How Much Should You Set Aside for Your Web Ad Budget

Every year, dozens of major companies fight tooth and nail over a coveted spot in the Super Bowl commercial lineup. These 30-second spots gave them precious little time to work with, but oh are they worth it! In return, one spot could cost companies at least $7 million.

You will have to spend something on your advertisement budget, but it doesn’t need to be in the millions. Every company’s marketing strategy will be different from the rest — with some companies next to paying nothing at all. How much should you have for your web ad budget?

Let’s take a closer look at how to determine the cost of an online marketing strategy for you.

What Is Your Web Ad Budget?

It seems like a simple answer, but it bears defining for clarity’s sake. This isn’t just the cost of the ads you commission or the spaces you reserve for them. This refers to all costs and expenses from public relations, to redos, to mixed media.

Web ads are incredibly diverse, and your budget should reflect that. There’s Google Ad Sense, video ads, mobile app ad banners, and so on. It goes without saying that this budget is separate from print media.

5% Rule

So the first question is how much other companies spend on online advertising services. If you can get a ballpark of what your competitors are willing to pay, then you have a metric to measure yourself with.

Fortunately, there is a “rule” that most companies abide by: the 5% rule. On average, companies should expect to invert between 2 and 5% of yearly sales revenue into their advertisement budget. However, this number climbs to 7% if your yearly sales fall under $5 million and there’s a 10% profit margin.

In essence, smaller companies need to invest more in their marketing budget to get the name out. Especially smaller companies that have wider revenue margins. As your revenue margin increases, regardless of your company’s size, so does your advertising budget.

This ensures that your advertising never outpaces your profit.

Web Ad Budget Size

Of course, the above refers to your overall advertising budget. What about your ad budget specifically? The answer is 90%, give or take.

Web ads make up the vast majority of all ads served. Super Bowl ads in the streaming age are practically already web ads. These are the ads people see all day on their mobile phones, as just one example.

Further, web ads are the most effective and have the largest correlation with an increase in profit. They are the easiest to interact with and the easiest to act upon. To put that more simply, they give you the best bang for your buck.

Make Your Ad Budget Today

Almost every company has an advertising budget of some size, but how much of that should be a web ad budget? In most cases, you want to go by the 5% rule; 5% of your sales revenue should pay for advertising. Approximately 90% of that should be exclusive to web ads.

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