Effective Advertising: How to Calculate Ad Budget

Posted 1 mėnuo ago pateikė Anastasia Prokofieva

Supercharging your business’s growth through effective advertising is like igniting the afterburners on a high-performance jet. When done right, you skyrocket; tačiau, a miscalculation could result in a rapid descent.

That’s why landing on the perfect ad budget is crucial. But how do you define what’s ‘perfect’? It’s about aligning every cent spent with your business goals, and we’re here to be your mission control.

Why Your Ad Budget Matters

In a world where even the tiniest details can make or break a company’s ad game, grasping the decision-making that goes into every campaign is crucial.

Your ad budget is the financial backbone of your marketing efforts. Every dollar should be put to work effectively to give the best ROI, aka return on investment. It isn’t a number you pluck from thin air or borrow from the neighbors. It needs to be strategic, just like your advertising needs to be targeted.

Tačiau, the critical question lingering in every business owner’s mind is, how do I know how much to spend for effective advertising?

Before Calculating Your Ad Budget

Figuring out how much to spend on ads is a matter of balance. You don’t want to waste money by overspending, nor do you want to be ineffective by underspending. There is a Goldilocks-like “just right” zone that will bring in results without affecting your margins.

Before we start, there are a few key terms you need to understand:

Markup yra skirtumas tarp prekės savikainos ir jos pardavimo kainos (bendrasis pelnas viršija savikainą). Paprastai jis išreiškiamas procentais.

Pavyzdžiui, jei parduodate prekę už $150 kai tai tik tau kainuoja $100, jūsų žymėjimas yra 50%. Norėsite, kad šis skaičius būtų rodomas visiems savo produktams atskirai ir parduotuvėje.

Marža yra jūsų bendrasis pelnas, išreikštas pardavimo kainos procentais.

Aukščiau pateiktame pavyzdyje, jūsų pelnas būtų $50. Taigi, jūsų bendra marža būtų 33.3% ($50/$150).

Apgyvendinimo kaina yra jūsų el. prekybos parduotuvės išlaikymo ir veikimo išlaidos (pvz., interneto priegloba, atsargų valdymas, ir siuntimas bei tvarkymas). Šios išlaidos paprastai yra statinės ir nuspėjamos.

Jums reikia šios metrikos, kad galėtumėte pradėti skaičiuoti skelbimo biudžetą. Atskiroje skaičiuoklėje, užsirašykite šiuos rodiklius.

Galbūt jūs turite kažką panašaus:

	Marža	Markup	Apgyvendinimo kaina
Produktas #1	33.33%	50%
Produktas #2	54.54%	120%
Produktas #3	37.5%	60%
Vidutinis parduotuvėje	43.39%	76%	$30.000

Kai turėsite šiuos duomenis, galite pradėti skaičiuoti savo reklamos biudžetą.

Skelbimo biudžeto apskaičiavimas efektyviam reklamavimui

Kiek galite išleisti reklamai, priklausys nuo trijų dalykų:

Niša: Stores in certain niches can get away with spending less on ads because of higher margins or stronger word-of-mouth or social media reach. This is particularly true for fashion or highly niche-specific stores.
Business stage: You’ll have to spend extra on ads in the early stages of your business to establish your brand. Late-stage companies can get away with spending as little as 3% of their annual revenue on advertising.
Margins: Advertising budgets are usually a function of your margin. The higher the margin, the more money you’ll spend on ads.

The US Small Business Administration advises allocating 7-8% of your gross revenue towards marketing and advertising if your annual sales are under $5 million and your net profit margin ranges between 10% į 12% post-expenses.

Understand that this also includes brand development costs, including spending on websites, dienoraščiai, and social media. Paprastai, you’ll have no more than 3-5% of your annual revenue to spend on advertising.

Turint tai omenyje, let’s look at a step-by-step process for calculating your ad budget.

Žingsnis 1: Calculate Your Minimum and Maximum Possible Ad Budget

Kaip minėta, most businesses allocate 5 į 10 percent of their annual revenue to advertising. Čia, 5 percent would be the floor and 10 percent the upper limit.

Start by calculating these lower and upper limits on your ad spend.

To do this:

Imk 5% ir 10% of your projected annual sales
Multiply each of these figures by the average markup per transaction.

Pavyzdžiui, suppose your business is projected to do $1M in annual sales this year. 5% ir 10% of your annual sales would be $50,000 ir $100,000.

Suppose your profit margin is 60%, t.y., you make $600,000 in profits with $400,000 in costs.

Todėl, your markup would be 150% ($600,000/$400,000 * 100).

You have figures like this:

Annual Sales (A)	5% of Sales (B)	10% of Sales (C)	Markup (D)	*5% of Markup (B D)**	*10% of Markup (C D)**
$1,000,000	$50,000	$100,000	150%	$75,000	$150,000

Taigi, your minimum and maximum ad budget is $75,000 ir $150,000.

Žingsnis 2: Calculate the Adjusted Ad Budget

The above is your “raw” budget since it doesn’t include your cost of occupancy (t.y., the cost of running the store).

To get your adjusted figure, simply deduct the cost of occupancy from the raw minimum and maximum budget.

Pavyzdžiui, suppose these are the annual costs associated with running the store:

Ecommerce software: $2400
Payment processor: 2% of annual sales ($20,000)
Hostingas: $1200

Taigi, your “cost of occupancy” is $23,600.

Your adjusted ad budget is as follows:

Minimum: $51,400 ($75,000 – $23,600)
Maximum: $126,400 ($150,000 – $23,600)

This figure tells you how much you can expect to spend on annual ads.

Pro patarimas: You can reduce your occupancy cost using a budget-friendly ecommerce platform like Ecwid by Lightspeed. You’ll get a robust online store fully hosted and maintained by Ecwid, plus dozens of built-in business management and marketing tools to grow your business.

Best Practices for Effective Advertising and Budgeting

Dabar, you have step-by-step instructions on how to calculate your ad budget. For best results, here are some best practices to keep in mind:

Start Small

If you’re just starting with advertising, it’s always better to start small and gradually increase your budget as you see results. It will help you avoid overspending and allow you to make adjustments along the way.

Set Clear Goals and Objectives

Before creating your ad budget, it is vital to identify your business goals and objectives. Priešingu atveju, it’ll be hard to evaluate the effectiveness of advertising.

Whether it’s to boost sales, increase website traffic, or elevate brand awareness, your objective should be crystal clear even before you boot up an Excel sheet.

Goals should be Specific, Measurable, Achievable, Relevant, and Time-bound. Known conveniently as S.M.A.R.T, these goals ensure your intent is as sharp as your execution should be.

Keeping your objectives and goals in mind will help you determine the types of ads you need to run and the platforms you should use. Pavyzdžiui, if your goal is to increase brand awareness, socialinės žiniasklaidos skelbimai gali būti geresni už tradicinius spausdintus ar TV skelbimus.

Pritaikykite Long Game vs. Greitas laimėjimas

Reklamos efektyvumas galiausiai priklauso nuo to, kaip jūsų taktika atitinka jūsų tikslus.

Skirtingi tikslai reikalauja kitų strategijų. Ilgalaikės prekės ženklo kūrimo pastangos reikalauja tvarių, nuolatinis skelbimo buvimas. Greitas pardavimas gali paskatinti prašmatnumą, trumpalaikė reklamos kampanija.

Apsvarstykite skelbimų platformas

Vieta, kur talpinate skelbimus, gali turėti didelės įtakos jų efektyvumui. Pagalvokite apie savo tikslinę auditoriją ir kur jie leidžia laiką internete. Tai padės jums pasirinkti tinkamiausią platformą jūsų reklamos kampanijai.

Apsvarstykite galimybę naudoti kelias platformas, kad pasiektumėte platesnę auditoriją ir padidintumėte sėkmės tikimybę. Pavyzdžiui, jei jūsų tikslinė auditorija visų pirma yra jauni suaugusieji, socialinės žiniasklaidos platformos, tokios kaip „Instagram“ ir „Snapchat“, gali būti geresnės. Tuo pačiu metu, Tikėtina, kad televizijos reklamos efektyvumas bus žemas.

Papildomai, skirtingos skelbimų platformos siūlo įvairių tipų taikymo parinktis. Pavyzdžiui, „Facebook“ ir „Google Ads“ leidžia taikyti konkrečius demografinius rodiklius, interesus, elgesys, ir vietas. Tai gali padėti susiaurinti auditoriją ir užtikrinti, kad skelbimai pasiektų tinkamus žmones.

Taigi, jei tau įdomu, „Ar socialinių tinklų reklama yra efektyvi?“ atsakymas tikrai yra, tol, kol skelbimai bus nukreipti teisingai.

„Ecwid by Lightspeed“ naudojimas savo internetinėje parduotuvėje, galite optimizuoti savo „Facebook“ ir „Google“ skelbimus Spustelėkite jį. Tai padės nustatyti ir automatizuoti skelbimus bei optimizuoti juos, kad investicijų grąža būtų geresnė.

Stebėkite ir analizuokite skelbimų duomenis

Keep track of your ads’ performance and use this data to make informed decisions about your budget. Adjust accordingly if certain ads or platforms don’t yield the desired results.

If you use Ecwid by Lightspeed, measuring advertising effectiveness is easy with the Ataskaitos tool. It has a Marketing section that helps track order sources, be it Google ads, Facebook reklama, or other marketing channels.

Apvyniokite

With these strategies in hand, figuring out an ad budget that meets your business goals and guarantees an excellent return on investment turns into a smart move, not a scary one.

Dealing with ad budgets isn’t just about finance but vision. It’s about translating the intangibles of advertising into actionable strategies that leave no room for interpretation — and every room for growth.

You’re not just calculating an ad budget; you’re architecting your path to market success. And with the strategies unearthed here, you’re set to craft an advertising budget that’s not just a figure on a sheet but the lifeblood of your most effective advertising.

Do you want to learn more about advertizing with Google?

About The Author

Anastasia Prokofieva is a content writer at Ecwid. She writes about online marketing and promotion to make entrepreneurs’ daily routine easier and more rewarding. She also has a soft spot for cats, chocolate, and making kombucha at home.