By David Ciccarelli
July 22, 2008
Do you have a marketing budget?
Deciding how much your marketing should cost - including how much should be invested in making sales grow - and how that amount should be allocated is completely up to you, the professional voice talent.
Advertising costs are a completely controllable expense.
Marketing budgets are the means of determining and controlling this expense by dividing it wisely among different strategies, marketing channels and service providers.
To Build Sales, Advertise
If you want to build sales, it is almost certain that you will need to advertise.
How much should you spend? How should you allocate your advertising dollars? How can you be sure your advertising outlays (expenditures) aren't out of line?
A marketing and advertising budget helps you set how much you have to spend as well as how you are going to spend it.
What you would like to invest in marketing and what you can afford are seldom the same. Spending too much is obviously an extravagance, but spending too little can be just as bad in terms of lost sales and lowered visibility.
Costs must be tied to results. You must be ready to evaluate your goals and assess your capabilities - a budget will help you to do exactly this.
Percentage of Sales or Profits
The most widely used method of establishing an advertising budget is to base it on a percentage of sales. Advertising is as much a business expense as, say, the cost of labor and should be related to the quantity of services sold, such as billable studio hours, or total revenue from voice-over projects.
In the short run a voice talent might make small additions to profit by cutting advertising expenses, but such a strategy could lead to a long term deterioration of the bottom line.
By using the percentage-of-sales method your marketing spending is directly proportional to the amount of money you are earning as a voice talent. Profits, especially over the long run, should also show an increase, of course, if your advertising outlays are being properly applied.
You can guide your choice of a percentage-of-sales figure by finding out what other businesses in our industry are doing. This is known as the "ratio of advertising expense to sales". These percentages are fairly consistent within a given sector of business.
As a point of reference, Microsoft currently spends 18%-19% of its revenues on marketing their company.
Other technology companies surveyed [PDF] have reported an overall average of 20.7% of sales reinvested in advertising and marketing, with some companies spending as much as 26%.
Alternatives to Traditional Advertising
The book "The Fall of Advertising and the Rise of PR" makes a persuasive argument that small businesses should avoid costly advertising such as print campaigns and mailers, and focus on public relations as a means of attracting new customers and growing their business.
The Bottom Line
If you're a voice actor and earning $50,000 per year, then it's wise to invest 20% of your earnings, which equals $10,000 in marketing.
Do You Have a Marketing Budget?
Add your thoughts by leaving a comment below.
Â©iStockphoto.com/muharrem Ã¶nerRelated Topics: advertising, Amazon, business, industry, marketing, Microsoft, public relations