More thoughts about business, this one’s about marketing, or budgeting I guess. You can view my other ramblings/lessons here.
The common phrase we hear when being pitched a service (in this case an ad) is, “well, it’s $1000. If 5 people bought your item, the ad would pay for itself.” NOPE! I ain’t great at story problems but the above line is a terrible sales pitch.
Here’s how I look at it (easy numbers for easy math):
- Service/product price is $200.00
- Expense per service/product is 50% ($100.00)
- Your marketing budget is 10% of expenses ($10.00)
- Your annual sales are $100,000.
- Your annual expenses are $50,000.
- Annual marketing budget is $5,000.
How many additional products would you have to sell to justify the marketing increase of $1,000?
$20,000. Or, 100 products/or services. IN ADDITION to your current sales. I know, it’s kind of a roundabout way to just say that if the price of an ad is x% of your current marketing budget, you need to expect x% increase in sales. AS A MINIMUM!
It’s hard to know as a start-up what ads will impact your business best and most. I’m learning.
What shouldn’t surprise me is that this pitch preys on what is so common in today’s way of thinking: it’s never about the bottom line, it’s about the payment plan.
So far my two favorite marketing tools are social media (and actual, OMG I’m going to say it, FACE TO FACE networking) and joining chambers/tourism bureaus, etc. Social media is cheap (which means you need to work harder to cut through all the other fluff) and the chambers/tourism bureaus cost a little to join but provide excellent connections. We’ve benefited from them bringing travel writers to the area, their social media streams, and networking opportunities they offer.
Just a little something rattling around in my head today.
