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When retailers in my community ask me how much to invest in advertising, what considerations should I be taking into account?

Thanks for your question. Most retailers set their investment in advertising dollars based on a percentage of sales. The accepted advertising industry norm is 3 percent to 5 percent of monthly sales as a monthly ad budget. However, the amount of dollars a retailer invests in advertising also can depend on a number of factors:

  • Business Location. High traffic area? Low traffic area? The lower the traffic, the more rural or out of main street flow, the larger dollar investment in advertising required.
  • Top-of-Mind Awareness. A new business as opposed to an established business with awareness, familiarity and trust will need a larger dollar investment in advertising.
  • Competitive Market. Businesses in a market with a number of competitors will need a larger dollar investment in advertising as opposed to the one-of-a-kind business in a market.
  • Price vs. Value. A business that guarantees lowest price or features continual sale efforts will need a larger dollar investment in advertising to continually reinforce this message.

Remember, when a business advertises price, or the business is only selling price, the business will have to continue to lower the price, or come up with enhanced incentives on an ongoing basis in order to continue building their customer base.

By Chuck Nau

Chuck Nau, of Murray & Nau, Inc., is a publishing consultant with more than 25 years of experience, having served the Seattle Times, Knight-Ridder Newspapers and the Chicago Tribune in a number of management, marketing, media and sales capacities.

Nau’s work as a publishing consultant includes clients who are newspapers, publishing associations and niche publications. His practice enables him to put his wide range of publishing experience to work for publishers, sales management teams and senior managers on both a day to day and special project basis. He has assisted clients as a management consultant, sales trainer, facilitator and coach/mentor in advertising, circulation and marketing areas.

In addition to his consulting practice, Nau has spoken to and conducted workshops for a number of national publishing groups, state press associations, and newspaper organizations throughout North America. He has written a series of columns covering topics in advertising, management, marketing, and sales which have appeared in various newspaper industry and press association publications.