How much should I spend on Advertisements?
I get this question all the time. Unfortunately, there is no set amount. It very much depends on your company, your competition’s spend, the industry you are in, the products/services you sell, your gross sales, your company size, new product launches, etc.
Getting an industry average number is not feasible, but anywhere from 2% to 10% of gross sales is not unheard of. But here are two important things to keep in mind when getting started
- START SMALL. It’s very difficult to predict the ROI on your Ad spend on a particular channel (Adwords, Banner Ads, Newspaper Ads, etc.), so take baby steps. Try out a channel with the least amount possible and see if you get any leads. For instance, you can try out Google Adwords for less than $50 to $100 and make a decision on whether it’s worth your money.
- DIVERSIFY. You don’t know if one channel would work better than the other until you try it out. So try out a few Ad channels, measure their ROI and then make a decision on which channel to invest money into. For instance, for Realtors, flyers work better than Adwords, since the intention is to establish a brand and not make a quick sale.
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