What percentage of gross revenue does everyone allocate to advertising. I am right around 6%, just wondering where everyone else is.
2.5% to 3%. I have a small market with little competition.
In my mind the sky is the limit…Now I am not saying spend your money foolishly but as long as any extra money you spend is driving profitable sales, keep spending more money…
If you are spending for example 5% and generating 100,000.00 per month in sales…This is 5,000.00…Try increasing your spend to 10,000 and see what happens…If your sales remain the same then the extra investment is not worth it…But sad to say you will not know until you try…So there is some risk…
But say your sales increase to 125,000.00 per month…This marketing % now becomes 8%…But 8% on 125,000.00 of sales should carry more to the bottom line that 5% on 100,000.00…That is unless you were not profitable on 100,000.00 in sales…
Also important is how you spend your money…Some marketing $$$s are almost disposable…Compare spending 5,000.00 on a “full wrap” for a delivery vehicle versus 5,000.00 on distributing your menus…In some markets your menus can get lost as soon as they are distributed so you need to keep doing them over and over…But a full wrap on a delivery vehicle will still be there for 2 or 3 years…
good post Royster, This worked 4 me
I agree. Full wrap was one of my best marketing ‘investments.’
Thanks for the input. I was considering wrapping a car but just havent done it yet.
I have a bit of an odd belief about marketing budgets. If I give you $500 and you bring me back $505 “new dollars” then I’m happy as long as I didn’t have to do anything more than hand you the money and take “your” money back. I made $5, showed off my product to some new customers and hopefully retained some of them.
I just don’t see falling into a percentage based mindset, if it makes me more money and is worth my time, I’ll take it.
My point was not really about car wraps…It was more pointing out that some marketing investments are more durable than others, therefore, they create more impressions per $ spent…
I tend to follow along with Indie, my percentage is threw the roof…BUT it all has a good ROI. I am ok as long as I see a profit. I have kissed a lot of frogs in the marketing world but I have seen what works and what that doesn’t!!!..I like to keep my name out there and yes there is a wrap in the works as well.
I just wanted to add something to this post.
In the past we have not used box toppers but we started about 8 weeks ago. We used 6250 box toppers in 6 weeks. After about 3 weeks we started seeing the offer ($2 off any $20 or more order) come back in. About 4 to 10 per day. The box toppers cost $270 which is .02% of our sales for those 6 weeks.
In the last 4 weeks our sales have jumped about 8% over last year. If I am correct these box toppers are highly effective in getting customers to return sooner and boost average tickets to a higher level.
The next 6 weeks we will be doing a different offer on our box toppers. I will be able to test to see if certain menu items sales increase by offering a coupon on that specific item.
I thought it best to add some comments to this older thread versus starting a new one…I thought some folks might want to review this thread again…
I got an email today about vehicle wraps…And I added some extra comments regarding magnets at the end…
Vehicle Wraps and graphics are up to 50 times cheaper for the same amount of impressions! A study by 3M concluded that it costs just 48 cents to get 1,000 impressions with vehicle wraps and vehicle graphics. The same amount of impressions on television costs $23.70!
Vehicle Wraps Marketing
Drivers: A Coveted Captive Audience
Americans Spend Nearly 20 Hours in a Vehicle Weekly!
When you participate in vehicle advertising, you’re reaching a coveted captive audience. Drivers spend more and more time in their cars each year. According to the 2009 Arbitron In Car Study, American Travelers spend more than 18 hours per week on the road - a 31% increase in just the last 6 years. Also according to the study, those who drive the most are also most likely to have the highest household incomes.
Commuters Have Long Drives -
A census bureau report published in 2005 reveals that at least 100 of these hours can be attributed to the commute to and from work.
Drivers Remember Vehicle Graphics Ads
Given the large amount of time that drivers spend in their cars, it isn’t surprising that vehicle wraps and vehicle graphics have such a strong impact on consumers.
Studies show that consumers remember vehicle graphics advertising.
97% recall ads on trucks
98% thought the ads created a positive image of the advertiser
96% thought ads had a more impact that billboards
Source: American Trucking Association and RYP and Becker Group
Media Cost Comparison
When it comes to getting the most for your money, Vehicle graphics are by far the most effective way to get your message out to potential consumers.
Take a look at the study from 3M:
Advertising Medium Cost Per Thousand Impressions
Study by 3M
TV Ads $23.70
Magazine Ads $21.46
Newspaper Ads $19.70
Radio Ads $7.75
Outdoor Ads $3.56
Vehicle Graphics $0.48
Now I am a little choked they did not include fridge magnets in their research…So I will make up my own numbers or at least make my best guess…A calendar magnet costs 0.50 to 1.00 each…So I will use the average of 0.75…And then say it gets viewed 10 times a day for 13 months…About 4,000 impressions or about $0.19 per 1,000 impressions…
So in my mind, wraps are good but fridge magnets are better…
It’s very important to track the effectiveness of EACH marketing spend, not just the overall marketing expense as a percentage of revenue.
Track the source of new customers. If customers are coming to you because of your magnets, vehicle wrap, t-shirts you gave away at the school carnival, someone who saw your sign, or any other reason, you need to know how they came to you and the amount of their purchases. You can judge the effectiveness of each campaign by comparing the cost of the activity to the number of new customers it produced and the orders those customers placed with you.
Coupon or discount offers can be effective in two ways -They can bring you new customers (who have a lifetime value, not just a one-time purchase value) and they can generate profit (contribution margin) on the sale of the offer. Count the redemption of these offers and use the medium (ValPack, Groupon, or even a coupon code) to identify the source of the customer.
When it comes time to place another ad, wrap another vehicle or do any other promotional activity you’ll have the information to make an informed decision!
I came across this article on mobile advertising today…
I have always been a fan of well dressed cars/trucks for marketing purposes…
only few pos systems out there will allow you to assign a coupon code to particular campaign so that you can see how many new customers you got to order. And not a single pos or rewards program will let you find out how much those new customers brought you a year after they made first purchase. (i am interested in not redemption rate, that particular week/month amount of sales … but in number of new customer and sales those new customer generated for as long as they were my customers. Example - redemption rate of 0.2% that brought 10 new customers who spent 1k each a year is much better then 10% redemption rate that bought 100 new customers, who ordered just once and never came back. Am i wrong? (in statement that no pos on market has this ability). please tell me i am, because i ve been looking for such pos or some sort of rewards program that would give me this information. How do you mark this particular customer that you got when you handed him fridge magnet on local farmers market (or ran local ad, or put coupons on windshields, or “accidentally” dropped coupons in that office building elevator… and know how much he spent with you (not first time, but overall?
We track both the source of a new customer and coupon redemptions for special offers. A customer’s lifetime value can be correlated with how that customer came to you. If the source of a new customer is a Groupon offer, for example, you won’t be flying by the seat of your pants when you decide whether that tactic works for your restaurant. When analyzing the effectiveness of advertising, in Valpack for example, you can track the redemptions of each coupon code to determine the profitability of individual insertions in the publication.
In your case you can use both a coupon code to track redemptions, and a separate customer source for each offer to track the source of the new customer.
Groupon, Living Social, Etc do not work to build your business. If you were ever consider a tactic like that do it on your own - the fees for someone else to get rich off you is just not worth it. Even if you bring in customers they are only there because they are CHEAP. Most of the user are people that can afford to spend more and WILL if the value and quality are combined with KILLER service.
I agree 100%! I should have used an example that wasn’t so emotionally loaded. The point I was trying to make is that building a business with promotional activity requires analysis. Starting, continuing or discontinuing any promotional activity requires facts. An “educated guess” is still a guess.