How Much Should A Small Business Spend On Advertising
We live in a world of constant optimization. If we want to have success tomorrow, we must act smart today.
So, no matter if we have an online-based business, or manage a team, the money we spend on advertising are always supposed to bring us profit.
However, is that really so? The sad truth is that in more than half of the cases the money we invested in advertising are given in vain.
In addition, our advertising strategy is supposed to bring us both image and profits.
Small businesses usually work on a tight budget, because they don’t have inexhaustible corporate actives that are supposed to cover different marketing strategies.
This is something that small businesses can’t really afford. That is why it usually needs more creative advertising strategies.
How can we pay for advertising only in return to the achieved results?
The affiliate marketing model is focused on achieving some results and paying for them only in case some direct sales are accomplished.
This is a bilateral process which connects on one hand business people who provide goods and services for sale and on the other hand, publishers, bloggers and Search Engine Marketing (SEM) experts.
The latter are called affiliates. Their role is to find customers who make purchases from the advertisers and receive a certain commission for it.
The commission may be a percentage of the sale, or it may be a certain fee – this is a matter of negotiation.
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The affiliates usually use the audience they reach through their blogs or websites.
This means that they use various innovative techniques in order to guide their readers to the advertisers, and their main goal is to turn their own users into interested and devoted customers of the advertisers.
This is exactly what the purpose of this advertising marketing strategy is – the advertiser pays the affiliate a certain percentage of the profit after a positive action by the users.
And this makes a good working advertising system which make everyone happy.
This way owners of small businesses should pay only in return to direct sales and specific results, and what better investment than that? Of course, affiliate marketing strategy is appropriate and very efficient not only when it comes to small businesses but literally for any business.
An advertising strategy that includes paying a certain percentage of the sales
This is probably the strategy that is the the majority of small businesses use nowadays.
Moreover, this is one of the most adequate methods you can use, taking into consideration the fact that we have already mentioned above – small business owners don’t usually have an inexhaustible advertising budget.
That is the reason why it is quite wise to invest money you have earned thanks to direct sales and other sales profits.
A great idea is to start with a smaller percentage – for example – from 5 to 7 percent of the sales you achieve, and lead your further marketing and advertising budget according to your sales.
On the other hand, this means that if you manage to achieve bigger sales, you will be able to invest more funds into advertising.
An advertising strategy that includes paying a certain percentage of the overall budget
Small businesses also use another marketing strategy when it comes to advertising. Another commonly-used method is to determine your advertising budget according to the overall budget of your company.
This automatically means that the percentage will be larger than if you determine your advertising funds according to the actual sales you make.
New businesses usually choose to spend from 20 to 30 percent of their annual budget, which is quite normal over the first couple of years.
After the small business is established, which usually happens after the second year, the percentage of funds spent on advertising grows smaller and is usually up to 10.