How much do I need to spend?

How much do I need to spend?

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How much do you need to spend on advertising? It’s a common question. We often get asked by our clients and prospects.  In my experience, there is no one-size-fits all answer. The truth is it depends.  I did some research to see if I could come up with some rules of thumb.

BusinessWeek.com had some useful statistics (originally posted: February 10, 2009):

•  Automakers’ generally spend 2.5% to 3.5% of revenue on marketing

•  Liquor (5.5% to 7.5%)

•  Packaged goods (4% to 10%)

•  Services businesses (5% to 15%)

What you are going to need to spend will depend on a variety of factors, like:

•  How much brand awareness and equity do you already have?

•  Is the brand in question mature (e.g. a cash cow) or are you trying to grow it?

•  How much brand awareness will come from other non-advertising sources? (Ex. I am exposed to my car’s brand every day, but not my accountant’s.)

•  What does your product and service category normally spend?

•  How active vs. category averages are your competitors with their advertising and marketing?

Looking at your goals and objectives, current brand awareness, your competitors’ activities and other strategic considerations can help guide you to the appropriate advertising and marketing budget; and help get you the results you need.

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