Internet advertising recently surpassed TV advertising.
When budgeting for advertising/marketing, where does the majority of your money go? Internet, TV, radio, direct mail, etc.?
Liz Barrett
editor at large
PMQ
I budget 5% of gross sales - direct mail (3%) radio (1%) Food cost- promoting catering for corporate lunch businesses (1%)
Our marketing budget has varied between 5-7% of sales broken down roughly as follows:
Newspaper: 20% (Includes several advertising products they sell)
Internet: 20% (Website and Facebook but does not include online ordering related costs)
Direct Mail: 10% (Both our own and coupon book)
In lodging rooms: 10% (Resort market. In-room guides)
Menus and box toppers: 10% (Printing and distribution to brochure racks for menus)
Coupon books: 10%
Yellow Pages 10%
TV: 0%
A few years ago the yellow pages would have topped this list. These numbers are all rounded and off the top of my head. The missing 10% is contained in those rounding errors. Donations are not in here. We just write that off to COGS. On a food cost basis, I guess they would come to another $1500 or so.
I am waiting to hear from all the folks that use fridge magnets & stadium cups…lol…Kidding aside, IMO printed menus should be high on the list using as many different methods of distribution as you can find…The next thing on the list is vehicle graphics…Despite their cost, full wraps (or nearly full wraps) have considerable impact…
Curious what people spend on database marketing vs. EDDM.
And although they’re less of a budget factor, how important are email and social media in relation to other marketing activities?
We do have car toppers and magnetic signs for the cars but it has been a long time since we got them so they slipped my mind. Not part of my budget this year or last. The challenge I have with fridge magnets is getting them to the customer! How do you do that?! I bought a bunch of them and still have them!
I just today got quotes for EDDM mailing vs saturation mailing. EDDM was more expensive both for the postage and for the non-standard size printing. In other words, I can print and mail a post card to every single address in our town for less than I can do the EDDM mailing to the same customers. Yes, I “waste” about 1000 pieces that go to addresses outside my delivery area but the actual total $$ spent is about $350 less. I guess in a larger city it would be a different story.
I find direct mail is very effective for driving first time orders and especially for driving orders to our on-line system where I capture the email address and can then communicate directly for free.
While not a large part of our marketing budget, I view magnets as a very important part of my marketing effectiveness. We include a magnet with every order, it’s just part of the persons job who is cutting the oven. A business card sized magnet is slid in where the front of the box closes. At my store that I’ve had for 17 years, if we run out of magnets for a short period, it feels awkward to box and cut a pizza and not slide a magnet in.
Other ways of distributing them that have been successful for us: When doorhanging apartments with metal doors, put a magnet on the door as well as a doorhanger. Every time you mail something within your delivery area, include a magnet. When apartment complexes ask for coupons for their move in packets, give them magnets to include as well. Put a few on each of your delivery vehicles and your customers will “steal” them and put them on their fridge.
We budget 1.5%
That includes, Menu, magnet and other box toppers, uniforms, car signs, widow decals, menu boards, donations, sponsorships, and online web hosting and support.
None of these add up to much percent wise so our advertising cost is very low.
David
We use about 5% budget that is split between sponsoring Four baseball and softball teams. Event sponsors for a wrestling tournament and a little league tournament. Advertising with 6 area schools for sports like basketball and football. We do contests at halftime for $20 gift cards at area sporting events. The 5% budget includes weekly direct mail of our menu flyers. And we do over 100 fundraisers a year with our take and bake strombolis (menu flyers included in the box).
Fundraisers have become a huge part of growing our sales. Since our Governor cut school funding we have been helping so many schools in PA and on the east coast. Word is spreading fast, we are now being asked to do the same for churches, dance groups, and other various groups.
PP, I just ran through the list of marketing items you mentioned, and with the exception of decals we do all those things although I never thought of uniforms as marketing. I came up with a similar percentage of sales cost (1.6%) for those items. What I don’t understand is how you manage to not do any other marketing? For us, those little items are just 1/4 of our marketing spend and in many cases are just reaching your existing customers (box toppers, uniforms, menu boards, magnets, website) Are car signs so effective for you in recruiting new customers that you do not need to market for them?
One of the best marketing practices the we use is a magnet that is shaped like a pie that has 8 slice magnets each, for each and every pie that goes out we put one in the box. Collect 8 magnets gets free pizza. On the magnet its self it has our web site. phone # logo and the offer. Loyalty rewards. Also they work well in gorilla marketing, everywhere I go I keep some in my pocket and stick them anywhere, gas stations, grocery stores, the mall, or just hand them out to people and tell them there only 7 magnet away for free pizza. It really works. Off the wall magnet do them for me. .68 for one magnet of eight slices.
Tony I have some clients that also do the same thing…But I have never understood giving away free pizza…Say you used the 3.00 it costs you to give away a pizza and gave a t-shirt or travel tumbler instead and sold the pizza for 10.00…By my math you are ahead 7.00 and get some continued marketing exposure…Maybe my numbers are a little off but I hope you get my point…Or rather than giving away a free pizza, give away some add-ons with their next order…Still should put you ahead a few $s…And does not “discount” you pizza or deflate your cash flow…
Royster, some of my clients use the pizza slice magnets too. I like your thinking, but the trouble with using a T-shirt, etc., as the reward is that it only works once—and some people won’t be interested at all. With a free pizza as the prize, the magnet promo keeps on working: after redeeming a set for a free pizza, the guest starts collecting the next 8 magnets.
It’s a basic loyalty program…the incentive to order again gets stronger as the magnets accumulate on the guest’s fridge—so they order more often Like any promotion, it only makes sense if the numbers line up in the black—but some operators swear by it.
Customer Appreciation can be expressed in many ways, and sometimes it costs more than others. What I council our clients is if you intend on giving something away free, be sure that it has promotional value for you.
What if you received your customer’s permission to:
[LIST=1]
[]Take their picture with you, your pizza team and the pie.
[]Post that picture along with an interesting paragraph on the various social media sites?
[*]Posted on the customer’s Facebook page, “I just received a free pizza from (business name here) located at (address). Visit them today to start earning your free pizza!”
[/LIST]
Then think of the cost of opportunity. What could you have done with those three marketing dollars ($3.00) that the pizza cost you that could have provided better customer appreciation, more goodwill to bring that customer back the next time and reached as many new potential customers?
Consider these statistics:
“50% of customers never return if left alone, over a 5 year period.” ~ Bain & Co.
“Up to 15% of a business’s most loyal customers account for 55-70% of the company’s total sales.” ~ Center for Retail Management, Northwestern University
“80% of your company’s future revenue will come from just 20% of your existing customers.” ~ Gartner Group
“It is 6-7 times more expensive to acquire a new customer than it is to keep a current one.” ~ White House Office of Consumer Affairs
“The probability of selling to an existing customer is 60 – 70%, while selling to a new prospect is 5-20%.” ~ Marketing Metrics
“A 5% reduction in customer loss can result in a 25% to 125% increase in profits.” ~ Bain & Co.
In the question of where to invest your marketing dollars, reinvesting in your existing customers is always the best place to start.
I spend about 500 .00 a year, only for one company who puts our menu in vacation rentals,about 1/10 of 1% of gross on advertising,put the rest in my pocket and concentrate on cooking good food and customer service, !!! it works great !!! i seem to do a lot of things differently than most folks here, probably from ignorance !
My father was the same way. If it works for you, don’t change a thing. When I bought the business I changed our marketing budget to 3% max. That has doubled our business and then some. If you ever need more business, you know what you can do…marketing.
We spend about 4% of sales on marketing.
60% is direct mail
35% is newspaper
5% other.
Being part of a small regional chain there is “corp advertising” which is spent 20% in TV on the Altitude Network for Nuggets and Avalanche games and some spots on Fox 31 right before prime time. The other 80% from them goes into a monthly RedPlum and Valassis MegaSheet.
My personal marketing budget is divided into 2 camps - EDDM Menus of which I hit my 1/2 my areas over an 8 week stretch then take 8 weeks off then hit the other 1/2 for 8 more weeks and repeat the cycle.
My other monies are pushed into SERVICE as a marketing vehicle. Adding extra drivers when the “sales/pie hours” say I need 10 I schedule 11. Adding 1 body inside too.
Some days I feel like I just throw the money down a rat hole…
Half of all marketing works… I wish I knew which half!!