For small to medium-sized businesses (SMBs), an advertising budget isn’t just an expense, it’s an investment in growth. Using digital tools like email, video, and digital display ads isn’t optional anymore. These platforms allow you to target your audience and drive measurable results.
So, why is an advertising budget so important, and how can you make it work for your business? Let’s break it down.
Investing in digital advertising can open doors for your business. Digital platforms let you zero in on your ideal audience. By targeting the right people at the right time, you get more out of every dollar spent. You can start small and grow your efforts as you see results. This scalability ensures that your investment grows alongside your business. Unlike traditional advertising, digital channels provide detailed performance metrics. You can see exactly how your campaigns are performing and make adjustments to get better results. Whether it’s a video ad telling your story or a personalized email offer, digital campaigns help build your brand, engage your audience, and create customer trust.
The biggest question is, how much should you spend on advertising?
That will be different for every business, depending on profit margins, type of business, brand recognition, and expectations.
Established businesses that want to maintain market presence usually plan to allocate 5–10% of their gross revenue to advertising. New or growing businesses, typically allocate 10%–20% to aggressively build top-of-mind awareness and gain market share. For example, if your annual gross revenue is $500,000, a $25,000–$100,000 budget would be the norm. This is only a benchmark and will change with each unique business.
A breakdown of that budget may look like:
- Streaming video ads
- Targeted display ads
- Targeted email campaigns
- Social media
- SEO
Maximize your results by focusing on these key strategies:
- Go Where the ROI Is: Prioritizing programmatic video, display, and email campaigns can deliver excellent results.
- Leverage Automation: Programmatic tools optimize campaigns in real time, saving time and boosting efficiency.
- Analyze and Adapt: Regularly check your campaign performance to see what’s working and adjust as needed.
A well-thought-out advertising budget is essential for SMBs. With the many expenses of running a business, it’s easy for advertising to fall to the bottom of the list, but it’s a vital investment. When approached strategically, advertising isn’t just another expense, it’s an extension of your business. It allows you to reach a broader audience, strengthen your brand, and grow your market share.
No one likes spending more money, but effective advertising is necessary for continued success. You might already have campaigns that are working, or not working. By reallocating your budget to more efficient strategies, you can make your advertising dollars work harder. If something is performing well, you might even scale back and redirect funds to expand into new channels, reaching an even larger audience.
These strategies can keep your overall budget the same, while maximizing its impact. Not sure where to start, or want an analysis of your current advertising mix? Reach out to NNEdigital today, we’re here to help.