Home-based entrepreneurs often cover initial advertising expenses with personal income.
Advertising can be one of the most expensive components of a comprehensive marketing campaign, and the cost of advertising can increase in tandem with the number of people reached by specific media outlets. Marketers use strict advertising budgets to govern their spending. Understanding calculate business advertising costs is an essential skill for developing a budget to keep your spending under control and maximize the incremental profitability gained from marketing campaigns.
Instructions
1. Develop an advertising strategy laying out exactly which advertising media you plan to use. Set down a plan for the relative weight of each medium in your plan, as well as the frequency at which you wish to use each medium. Determine the size, length and other cost-driving characteristics of the messages you plan to send through each media. All of these decisions will affect your calculations in later steps.
For example, you might choose to focus 75 percent of your campaign on television advertising at three exposures per day, per outlet, and 25 percent on magazine advertising, at one ad per month, per outlet.
2. Choose a number of specific outlets to pursue within each advertising medium in your strategy. Select outlets whose target audiences most closely match your own. These are some of the most important decisions you will make throughout the entire campaign -- getting your messages in front of the right people, via the right specific outlets, is the key to advertising success.
To continue the example, you might select three local television stations, three national television stations and two regional magazines.
3. Contact the specific outlets you wish to work with to determine the initial costs of your advertising campaign. Introduce yourself to a representative from each outlet who handles advertising sales, and request a detailed pricing schedule for all of their advertising options.
4. Negotiate with each outlet individually to reduce your costs in some way. Schedule in-person meetings with your contacts whenever reasonably possible to strengthen the relationship between your two companies. Offer volume agreements, exclusivity agreements or other incentives to achieve lower prices from individual outlets.
5. Add up all of the final price quotes for all outlets in all media included in your strategy. Create an itemized list detailing the specifics of each advertising purchase, and keep this list on hand to calculate the relative cost-effectiveness of each outlet during and after the campaign to guide future media-buying decisions.
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