Customer Service – When budgeting for advertising basics, look back before moving forward

With the onset of the fourth quarter, many businesses find themselves in the midst of reviewing the previous nine months and budgeting for the coming year. Where did the money go? Which tactics worked, and which ones didn’t? Obviously, the goal of the budgeting process is to look ahead, but a valuable tool for doing so is the reexamination of what already has happened. This is an opportunity to learn from the successes and challenges of the past year and plan accordingly for the future.

In my last column, I discussed different strategies for determining an advertising budget. This time, we’ll focus on what to do with the money that has been allocated for this purpose.

When establishing the specifics of an advertising budget, business owners often struggle with a number of questions, such as, “How do I know I’m choosing the right media?” and “How do I sort through all this information to make the right decisions?” They wonder how they’ll find the time to take calls and meetings with every media sales rep in town and who to trust to help the most. Many are concerned they are not getting the most-or anything at all-for their money and have no idea how to find out which media are working versus which are not.

Like many other managers and owners of small businesses, you may not have a clear idea of what has been spent this year on advertising. Maybe you started with a general idea, but then representatives from every media outlet, charitable fundraiser and high school yearbook walked through your door with advertising opportunities.

Media representatives can be relentless, and many, not surprisingly, are also quite likeable-two ingredients conspiring to whittle away at your dollars. Sometimes dollars fly out the door in big chunks, like when you sit through a top-of-mind awareness seminar and the presenter convinces you this radio station/television station/publication is the one and only answer to all your marketing challenges. You might be convinced to spend your entire budget, or more, in this setting.

Other times, your dollars trickle out more slowly. It starts with $500 to this “exclusive” sponsorship opportunity, then $200 for that special program insert. Next thing you know, you are supporting the kids putting their all into playing little league baseball and spending just $1,500 to purchase hundreds of those mini foam footballs that have your logo on them and get thrown to fans at high school football games.

The opportunities are endless, and it is common to respond with a “yes” to all of these solicitations, even if your reasons for doing so vary. Try to resist the impulses. I am not saying don’t be charitable. Instead, I am suggesting many business owners feel these investments in the community are simply a cost of doing business. I agree, but making sure these expenditures support your business plan, fit into the big picture and budget, and do not jeopardize profitability are essential components to consider.

The ideal time to bring in a professional to develop an effective media plan is after your advertising line item has been determined. There are many advantages to hiring an individual or firm to assist you with your marketing decisions and implementation, not the least of which is that creative messages will be more consistent and cohesive. Also, you will be more likely to receive objective, expert advice from someone who is not merely trying to sell you airtime and print space.

Usually, a professional media planner at an agency has established relationships with different media outlets. Because of these relationships, and the ability to buy media time and space in bulk, agencies often offer clients better rates for advertising than the business owner would be able to get on their own. The professionals also have access to data and research and understand the nuances of the advertising industry. Then, of course, employing an agency to do the work saves oodles of time for the business owner.

Usually, I allocate about 80 to 90 percent of a client’s budget up front. This allows me to focus on goals and the big picture, as well as take advantage of some placement economies. When possible, I incorporate the community-based extras that are beneficial to the business and automatic renewals. I then put the remaining balance aside for things that may come up throughout the year. These might include more community opportunities, a special sale for the business, an incredible special on rates, or anything else unexpected. Planning ahead by not committing every dollar in the budget in anticipation of unforeseen situations is a great way to stay on budget.

The most important part of budgeting is staying with it. It’s OK to make adjustments mid-year, so long as the changes are made in a thoughtful, well-planned manner, but in general, make a commitment and stick to it. This will help you anticipate and control spending, and avoid impulses to spend where it is not effective.