How Much Ad Spend Is Enough?

If you believe industry spending averages are a reasonable benchmark for developing your own ad budget then a good place to start is the annual Schonfeld & Associates report published annually by AdAge.  You can get this information by paying $699 for the most recent data set, or you can simply search “advertising-to-sales ratios” and you’ll discover a trove of the same information for free. You can send me a finder’s fee if you’re so moved. When searching ad-to-sales ratios you’ll discover historical data dating from 2016 all the way back to 1997 when the Dow Jones first breached the 7,000 mark. How time flies. The interesting thing about these reports is the spending ratios don’t vary much from year-to-year. In 2016, for example, beverage sellers spent an average of 3.9% of sales on advertising, restaurants (“eating places”) spent an average of 2.4%, and vanity brands in the perfume, cosmetic and toiletries industry allocated a ginormous 21.2% to advertising. Spending in each of these industries for the year prior was within one-tenth of a percent, and as far back as 2010 the deviation was still negligible. In fact, in the grips of the Great Recession, the percentage of spend actually increased for many industries as sales softened and smart, well-positioned marketers leaned in to make the most of competitor woes. So, the next time somebody in the C-suite challenges your marketing budget make sure you’ve come loaded for bear with the best data available. It’s out there and the price is right.