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Here's How Much You Should Spend on Advertising

By David Berry: A question that every - every - marketer hears from prospects or clients is "how much should I be spending on ads?" And there isn't a marketer alive who can give you the "right" answer on the spot (though some could come close).

When I get asked this question, my favorite response is "one million dollars." I say it with confidence too. Invariably, the person who asks me chuckles, and then I explain the same thing every other marketer will explain to them.

"It depends..." 

Of course, even though "it depends" is the start to the right answer, people don't want the right answer. They want a tangible number that they can touch and feel. That they can react to and say "oh, I can afford that" or "oh, that's too much."

Today, though, I'm going to try to give you a "pretty good" answer to the question, based on a few assumptions:

  • You're a small-to-mid-sized business and you sell a product to consumers
  • You haven't done a ton of advertising yet
  • You have a lot of shifting priorities and don't know where to start

If that's the case, I can make a few more assumptions:

  • Advertising has to pay off quickly, or there won't be more money to play with
  • You'll watch over every dime once you start spending money on ads
  • You may be inclined to freak out, change direction or shut it off at the first sign of volatility

The good news? A lot of small-to-mid-sized businesses are just like this. Now, let's dive in.

Put Aside $5,000. I say $5,000 for a few reasons. It's an amount of money with which you can test and learn what works and doesn't work for your business. Plus, it's enough where you could justifiably stretch it out for several months. Too many first-time advertisers say they can afford a certain amount, yet when it comes down to actually spending it month after month, they balk. They freeze. And they pull back without learning or selling much. By putting your investment aside ahead of time, you remove the chance that you'll panic and pull back if you pay as you go.

But $5,000 Isn't Likely to Transform Your Business. Treat your initial $5,000 investment the same way you would treat the purchase of a sofa. You might recoup some of your costs on it, but the goal is to use it for a purpose. And that purpose, in this case, is to learn which approaches, messages, visuals, targeting, etc. are the ones that work for you.

You'll Get There, But You'll Need to be Patient: I have a client who spends $2,000 a month on ads and generates close to $7,000 in revenue. Another spends around $10,000 a month and generates around $25,000 in revenue. But that didn't happen overnight. In fact, in both cases it took us about three months to come up with an approach that generated consistent revenue. If either client had panicked in the first 90 days and abandoned ship, they wouldn't be seeing the success they're seeing now.

So there's your magic number! $5,000. Now, where do we start? Well, that's a conversation for another day. Or, you could email david@dbpluspartners.com to discuss it :)

-DB