What percentage of my net or gross profit should I put toward advertising?
Is there a general rule of thumb to follow for this?
Join us at Entrepreneur magazine's Growth Conference, Dec. 15 in Long Beach, Calif. for a day of fresh ideas, business mentoring and networking. Register here for exclusive pricing, available only for a limited time.That's a tough question; there are no hard and fast rules here. It depends on a lot of things including who you are targeting--businesses or consumers, the competitive environment, whether it is a new product/service launch vs. maintenance or growth mode, etc.
Depending on what category you are in, you could see the percentage range from 1 percent to 20 percent. I'd look at what you need to spend to get your story out there and make sure you have a strong and compelling brand with a unique value proposition before you spend anything on advertising, marketing or PR. If you start from that angle you'll be coming at it from a much stronger position. It's not about how much you spend, but rather are you talking to the right audience in relevant ways?
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