How Much Should Retailers Spend on Advertising?: An excerpt from “How to Advertise your Retail Business.” by Gary Wright.
“I was seriously concerned about spending that much money in such a short period of time in advertising. But actually we found that we came in significantly under budget. … Our percentage of advertising dollars spent against sales, were less than what we’d normally spend because of our sales volume increasing so tremendously…”~G.A.Wright Client – Steve Stebbins
Most retailers spend 2% to 3% of gross sales on advertising. However, advertising
expenditures vary from nothing to about 10%.
Many small stores in regional malls don’t spend anything for advertising. Actually, they
do, but it’s included in the rent. The large anchor stores pull the traffic that keeps the smaller stores alive.
A store in an isolated location obviously must spend more. Advertising also varies by
type of merchandise. Furniture retailers, for example, spend about 5% on average.
As a very broad “rule-of-thumb” advertising percentage plus rent percentage should be
about 10%. So, if you’re spending a lot on rent to get a high traffic location you should spend much less for media advertising.
The advertising mix depends on the media available in the market area. Is there a good
newspaper? Is a directory service available that has online exposure? What about radio, cable and television? Outdoor advertising is also a possibility. Can pay per click advertising on various search engines create more traffic? Is a website necessary? Can direct mail still be used effectively? Is email advertising important?
I will give you many answers to these questions if you call to order the full free report “How to Advertise your Retail Business.” 303-333-4453
At one time most retailers could get by with a combination of direct mail, newspaper
and Yellow Pages advertising. It is now more complicated and in most cases depends on the availability of advertising media in each market.
“We learned that the goal of advertising is to create traffic and the result of increased traffic is that it generates sales.”~G.A. Wright Client — Billy Birthrong