Online Advertising - Setting Your Budget.

For many growing their companies depends on many factors, the main one being that they must get the word out about their product, site or services however, this isn't necessarily as easy as it sounds especially with their being so many marketing mediums available to them these days. With that being said, marketing is one thing that everyone needs to do at some point however, how do you work out how much you should spend on your marketing campaigns especially in today's competitive industry? This is what we will take a look at in this article.

Setting Your Advertising Budget - 4 Methods.

As a general rule of thumb there are four main methods a company can use to budget their ad campaigns, which one you choose will totally depend on what type of product you have and, more importantly, which offers YOU the best value. The current methods of setting your advertising budget are as follows.

Percentage Based Ad Budgets.

The percentage based advertising budget is the one most widely used by companies both on and offline, it relates to the quantity of sales, its quick and easy to work out whilst ensuring that you don't overspend on your advertising needs. By utilizing this method of calculating your advertising budget, you keep your advertising costs, in line with your sales volume which, in the long run, should show a nice increase in overall profits. Most percentage based advertising budgets use a figure from between 5% to 20% of the total gross companies revenues, of course, you can alter this to better suit your needs as required as it is only a guideline.

Unit Of Sales Based Advertising Budgets.

With this method of setting your advertising budget, you in effect, set aside a specific figure for each item you sell based on your experience of how much it costs for you to sell 'X amount of items. For example, if you sell 10000 products and you spent 5 cents on advertising them, to sell 100000 products you need to budget a figure of $5000 on advertising. This method, whilst being defining on what you need to spend based on past expenditures, doesn't really allow you to take in to effect current market conditions easily however, if you are working in pre-defined market conditions, this offers you an excellent way to budget for your ad campaigns.

Objective Based Ad Budgets.

Objective based ad budgeting is probably the least used method of calculating how much to spend on your marketing campaigns, the reason for this being that it involves doing a lot of research and therefore can take months to set a solid figure. To set up an advertising budget using this method takes many months of data in which you assess each and every variable available to you as well as those variables available to your customers.

Purchasing Steam Advertising Budgets.

This is the type of budget you set if you are looking to attract long-term customers of your product, you calculate this based on how much new business you can realistically expect to generate from an advertising medium for example, you presently have a customer who spends $100 a week with you and has done for the last 2 years, this customer, as of right now, is worth $10,400 to you. Now you have to work out several other variables which are..

1) How long do you expect the business relationship to last?
2) How much do you expect the customer to pay during that term?
3) What is your gross profit margin?
4) How much of that profit are you willing to spend on finding more clients?
5) How many new customers do you want to attract?

Once you have all of these figures to hand, you should be able to work out how much each customer is worth to you and thus, develop your advertising strategy based on that total figure over the initial business period you set in item (1).

Advertising Budgeting - Overview.

In today's thriving market place, with so many different ad mediums available to you, due diligence is a must have when setting up your ad budget, many companies spend little to no time working out the figures that they need in order to set a qualified marketing campaign in motion and, these are the companies that do not get the results they want to achieve. By setting yourself an advertising budget and sticking to it, you'll end up with a solid plan for long term growth of your company, irrespective of what you are selling.

Article written by Lee.

http://www.webmasteradvertising.com