I laugh when I hear people complain about how much they spend on advertising. Why? Because there are only 3 possible scenarios when you advertise:
1. The advertising bombs and you lose money
2. You don’t measure the results of your advertising, so you don’t have any idea what on earth is happening.
3. The advertising works and you make money
And there are 3 simple solutions to each of these problems:
1. If the advertising bombs and you are consistently losing money – STOP doing it and try something else
2. If you don’t measure your advertising – you’re being stupid. After all, would you employ a salesperson and not measure his results?
3. If the advertising works and you make money… Plough Bucketloads Of Cash Into It Because It’s A Money Making Machine
Why? Because it’s sort of like putting your money into a poker machine where you always walk out as a winner. Where every time you put a dollar in it spits out $2, $10 or $14 into your hungry little hands.
And yet what do most business owners do? They say something like:
Our advertising budget for this year is $5,000. Or $10,000. Or $50,000.
Or whatever.
That’s crazy.
Think about it: If I walked up to you and said “{FIRSTNAME Friend},for every $100 you give me, I’ll give you $300 back. How much would you pay me? Would you say: ‘I’m only paying Scotty $20,000 this year because that’s my budget.
Or would you say, if Scotty keeps giving me back more than I pay him, I’ll keep giving him as much money as possible?
You’d be crazy not to, right?
And it’s the same with your advertising.
So what’s the formula for setting an advertising budget?
1. Start small. Test a small direct mail campaign to 500 or 1000 potential prospects. Or an advertisement in a cost effective publication.
2. One of two things will happen.
1) It will work… or
2) It will fail.
If it fails… try something else.
If it works… keep doing it. As much as you possibly can – until it stops working.
And then try something else and do the same. For instance you might start out with ads in your local paper. And then venture off to magazines, direct mail, classified ads, internet, fax streaming and letterbox drops.
Are you getting the picture here?
And your turnover is like a snowball gliding down a hill growing second by second, minute by minute.
You can start with an advertising budget of as little as $20 a week on a classified ad (like I did when I started my business) and end up increasing your budget to thousands of dollars every week.
And because you’ve developed a predictable system, every time you spend money you’ll be earning more back in return.
The bottom line is: Having an advertising budget for a small or medium sized business is stupid.
