Many aspects of how we reach people through advertising has changed as new technology is developing but at its core, advertising still needs money behind it to work. A common question we get from our retailers at BLM when it comes to their ad budget is “How much should I spend and where should I spend it?” and to be honest, there isn’t a perfect answer.
Every client is different, every market is different, and therefore every advertising budget needs to be different. For example, in some markets it makes sense to be on broadcast TV, in other markets where broadcast TV isn’t as affordable, it makes more sense to have a stronger digital presence in your budget, but at the end of the day, you can usually count on the below key tips to build the foundation for a successful advertising campaign.
• Take 5-10% of your annual revenue and reinvest it into marketing your business. You might be asking why 5-10%? Why not land right in the middle with 7%? Why not go over 10 and do 12%? Well certain situations might call for more or less spending, but in our experience in order to grow your business and maintain a strong bottom line this is the range we have seen work the best. Maybe a competitor went out of business and you want to capture more of the market and need to spend up to 10% or maybe you need to reinvest some of your revenue into a store renovation and need to cut back on marketing and drop it down to 5% from a 7%. Start your budget with this range and try to track your actuals each month so you can make sure you stay in this range.
• Take advantage of your co-op budgets. Let’s face it not all co-op advertising is going to be as strong of a message as some of your branding messaging, but the fact is co-op ads come at a discounted rate of 50%. If your brands are willing to pay for half of the ads we recommend using as much co-op dollars as you can. Incorporate the shared cost of your co-op ad spend into your budget so you can have an accurate picture of what your actual ad spend is.
• Give your Q4 advertising budget a lift of 20-30%. When it comes to jewelry the buying cycle is longer than most other retail purchases and more jewelry purchases come in Q4 so in order to be top of mind in a time when people are buying and the market is more expensive you are most likely going to have to spend more money for your advertising to work. Incorporate extra spend into the budget early on in the year so you have sufficient funds to have a successful Q4. The same goes for months where you are having a sale. Doing an inventory sale in April? Make sure to give that month a bump so you can get the word out about your sale.
• Track your spends in a detailed excel sheet and look at your different marketing spends and how they compare to each other. At the end of a great year how much did you spend on digital vs. traditional? How much print did you spend compared to other areas? Did you have a down year and need to shake things up, or did you have a great year and you need to replicate your spends? The more detailed you can track your spends, the better idea you’ll have about what works for your business.
• Take a trip down memory lane and try to think about what has worked in the past for your business. More times than not I hear clients say “We used to do TV, or we used to do radio or we used to do this or that..” and when I ask well how come you stopped there usually isn’t a definitive answer. We get it! When you’re running a small business there are a lot of moving parts and sometimes marketing falls by the wayside and that’s ok because that’s our job to make sure it doesn’t! Sometimes restarting an old marketing service can make a big impact on your business, so chat with us about your past so we can help you plan for the future.