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Determining Ad Size
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Determining Ad Size

Get more readers seeing your ad
Get more readers reading your ad
Get more readers responding

The traditional approach to determining ad size and overall budget is not one that we particularly agree with (we'll get to our approach soon), but we'll take you through it anyway.

When using this approach, you first set a yearly budget based on a percentage of your gross annual sales and then divide that amount up between the weeks and months in the year.

What percentage of your gross sales? That depends on your type of business. Your national trade association may be able to give you an average percentage of gross sales that your size and type of business reinvests into advertising.

If you have a daily newspaper in your area, it might have--and even give you--the Newspaper Association of America's Advertising Planbook, a spiral-bound datebook that also contains these percentages for various industries.

On average, businesses reinvest somewhere around 3% to 5% of their annual gross sales back into their advertising, but it can vary depending on your market and how long you've been in business.

So, if your annual gross sales total $100,000, and the average percent of gross sales that a business your size in your industry reinvests in advertising is 3%, then according to this approach you would set aside $3,000 for advertising next year.

The next would be to spread this amount out over the year, spending more of your budget during the busier months and less during the slower months. The idea is that your monthly advertising expenditures should mirror your typical revenue for that month. So, if
18% of your sales are made in November, then 18% of your advertising budget should be spent in that month. And if only 4% of your sales are made in July, then you should only spend 4% of your budget in that month.

If you're wondering what is typical for your business, the U.S. Census Bureau has statistics on the month-to-month selling cycle for a variety of business types.

Once you determine your monthly advertising budget, now it's time to fine-tune it even more by dividing it by 4 (or 5, if it's a 5-week month). Once you decide on the advertising medium in which you'd like to run, you'd then simply divide the weekly budget by the advertising rate.

Therefore, if you went through this process and found that you had a weekly budget of $600 one month, and the rate was $75 per column inch, then each week you could run an 8 column-inch ad, which would work out to a 1 column x 8 inch ad, or a 2 column x 4 inch ad or two 1 column x 4 inch ads. More information on rates and calculating the cost of ads can be found in our 19-page guide to reading a rate card.

So that's the traditional approach to determining an advertising budget. There are a number of problems with this approach, however, that we'll discuss on the next page.

Next: Why the traditional approach rarely works


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