How to Build an Advertising Budget That Works for Your Business
Creating an advertising budget can easily fall into solutions that “feel comfortable.” But, in all reality, the best plan is one that matches not only where your business is today, but also where you want it to be tomorrow.
At 1123, we work closely with clients to create budgets that make sense for their goals, their audience, and their market. Here is the framework we use to get started constructing an advertising budget that aligns with your marketing goals.
1. Start with Your Business Stage, Not Just Past Advertising Spend
The first thing we look at is your company’s history, not how much you have spent on marketing and advertising before, but how established you are in the market. Is your product or service something customers already know and trust, or are you new and introducing something fresh?
This makes a big difference in how much you should allocate:
- Established Brand (Staying Top of Mind and Building Loyalty): 5 to 10 percent of your revenue is often a good range to stay within.
- New Business or Service Launch: 10 to 15 percent of your projected revenue. You are building awareness and a customer pipeline before seeing maximum returns, so this is part of your business development investment.
Advertising is an investment, but it is also about making key decisions on how to utilize this spend.
2. Understand Your Numbers
We talk with our clients about customer probabilities, average sale amounts, and expected gross revenue over a campaign period, which often extends beyond the actual ad flights. If this process feels intimidating, know that we have been helping our clients build their annual advertising budgets as part of their overall marketing strategy for over 12 years and will walk you through it step by step.
3. Define Your Target Audience
Before you spend a dollar on advertising, you need to know who you are talking to.
That means:
- Building customer personas
- Understanding the media they consume
- Crafting creative that resonates with them
4. Choose the Right Media Mix
Once you know your audience, research the media that reaches them. We focus on four main buckets:
- Awareness – Getting your name out there
- Engagement – Building interest and connection
- Conversion – Driving sales, leads or other meaningful actions
- Loyalty – Turning customers into repeat buyers through first-party data
How much weight you give each bucket depends on how well your brand is already known. If your budget will not cover everything, start with at least one strong awareness tactic and one lower-funnel tactic that can drive conversions.
5. Buy Media Strategically
Every advertising tactic needs to be purchased with purpose. We focus on frequency and visibility, buying enough so your audience sees and remembers you. Media best practices shift quickly, so it is worth reading multiple sources or asking a trusted partner like us for the most current recommendations.
6. Align Your Budget with Your Goals
At the end of the day, the campaign goal and the budget have to make sense together. If the budget is too small to hit the target, you can either adjust the goal or invest more to meet it. A realistic, well-thought-out plan will always give you better results than a wish list without the fuel to back it up.
Bottom line: Building a strong advertising budget is about strategy, not guesswork. Whether you are launching something new or keeping your brand top of mind, following these steps will help you spend wisely and get results that matter. Contact us today to start planning your next great campaign.
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