If you do not have a set advertising budget, what are you doing to acquire new clients? In episode 190 of Journey to $100 Million, listen in to Erik as he explains the importance of advertising when trying to grow your business. It has been shown that most legit businesses (businesses that have actual operations) need to advertise in order to get a steady stream of new clients coming in.
If you “advertise” through word of mouth, you are not exactly marketing for your company unless you are putting a real significant effort behind gaining referrals. Gaining referrals is great, but the main goal of advertising is to gain new prospective clients and customers that are attracted to your company and offerings. There are a couple different ways to do that, but for us as digital marketers we like to use websites, SEO, social media, and online advertising such as Facebook or Google.
In order to get a start, most companies will put an actual budget in place for advertising. When putting this in place, it is common for the advertising budget to be tied a specific percentage of the company’s revenue. If that percentage is low, around 1%, you are probably not putting a whole lot of effort into your advertising. You may be boosting some posts, but you are not really moving the needle. If you are just doing 1% of your revenue, you might as well cut it all together because you are not putting enough into your advertising to really see results.
If you want to move the needle, you need to be putting 5-10% of your revenue right back into advertising. It sounds like a ton, but it is a business expense you must bite the bullet on, because otherwise new business will dry up: money in should always be money out. This does not happen overnight, so it is smart to start with a lower percentage, but the goal should be to ramp it up to 10% in the future. If you do not have at least 3-5% of your revenue being pushed back into advertising, you are not doing enough to grow your company – bottom line.
In order to grow a company, you must have new clients calling and walking through the door. If you are not advertising, that is just not going to happen. Setting aside a portion of your budget for advertising can be very lucrative, although sometimes it may seem like a high portion of your revenue. That being said, when creating and monitoring an advertising budget, be sure to keep it as something you can actually manage that will not crush your company. If you do it right, you could see results that you never thought were possible.
Erik J. Olson is an award-winning digital marketer & entrepreneur. The Founder & CEO of Array Digital, he is also the host of the Journey to $100 Million Flash Briefing and daily podcast, and the organizer of the Marketers Anonymous monthly meetups.
Kevin Daisey is an award-winning digital marketer & entrepreneur. He started his first company when he was just 23, and is the Founder & CMO of Array Digital. Kevin is the also the co-host of the Journey to $100 Million Flash Briefing and daily podcast, and the co-organizer of the Marketers Anonymous monthly meetups.