The Importance of Advertising Budgets in an online Business
Most everyone can agree that advertising a business is extremely important. The same goes for an internet business almost doubly so, simply because of the sheer volume of companies out there doing, likely, the same exact thing you’re doing. How do you stand out in this jungle of wares?
As I had mentioned a few days ago, Growing Your internet Business Organically is something that needs to be taken into consideration, and should be second to none – the first line of attack for generating business of average passers-by. But how do you give that extra boost your company may need to live up to it’s potential? Before you get started plummeting all of your money in to Google AdWords, there are a few steps you’ll need to take into consideration:
Financially Planning your Business
Where are your costs? In order to figure out what you can devote to advertising, you must first figure out where your overhead lies. Chances are, if you’ve made it this far into the game you already have a pretty fair idea of what percentage you can play around with: things like rent, payroll, expenses, and debt management should all be factors when taking advertising into consideration. As for Studio Symposium, we have no overhead really to speak of, the only cost being Payroll. Since we started the company without any capital infusion to date, and have purely funded the project out of our own (nearly empty) pockets, we’ve already made our money back, so there are no other primary concerns.
Are your clients succeptable to advertising? This may sound strange, but not all companies are alike. Some have very particular customers who already know what they want before they get into the “door” (being your website, in this case). Example: How many Toyota advertisements do you see on TV currently? Chances are you can’t go a channel or two without seeing some sort of reference. The same goes for the likes of Honda and Hyundai. This is because they’re all in the same market, competing with relatively the same target demographic. Conversely, how many advertisements do you see on TV for Porsche? Chances are you can’t remember the last time you’ve seen a Porsche commercial, and there’s a reason for that. The company is in an extremely Niche market whos customer base isn’t easily swayed to and from one particular brand to another. They have their market share, and rarely need to advertise (outside of print publications reviewing or test-driving the cars) that they’re introducing new models. The same goes for your internet business – are your customers the kind to be easily swayed by brand agnosticism? Or have you ammassed a large, devoted fan base to your particular product or service that will follow you to the edge of the earth?
How much of a value-adder is advertising to your company? See above; essentially the more you know about how to advertise to your customers (potential or existing) the better off you’re going to be. Advertising is almost always a value-adder, especially in the internet days where literally everything is measured. This is a good thing because it allows you to trim, or add, different marketing techniques as needed. If marketing and advertising is almost your sole means of gaining new business, I would suggest a high budget for advertising.
After taking these things into consideration, you should be able to sit down and figure out what the minimum and maximum is for your spending budget on advertising. As noted before, because Studio Symposium has non-existant overhead, we worked out what I consider to be a very generous (and exciting!) advertising budget of 20%. For contrast, I know a few restaurant owners in the area that only spend about 1-2% on advertising. Naturally, a lower overhead means a much stronger budget for advertising.Now that you’ve got your advertising budget figured out – write it down. It’s best (I feel) to stick to a percentage of your inccome rather than a fixed amount. This way, the larger you get, the more you’ll be able to spend on expansion. How do you deal with advertising after all of the math is figured out? I’m going to outline techniques in 3 sections: Guerrilla, Standard, and Public Relations. Over the next few days, I will detail the different aspects of making the most of your newly-found advertising budget. Until then, good luck figuring everything out, and remember that advertising is an area of your business that should never be ignored.– Chris
