How much do companies pay for advertising

It is true that nowadays the internet has become the most effective way to advertise any business. However, everybody wants to know what are the true costs and how much companies pay for advertising. Well, the numbers depend on a couple of factors. That’s why we are here to tell you all about it. Learn how much your business would need in order to advertise well online!

money companies pay for advertising
Before investing in marketing, learn about how much companies pay for advertising

What’s the average?

Well, the average number that small businesses pay for advertising depends on the industry we are talking about. For example, industries like furniture stores, jewelry, leather goods stores spend around 4.4% of their revenues on advertising. Next, we have real estate business that spends a bit less – around 3.8%, while restaurants or specialty food stores spend around 1.9% of their revenues on advertising. The bottom line is that on average all industries pay 1.08%.

Should you follow the average numbers of how much companies pay for advertising?

Well, no. The numbers you read online are not the strict rules you should follow. The average numbers shouldn’t be the main factor in how much you will spend. This is highly individual and is different for each small business.

calculate how much companies pay for advertising
Even though the information on how much companies pay for advertising can be helpful, it doesn’t have to be a strict rule.

What are the factors that you should consider?

When thinking about how much companies pay for advertising and creating your own advertising budget, there are some factors you should consider. But before that consider these factors:

  • Consider the past results – You should rethink your advertising plan and see what works for you better – online vs. offline marketing? See what was successful in your business before, and be sure to follow it.
  •  Determine the size of your business – not every business is the same. See what are your revenues and be real about how much you can spend.
  • The development stage of your business – see where your business is at. If you are a startup, you can spend even 10% on advertising in the first 6 months, like an investment. Later, as your business develops, you’ll see if it is necessary to spend less or more.
  • Set your goals and marketing objectives – you need to know what are your targets, and how much it will take you to get there. Don’t spend money on something that will not attract the right audience.
  • Always keep an eye on the competition – see what are the marketing plans of your competitors and how much these companies pay for advertising. This way you will see if you can and should do the same.
advertising online laptop
Make the advertising plan and see what are the reasons companies pay for advertising

How to spend wisely?

The best way to run your marketing finances successfully is following a plan. It is very easy to waste money by paying ads randomly or if you see others do it. Make sure to create your marketing plan and you should stick to it. This plan should include:

  • the messages you want to say and promote – don’t just pay ads for random things, but only those that are relevant to your business.
  • ways of promotion – decide what are the best ways to promote your business and focus on them. Be sure to understand all the different ways of advertising your business so you can be sure what suits you the best.
  • goals – set your goals and target audience and do everything to reach them, rather than wasting money on something irrelevant.

Advertising online – average costs

If you are new at this, here are some online ad costs you should know about :

  • The average cost (per click) for Facebook ads is $1.72
  • The same thing on Google Ads (Adwords) costs $2.32
  • The average Facebook CPM (cost per 1000 impressions) is $7.19, while on Instagram you need to pay around $5.
  • if you want to promote very competitive and used keywords, you need to pay a bit more – $50 or more, per click.
facebook page on a phone and a laptop
Online advertising is a great way to promote your business

You should know that average costs change due to the shift in the popularity of social networks. Therefore, you may find that Instagram ads are getting more pricey recently.

Traditional advertising

Even though online advertising seems to be more popular and effective these days, traditional ways of promoting a business should be overlooked. Offline marketing includes TV and radio ads, billboards, prints, etc. However, with these ways of advertising, you also need to have a clear target and goals. That way you will be able to target the right people – if you know your target well.

offline advertising billboards
Traditional ‘offline’ advertising can be effective as well

Which way is the most cost-effective?

When you think about how much companies pay for advertising, think twice – the right way of advertising is much more important. If you consider all the factors, along with the price and effectiveness, some of the advertising options prove to be the most cost-effective. These include PPC Advertising (pay-per-click advertising), SEO, emails and content marketing. The reasons to choose these options is that you will pay less and get the precise advertising that will reach the targets you actually need.

Know what you are advertising – brand your business well

Talking about the costs of advertising, you need to have something to advertise. Therefore, proper branding is necessary. Don’t worry you can easily brand your business on a budget. Just be sure to have a proper logo, website, social media profiles, etc. so you can advertise your business easily.

Learn how to improve the marketing of your company

Finally, all these numbers are just – numbers. How much companies pay for advertising doesn’t need to be related to your business, even though it is a great reference. Focus on improving your company’s marketing. Be sure to have an interesting and relevant website, use the social networks the best way possible, gain a reputable status in the business, etc. Learn how to help your business the right way.