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How to decide advertising spend for your small business

Whether you’re in the process of starting a new small business or already have one, you may already understand the importance of having a strong online presence for your brand. You might be concerned that promoting your business online will come at a hefty price, especially if you’re a small business and the budget for advertising spend may be limited. The good thing is that small business advertising can still deliver results without a corporate budget. It may just take a bit of planning before launching your next campaign. Before throwing money at various advertising platforms and tools, there may be some value in developing a small business advertising budget and plan to avoid overspend.

Until you have a strategy in place, the amount your small business dedicates to advertising spend is moot. We will review how to build an advertising budget that aligns to your business’s needs and that can generate success for your brand, whether that be by gaining more customers, more clicks or more profit.

How to create an advertising budget

Your advertising budget is both informed and dictated by your advertising plan and, without one, you could potentially overspend and affect your broader small business budget, or underspend and not reach the customers you want. The following steps can help guide you when creating a small business advertising budget:

  1. Create specific, actionable goals. One of the most important goals for a small business when advertising is to increase sales. However, creating more specific advertising goals can help you create a more effective strategy and budget. Some examples of specific goals might include: increasing foot traffic in your store by 30% during a weekend event, or increase social media visibility for your brand by at least 20% in 6 months.
  2. Know your operational costs. No matter what your goals are when devising your advertising budget, consider what current or anticipated operational costs (i.e. web hosting, content outsourcing feeds, labor, social tools and platforms) it will take to execute these goals. With a better understanding of what tools you’ll utilize and how you’ll execute your advertising campaigns, you’ll have a better idea of costs.
  3. Measure what matters. When creating ad campaigns, you will want to leverage advertising metrics that can showcase how your campaign is performing based on the goals you already established. For example, automated bidding from Microsoft Advertising gives you flexible, advanced tools to maximize your advertising spend while increasing conversions, clicks or any other goals you established.
  4. Test, revisit and revise. Once you’ve decided on what you’re willing to spend and for what types of online advertisements, continue testing and revising both your advertising spend and strategy. If certain ad campaigns are underperforming compared to others, then consider investing in what’s working, or plan to make adjustments to the ad itself. Our Shared Budgets feature makes it easier to match your Microsoft Advertising spending with how your business allocates marketing budget across multiple campaigns.
  5. Consider current and future trends. Part of the revision and testing process also means thinking about how consumer trends shape your advertising strategies. Not only can the way a consumer interacts with your brand change on a dime, the tool or piece of technology they use to interact with your brand can evolve. So, you as a small business owner must evolve with them.

No matter where your small business advertising strategy takes you, it’s important to remember that you can have ad spend that aligns with your goals and doesn’t come at a huge cost. Before building your next online ad campaign, consider these different techniques and benefits to help you make the right choice for your business. Extend your small business reach with Microsoft Advertising. Learn how our small business advertising solutions and tools can help boost your advertising performance.