Even the smallest business needs to advertise to promote its products and services, and to maintain its profile in the market place.
The common approach to advertising is for a business to allocate a set amount of money to be spent over a 12 month period. The aim is to put together a combination of advertising that gives the best long-term exposure for the business, and to as wide an audience as possible.
Finding the right balance between what you spend and the revenue your business generates from your advertising is important. It is easy for a business to overcommit funds to advertising, so careful planning ahead of time is the best way to avoid this.
Decide how much you want to spend on advertising and then where you will be spending it. The most common advertising media include newspapers, magazines, radio, TV, direct mail and online.
Cost per thousand
It’s not always easy to compare one advertising medium with another to decide which offers the best value for money. One method to gauge the effectiveness of a medium is by using the cost per thousand (CPT) equation.
For example, if magazine A costs $1200 to advertise in and reaches 80,000 people, the CPT equation is 1200 (the cost of the ad) divided by 80 (the number of thousands of readers). In this case, it is 15. Which means it costs you $15 for every thousand people your ad reaches.
So then, if Magazine B costs $1920 to advertise in and reaches 160,000 people, the CPT is 1920 divided by 160, which is $12 per thousand. So even though Magazine A costs less, you would get better value for your advertising dollar by selecting Magazine B.
Your budget should also allow for your advertising to be run on a regular basis. In this way, your business can gain awareness and acceptance by the public. It is only through maintaining an ongoing presence in the marketplace that you begin to gain customers.
Contingency funds
It’s a good idea to also keep a part of your advertising budget (around 10 per cent) unallocated to take advantage of discount deals that come up from time to time. This gives your budget some flexibility. Magazines and newspapers for example, occasionally offer ‘distress rates’. That is, they have advertising space they have not been able to sell for an upcoming issue and offer a last minute deal at a heavily discounted rate to anyone willing to advertise with them at short notice.
Value added benefits
In addition to distress rates, some publications will offer editorial support to their advertisers as part of the total package. They do this through including an article on your business or product in the same issue. It’s another good way for a business to stretch their advertising dollar.
Make every word count
The content of your advertising is also important. Give your potential customers good reasons to act immediately or the impetus of your campaign will be lost. Some ways to inspire your customers to buy now rather than later include: having a deadline for a sale, having a ‘buy one, get one free’ incentive, offering a free gift or upgrade, using an interest-free period for goods bought, or giving a store voucher that customers can use towards their next purchase.
Customer feedback
Your customers are the best (and most inexpensive) source of information as to how effective your advertising is. Have your staff gather feedback from them wherever possible. This can be simple information such as ‘How did you hear about us?’ Or, get your customers to fill in a feedback form to find out what publications they read, what other products or services they would like your business to offer, etc. It helps to offer an incentive for them to take the time to fill out the form (such as a competition to win a $500 voucher).
Revise to survive and prosper
Even five years ago, the amount of business that online advertising and promotions generated for a company was insignificant. Now, the internet is seen as a vital component in the success of most businesses and it figures prominently in their advertising spending.
It is important that you revise where your business spends its advertising budget each and every year, so you can take advantage of any new opportunities and mediums that arise.