Thinking About Increasing Your Advertising Spend? Keep These 5 Considerations in Mind

Some of your main goals as a business owner are to boost sales and increase revenue. One way to do this is to increase advertising spend. But is hiking up the money spent on advertising worth it for your company? Ask yourself, Should I increase my advertising spend? and keep a few considerations in mind before making a decision.

Increasing advertising spend: 5 Things to consider

The decision to increase advertising spend shouldn’t be willy-nilly. The choice should be well thought out and researched. Otherwise, you could wind up wasting precious funds (and no business owner wants to do that). Before you make the leap and increase your advertising spend, consider these five questions.

1. What are the pros of increasing my advertising spend?

There are plenty of advantages to increasing advertising spend if you go about it the right way. So, what kinds of benefits could your business reap from increasing advertising? Here are a few advantages:

  • Builds brand awareness
  • Helps boost sales
  • Educates consumers about your business
  • Helps you stand out amongst competitors
  • Increases traffic to your website
  • Reminds existing customers about your business

Of course, advertising has to be done wisely to be effective. For example, if you’re advertising on a radio station that your target audience doesn’t listen to, you are likely going to waste your advertising budget. 

If you plan on increasing ad spend and want to see these perks come to life, do your research ahead of time (e.g., market analysis). That way, you can make sure you know which platforms and advertising options are best for your business. 

2. What are the disadvantages to increasing advertising spend?

Likewise, there are a few cons you need to be aware of when it comes to increasing your advertising spend. 

Some disadvantages of increasing your ad spend include:

  • More risks
  • Increased costs 
  • “Too much” business
  • Can irritate potential or current customers (over advertising)
  • Can confuse buyers

Obviously, with increased spending comes additional costs. And sometimes, those extra costs aren’t worth it in the long run. Along with more expenses, you take on more risks when increasing ad spend, such as over advertising, wasting funds, and potentially confusing buyers.

Before making any decisions about increasing your spend, consider the cons (and pros) of it. And, ask yourself if taking on said pros and cons is worth it for your business. 

3. How will it impact my budget?

Is there room in your business budget to increase advertising costs? Or, are you barely skating by as is? Considering these questions is a must when contemplating an ad spend increase. 

The U.S. Small Business Administration (SBA) recommends spending 7% – 8% of gross revenue for advertising and marketing costs if your business is making less than $5 million a year in sales. 

Are you spending more than the recommended amount? What about less? If you’re spending less, it may be time to increase your advertising spend. If you’re spending more, carefully consider how it can impact your business and budget. 

Look at your current expenses and debt to determine if you can afford to spend more on advertising. If there’s no room to budge, you may need to hold off on increasing spending for a little bit until you have the funds for it. If you can make adjustments (e.g., cut back on other expenses) or can afford to, give an increase a go. 

4. Will it increase my ROI?

Next, consider how increasing advertising can impact your return on investment, or ROI. Your ROI lets you know if the money you spend on investments (e.g., ad spend) is flowing back as revenue.

To find your current ROI, take your earnings from advertising and subtract the costs. Then, divide your total by the total costs. 

ROI = (Earnings – Cost of Investment) / Cost of Investment

Ask yourself if increasing advertising will help increase your ROI, or if it will potentially decrease it. Will your additional ads increase sales? Or, will they be a flop and cost you more money?

Again, if you want to see an increase in revenue, you need to do your advertising research to get the most out of your funds (which we’ll discuss later). 

5. How much do I need to invest to reach revenue goals?

What are your revenue goals? And, how much do you need to invest to reach said revenue goals? These are a couple of questions you need to consider when contemplating an ad spend increase.

Take a look at your current total revenue. Is it not reaching, meeting, or exceeding your goals? If you’re not reaching your current revenue goals, it may be a good time to increase ad spending. But before you begin to increase your advertising budget, figure out how much you’d need to invest to meet your goals. And, analyze how well your current ad efforts are doing. Look at factors like your return on ad spend (ROAS) and conversions to see how your company is doing. 

questions to ask yourself before increasing advertising spend

Getting the most out of your advertising spend

Decided to increase your advertising spend? Great! Now it’s time to learn how to get the most out of it. After all, you don’t want to throw money down the drain and get nothing in return for your business.

To get the most out of your advertising spend, you should:

  • Identify and target your audience
  • Have consistent messaging
  • Experiment to see what does and doesn’t work
  • Make it easy to contact your company
  • Be yourself 
  • Track and measure results
  • Make adjustments if needed

The more you do to ensure your ad spending is going in the right direction, the better. 

Want to track your income and expenses to determine if you can increase your business’s advertising spend? With Patriot’s online accounting software, you can easily record transactions anytime, anywhere and be on your merry way. Try it for free today!

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