Creating an Advertising Budget for Your Company

advertising budget

Creating an Advertising Budget for Your Company

Did you know that, as a rule of thumb, companies that make less than five million dollars every year should only spend about 8% of their revenue on advertising? Many business owners either don’t know about this rule or forget about it. When business owners do this, they risk spending too much money on advertising. 

If you plan on investing in advertising for your business, the first thing you need to do is set up an advertising budget before you spend even a single dollar. Many people make the mistake of thinking that they can make back all the money they spend on ads as long as the results of the ads turn out well. While this may be true in some cases, in other cases, you may end up losing money on your investment, or you may not make back as much money as you expected. 

So, as a precaution, it’s best to start small when it comes to your marketing budget. But how should you create an advertising budget in the first place?

How to Create an Advertising Budget That’s Right for You

Before you create your budget, you need to start asking yourself some important questions. For example, “How much does advertising cost? How much does marketing cost?” 

By asking yourself these questions and finding the answers, you will be able to have a general idea of how much certain marketing services and advertisements might be. If you don’t know the cost of the ads you plan on investing in; you are essentially throwing your money into a bottomless pit. This, of course, is not ideal if you are trying to not only save money but build your company’s wealth as well. 

Once you discover how much advertising costs for your business, you will be able to put a cap on how much you are willing to spend. For example, you may decide that you don’t want to spend more than $5,000 on advertising for the near future or for a certain year. In this case, $5,000 in advertising services will only get your company so far. 

The Details

If you are just starting out with your company, a smaller budget is often enough to get the ball rolling. On the other hand, if you have a more established and prestigious company, you may need to spend much more money on advertising before you start to see serious results from those advertisements. As mentioned before, spending a certain percentage of your income on advertising can help you rein in how much you should spend on advertising. 

By doing this, you can easily answer the question of how much should you spend on advertising. But what if, even following these tips, you still find yourself struggling with keeping your marketing spending within your budget? Fortunately, there are a few more things you can do to keep your spending under control.

Take a Closer Look at Your Sales Funnel

Many people make the mistake of not looking closely enough at their company’s sales funnel. By prioritizing and outlining your brand’s sales funnel, you will be better able to visualize what your company will need to be more competitive within your industry. You will also better be able to see where most of your company’s spending tends to go and where it should go. 

But the benefits of outlining your sales funnel don’t stop there. A good sales funnel model will be able to show you what your company needs to accomplish before potential customers will actually make a sale with your brand. For example, a sales funnel usually starts at the widest and most general part of the funnel. 


At this point, awareness is important. If people are not aware of your brand, they will, of course, not be able to give you any business because they won’t know anything about what you’re trying to sell. Since awareness is so important, you will need to calculate how much you will need to spend on advertising to get more people aware of your brand. 

Putting out a few ads here and there won’t cost very much and they will usually do the trick when it comes to awareness. But awareness isn’t enough to get people to buy products or services from your brand. Instead, you will need to look deeper into your brand’s sales funnel to see how far you should go with marketing costs and marketing strategies. 

Often, the next steps have to do with generating interest in your brand, compelling your potential customers to make a decision, and finally, getting people to make a purchase. In order to get more buyers, you will more than likely need to spend more money on advertising. 

Look Ahead and Plan Your Company’s Goals

The final and perhaps most important step you need to take when it comes to crafting an advertising budget is to look ahead and set goals for your company. Without goals, your company will aimlessly wander from success to success. When you don’t have a plan for your company’s future, you can’t secure your company’s future and success as much as you could. 

If you have a small business and envision it growing into a powerful company in the future, you will need to think about how much money you will need to spend to get your brand to that point. You can plan over months or years. The important thing to remember is to never spend beyond your means and try to get the most out of your advertising. 

Everything You Need to Know About Creating an Advertising Budget

If you were unsure how to create an advertising budget for your company, you should now know all about it and what to do next. By keeping your budget in mind, you can always maximize the results of your advertising while minimizing the amount of money you lose. 

By doing this, you will be able to make the most successful choices for your business. The result is being able to see your business soar.

To learn more, contact us here

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