How much will advertising expand enrollment? Will it amount to an increased market share at the expense of a lower net income?
“Easier said than done!” is the best way to describe the process of estimating just how much money you must allot to promote consumer awareness of your business and keep your name before the public. Small to mid-size businesses tend to decrease or even eliminate their ad budgets when enrollments dip and bolster them when enrollments are high. On the opposite end, large businesses tend to increase ad budgets when enrollments dip.
Some teachers set ad budgets based on leftover funds. Or they judge past enrollment rates and estimate their ad budget based on a fixed percentage of sales. Advertising is not a luxury. Consider it a fixed expense as hard as your rent or utility bill.
Establishing Your Budget
Fix an annual budget and set the amount you can spend on each phase of the campaign. Build a detailed budget accounting system to determine how your money will be distributed to accomplish your key objectives. Ask yourself, “Where is my advertising dollar best spent? Where can I make the greatest sales impact with the least expenditure of time and money?”
Consider not only your advertising costs but also costs associated with promotional materials, brochures, flyers, newsletters, etc. If you want to grow, you must be willing to allocate sufficient sums of money for promotions and advertising. It is not uncommon for successful instructors to spend between $500 and $750 per month for a media mix of online and offline ads and promotions.
Commonly Used Methods
1. Percent Of Sales
The average is about 5%. Take your total sales income, and multiply it by the percentage given to get an approximate figure. A problem with this method is that it suggests marketing is based on sales. In reality, sales are a direct result of marketing.
2. Leftover Funds Method
This is not the way to go unless you are starting out and have no other alternative due to a shortage of capital. People who determine their promotional and advertising budget based on what they think they can afford, assume that marketing is a non-essential part of business. They couldn’t be more wrong.
Advertising and promotion are necessities if one is committed to being financially successful.
3. Meet The Competition
“Let’s match the competition dollar for dollar.” Problem is, you’re assuming they’re doing everything right, which may or may not be the case. We’ve seen a number of instructors over-advertise themselves right out of business because they did not take into account their own individual requirements.
4. The Project Method
Define your sales goal for each project you undertake, and determine how much money it will cost to achieve it. If for example, you get a 1% return on flyers and you want to elicit ten responses, you will need to deliver at least 1,000 flyers to your targeted area. If the flyers cost you $30.00 and you pay someone $20.00 to distribute them, your total budget, based on your desired response objective will be $50.00. If you plan to do this six times during the year, you will need to allot $300.00 (6 x $50.00) for flyer campaigns. This method is discussed later in this chapter under the sub-heading, “Applying The Above Information To Your Advertising Budget.”
5. Ad Allowance Per Student
The ad allowance is helpful. If you know from experience that it costs $20.00 to sign up one student, then you will be able to come up with a sound ad budget.
For example, in order to make $150,000 a year or more, you decide you must give 40 introductory lessons per month and sign-up 30 new students. To attract 30 new students at a conservative cost of $20 per student means that your ad budget should not dip below $600 a month.
Which Method Should You Use?
Based on thousands of conversations, I think the majority of business owners must throw darts to determine their budgets!
The only way you can set the right marketing budget is to reverse engineer exactly what you want to happen. The step-by-step process outlined here will allow you to look at budgeting and meeting budgeting goals in a powerful new way a way that directly connects everything you do in the name of marketing to a specific and tangible result.
You cannot increase business by spending less on marketing, although you don’t always have to spend more to get the results you want. Often it’s just a case of spending where the response is greatest and NOT spending where there is no direct or tangible return.
The only logical way to determine an effective marketing budget is to work it backward from your sales goal. How many leads will it take to reach that goal and how much will it cost to generate that many leads? Any Other Way Of Budgeting Is Pure Fantasy!
Set priorities based on the relative importance and anticipated profitability of each project. Take a look at an entire year and determine what projects will come up and when. You can use past sales history as a guide. Determine how you will handle holiday and seasonal slow periods. Aggressive marketing can smooth over the cash flow during these times. Stay Flexible.
What To Expect From An Ad
First, you must make sure you have chosen the right ad for the target audience you are trying to reach. Refer to the appropriate chapters in the sections on Advertising and Marketing if you have any doubts at all. Assuming that you have chosen an appropriate ad from Appendix C in the back of this manual, what type of response should you expect? Well, that, of course, depends on several factors. We know you have a good ad because you are using one from the manual, but how good is the medium in which you have chosen run the ad?
In some areas local newspapers are very well read; in others, they are not. Make sure yours is read by asking current students if they read it, and other local businesses that advertise whether or not they are getting an adequate response. You find out that they are getting a satisfactory number of calls, so you decide to run a 4”x 4” ad and you call the sales rep and ask them to drop by. Not so fast! Did you pick the right day to run your ad?
Number Of Insertions
By running an ad one time, especially in a daily or weekly publication, your ad only hits the people that read that publication that day or week. By running smaller ads a number of times over a period of a month, you can reach two to three times the amount of people, thus increasing the visibility of your business.
The timing of your ad is also very important. Run it in the New Year and you will get 15 – 20 calls; run the same ad around Thanksgiving, and you may be lucky to get 2. In the business of golf instruction, it’s best to avoid holidays when planning an ad campaign. January through October will produce significantly better responses than the remaining months in most parts of the country. This does not mean that you should not advertise in the other months, only that your expectations should be lower.
Another major factor that can affect the success of your print ad is where the paper decides to place it. In many papers, you can pay extra for premium placement, in others its potluck. If your ad appears on the front or back page, you will dramatically increase your level of response. If you are on page 3, right next to a picture of the winner of last night’s Miss Cornbelt contest, expect an increase in calls, especially from men!
On the other hand, if your ad is buried at the end of the paper next to an ad for Jones Funeral parlor, the response will be down. If your ad runs on the same page as that of another instructor, even if your ad is better, (which it is), the response will drop a little.
If your ad runs in the same issue that runs a story about a scratch player going crazy and killing six people in the clubhouse bar with a four iron, don’t wait by the phone! The point is this; even with a good ad, the response can vary depending on several factors, some of which are beyond your control. You can be sure, however, that these factors will balance out over a reasonable period of time.
A good ad, run in the right media at the right time, should draw at least 5-10 calls and more if certain factors are right. Now it’s up to you to turn on your sales skills and convert these calls to students.
The section on Sales will tell you what you need to know in that area.
What About Flyers?
The same timing principles that apply to ads, apply equally to flyers. They work better some times than others. The throwaway rate with flyers is huge because you have no idea who you are targeting if you simply leave one on the windshield of a car in a supermarket parking lot. A better idea is to hand out flyers directly to people. At least then you can weed out the very old and various other groups who are not likely to have much interest in golf.
Typically, you can expect about a half a percent to one percent response from flyers. Now, if you pick the last little league game of the season to give out your flyer to ten teams of kids with nothing to do next Saturday, bingo, the response may go way up. Other gatherings that will increase response among children include church and school carnivals and holiday parades. As with any other form of advertising, careful thought and selection will pay off.
So if you give out 1,000 flyers you should get 5-10 calls but don’t expect them all at once. Despite popular belief that all are trashed, one or two will find themselves pinned up on the refrigerator for future use.
Applying The Above Information To Your Advertising Budget
The above information can help you to determine your advertising and promotional budget based on your desired sales objective.
Using the project method to set your advertising budget, you must first take into account that your sign up figure is not the same as your response figure.
For example, if your desired sales objective is to sign up 30 new students from a particular advertising campaign and your closing rate is 70%, you will need to elicit a minimum of 43 responses. (43 x 70% = 30). If you estimate your response to be 5-10 inquiries per week from a quarter page ad, you will need to run your ad for a five to ten week period. Taking the cost of the ad times the number of insertions will then give you your media cost. To this you must add any costs you incur in the production of your ad, which should be minimal if you use the stock ads provided in the Advertising Appendix.
Note: You can alter the number of insertions necessary to accomplish the goal by going to a larger size ad.
- Our experience shows that when advertising in a single medium for extended periods of time, your response will be greater if you change ads every three weeks.
- A larger ad regardless of medium (magazine, newspaper or website) will pull more than a smaller. If your budget permits, you can get more responses over a shorter period of time by increasing your ad size from say, a quarter page to a half page.
For all practical purposes, a half page ad will be just as effective as a full page ad when you factor in the number of responses versus the increased cost of the larger space. Of course, you may come across exceptions to this rule of thumb.
Whether you base your advertising expenditure on how your business performed last year, or use a budget system based on research, or make a ‘seat of the pants’ decision, always remember that a well-planned advertising investment can give your business the fighting edge in the battle for enrollments.
All The Best,