How Much Do I Need To Spend On Advertising?

Posted by Matt Mills on February 12, 2014 at 4:09 PM

Washington DC marketing strategyWhat is the most common advertising question asked by business owners and marketing professionals?  Easy…“How much does it cost?”  That sounds like a simple question, but when it comes to marketing, the answer is anything but simple.

When purchasing a “tangible” product, understanding the cost is much easier.  The new Toyota I am considering costs $32,000.  But with the upgrades, it will be $35,000.  For purchases of hard goods, “how much does it cost” is typically an easy question to answer.

However with advertising, most of it is “intangible”.  When you purchase a display ad on a website, search results on Google, a TV or radio commercial that is produced for you, or even a print ad in a newspaper or magazine, you will often receive in return something you can actually hold, touch, hear, or see.  Your advertising creative may be something tangible, but don’t let that confuse the issue… because what you are truly purchasing (eyes, ears, etc.) is not a tangible product.

For instance, when you purchase a 300x600 display ad or a professionally produced 60 second radio commercial, you aren’t buying the actual advertisement, you are purchasing access to the audience who will see or hear those ads.  That is who will purchase your product. 

What You’re Really Asking…

With this being understood, it’s not the cost of the “ad” that you really want to know.  Instead it is what does it cost to run a successful advertising campaign?  The better question is…”how much will it cost for YOUR company to run a successful advertising campaign?”  That answer is going to be different for every business. 

All (good) advertising is designed to get someone to DO or BELIEVE something…preferably BOTH.  And every company has different marketing challenges and objectives.  In addition, advertisers are all selling different products and services.  For example, on a radio station, you will find advertisers who are trying to sell a $35,000 automobile running next to an advertiser trying to sell $15 pizzas.  So the most effective strategy for a “successful” advertising campaign will vary from company to company… and so will the cost.

So, What Will it Cost to be Successful for My Business?

Before even attempting to answer your question ”how much does it cost?” a good marketing partner will take a consultative approach.  They will spend more time trying to understand all they can about your company, and then they will talk about their advertising opportunities.  The first step is to learn as much as they can about your business… including what a successful campaign would look like to you. That information, coupled with their knowledge of their product, will lead to the development of a targeted idea and include details like length and frequency of the campaign.  With all that information, the “cost” can be determined.  

To provide more context, here is an example of this concept. is a division of WTOP Radio and  We track the renewal rate of our advertisers and there is a clear correlation between investment and “success.”  For the advertisers that purchase the least amount of advertising they can in order to “test to see if it works”, tend to renew only 25% of the time.  Conversely, those advertisers that invest in a targeted campaign, built to their specific needs that effectively reached their target audience, typically renew at a rate of 85% and above.

There is an old saying that applies here…”If you are going to do something, do it right!”  In other words, spend the money necessary to get the ROI you need to make it a success.   Which leads to other applicable sayings:  “You got to spend money to make money”…and “you get what you pay for.”

The takeaway is that when it comes to advertising, there isn’t one cost that delivers results.  But if you have the right marketing partner, then you will be able to develop an effective campaign that is tailored to the unique needs of your business. 

Want to learn more about marketing in the Washington DC area? Download this free eBook written by our marketing experts:

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Tags: Marketing Strategy, ROI



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