For Managers
Sales Meeting Tool Kit

How much should you spend on advertising?

Here’s how to budget for better results

It’s not always easy to identify the right amount of financing to set aside for advertising each month, whether you’re a broker or a sales associate. But there are some rules of thumb you can follow to make building your advertising budget less daunting and less risky.

The place to start is to compare your sales to advertising on a month-to-month basis from last year’s numbers, says the Newspaper Advertising Association. Plot two lines--advertising dollars and sales—on a month-to-month graph, or “fever chart,” and see whether the two lines track one another for the year, or are too far apart; if the latter, you may
be missing sales opportunities by advertising too early or too late. Once you’ve made the comparison, you can see where and when to allocate your monthly advertising dollars to track favorably with sales volume so you are taking advantage of the market at peak selling times.

Before you set your ad budget, you should know and understand your competition, analyze your performance, note the length of the selling season compared to last year, and watch for selling trends, such as a preference for homes with ISD lines, new mortgage instruments, and shifts in demographics that may bring different buying populations to town.

After you take the accompanying “One-Minute Advertising Budget Test,” you’ll have a practical standard to gauge your advertising budget for the year. Now you are ready to forecast how much you should spend each month.


ONE-MINUTE ADVERTISING BUDGET TEST
This test is easy and only takes a minute. It will help you determine how much to budget for advertising.

Next to each category, check one of the three answers. Then write in the corresponding points (1, 2, or 3) on the space provided. Add up the four numbers and consult the box at bottom.

1. I am in a location that has
____ high traffic 1 point
____ average traffic 2 points
____ low traffic 3 points POINTS_____

2. My company’s awareness in the marketplace is
____ high 1 point
____ average 2 points
____ low 3 points POINTS_____

3. Amount of competition
____ few competitors 1 point
____ average 2 points
____ many 3 points POINTS_____

4. My company’s emphasis on price is
____ little 1 point
____ average 2 points
____ high 3 points POINTS_____

TOTAL POINTS_____


RESULTS