Can you afford to advertise or can you afford not to? That is the question (it supplants Shakespeare’s question).
After 4Imprint struck gold with its cable TV advertising, we are seeing the seeds of many more companies creeping in and using local media for advertising. Covid destroyed advertising budgets for two years. The post Covid captivity period has opened it back up again.
According to Gartner’s annual CMO Spend and Strategy Survey, “Marketing budgets are climbing back. Survey results show that budgets have recovered somewhat, with the average marketing spend increasing from 6.4% to 9.5% of company revenue across almost all industries. While this is a significant uptick, budgets still lag behind pre-pandemic levels — between 2018 and 2020, they averaged 10.9% of company revenue.”
So, here is the takeaway, the average advertising budget for all businesses is 10.9%. While it has been down, it is catching up to pre-Covid times.
Now let’s focus on your business. Traditional media advertising is not what small to medium distributors do. They view themselves as small businesses and spend accordingly. Yes, they will do local sponsorships, have a print ad here and there, but few have any real budgets as a percentage of revenue.
The ad world has changed. Survey after survey indicate that digital advertising is the king of all mediums. Surveys also indicate that nearly 70% of all TV viewers stream their TV. Do these trends apply to you? Yes, yes, yes, if, and only if, you need to grow and increase sales. If you are enjoying a small business and net a 6-figure income/salary, you may not want to grow - bigger is not always better. Having total control of a small company is much better than lack of control of a bigger company. I have seen the Peter Principal work in so very many companies. Small to mediums want to become big and the proprietor is simply not capable of managing a larger business at the expense of their own sales that built the business, and their core competency.
Illustrating a distributorship with net income of $400,000 and a desire to grow, should they allocate 10% towards advertising (40,000)? Many would answer… ”that’s too much”. Well, it may be, but not if you want to grow. To make money, you need to spend money. Consider 3-5% of your net income. Use it selectively in media placement. Enlist someone who knows how to place you. The result may surprise you and you will have “proof of concept” that strategic advertising may work for you.
The good news is that, in this era, highly targeted and strategic ad placement can return better results than an ad in a Chamber of Commerce journal. There is a reason why and where 4Imprint places its ads. Through digital geofencing, targeted social media advertising and streaming cable services you can hit financial portals and find many of your prospects. The same applies if you are looking for fund raising, retail customers, food services, etc.
If you watch Shark Tank, you have become very familiar with the term “customer acquisition cost”. Perhaps it is time, if you want to grow, to strategically advertise where you want to develop business.