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Advertising Advice
How much should you spend on advertising?
This is
probably the most fundamental question with all advertising activity - what you
should sensibly invest in advertising. The answer to this is actually relatively
simple to calculate in many cases.
Here is a fictitious example which may help:
A client has a new service which is sold on their website. The service costs £5
to provide so long as 1,000 are sold. So in order for the client to break-even
he needs to sell his product for £5 and needs to achieve at least 1,000 sales.
An advertising agency is hired by the client and following their analysis the ad
agency recommends that the service can be sold for for £20 and 5,000 sales can
be achieved by investing £5 in each sale - this is an advertising budget of
£25,000. So, 5,000 sales bring in £100,000 of which £25,000 is advertising
cost, economies of scale make each product now cost £3 (from £5 when only
1,000 are sold) that's £18,000, total cost of sales is £43,000 - profit
£57,000. Without the advertising there are 1,000 sales at £10, cost of sales
is £5,000 - profit £5,000.
The above example highlights two factors to consider when setting advertising
budgets;
1. How many additional sales can be achieved by the advertising spend?
2. Can the product price be increased by advertising in a positive way to
increase the perceived value of the product.
If the advertising spend increases both sales and the price of the product
or service then the effective net cost of advertising can actually be free.
New ad agencies
We want
to be a showcase for new talent, if you are a new agency
and want to showcase your talents on this website please
email details to: showcase@advertising.uk-directory.co.uk
List of UK Ad
Agency Links
Our quick list of the
UK Ad Agency links will be added to soon;
List of Advertising Agency links:
The Creative Advertising Agency
Source: The UK-Directory Search.
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