How much should businesses spend on adverting in comparison to their overall marketing budget? When discussing my post on word of mouth marketing, this question came up and I thought it was worthy of a post all its own. Since I started my company back in 1998 I’ve been willing to dedicate 10-20% of my gross to advertising expenses. This includes everything from PPC ads to sponsorships, magazine ads, etc. What I don’t know is if there is a standard amount that most businesses are willing to spend to advertise, promote and marketing themselves to their audience.
Retail businesses certainly could not give up 20% of their gross for advertising as that cuts too deep into their profit margin, but they certainly could dedicate that much off their net. What about service industries where the greatest expenses is just time. Rates are often based on a combination of skill, experience, demand and expenses. Advertising would certainly be considered into those expenses.
So what’s a fair amount to dedicate to advertising? Does it differ industry by industry? How much do you spend, percentage wise?