The Best Way to Manage Your Advertising Budget


If you have a fixed amount of money set aside for advertising, you have two options: 1. spend all of it on your next campaign or, 2. only spend a part of it. According to Entrepreneur, “Most advertising salespeople will tell you that ‘5 to 7 percent of gross sales’ is the correct amount to budget for advertising, but don’t you believe it.”

The fact is, your advertising budget depends on your financial standpoint and how much of a risk it is to your company. If you have no more cash reserves left, it’s probably wise to spend the money sporadically.

Consider the Sales

An Inc. report stresses the fact that your advertising budget should initially be based on the projected sales revenues of the product you are advertising: “The cost of advertising will be paid for by sales and increasing sales is your goal of an ad campaign.”

For example, if you have a fixed budget of $500 for advertising but estimated that your product sales will only bring in $100, then it makes little sense to spend all that money on advertising. Instead, you should only spend a portion of that budget and recuperate your expenses through sales.

SBA Examples

The Small Business Administration (SBA) outlines two ways in which you can spend your advertising budget:

If you spend $10 of the asking price on a product that costs $300 in advertising, then you should be spending $3,000 in advertising to sell 300 units, thereby generating $90,000 in sales.
Alternatively, you could set aside a flat percentage of your total projected sales revenue. So if you plan to use 5 percent of your revenue, and you expect to bring in $100,000 in sales that year, you would spend $5,000 on advertising.
Whatever option you choose, you must be tactful and ensure that you don’t jeopardize your company’s future.

The Importance of Follow-ups

No matter how much you spend, the most important thing you need to do is to follow-up on your leads to turn them into buying customers. If you manage to gain a decent number of responses to your advertising and have a substantial list, do the following:

Send daily emails to your list to maintain interaction.
Provide a lot of offers that are too tempting for your prospects to resist.
Have clear calls-to-action so that customers can get to your services.
Create webinars so that you can showcase and share more of your expertise.
Invite and engage with your prospects through a Facebook group.
Constantly make videos with engaging and educative content.
When you do these actions correctly, the amount of money you use from your budget will have been spent effectively.


While you’re still a new company, focus on mastering the follow-up techniques provided above before you spend money on advertising. Doing otherwise might waste your money as you can only complete a sale once the prospect is sold on your product or service.

One great way to convert them into buying customers is to constantly show them your “money page.” This is a page where you showcase your product or service and remind them of why they need your offers.

Advertising is all about repeating your message until you get a sale. Don’t present your prospects with the money page just once; you must frequently market your product or service so you can continuously convince your prospects to buy it. With enough exposure to your product or service, prospects will turn into paying customers.

Matt Lloyd