Optimizing Your Advertising For Seasonal Highs And Lows

Writing by Brick Marketing on Tuesday, 12 of August , 2008 at 9:51 am

Do you know your peak seasons? You should. And it helps to know when the start and when they end because when it comes to advertising, how much you spend is vitally important. But just as important is how much revenue you bring in the door as a result of that advertising.

If your peak season is Christmas, for instance, you know that you can count on a certain amount of business based on the economy and the mood of the marketplace. But if you don’t advertise to bring people to your shop then you likely won’t get as much business as you would have. You probably have a budget to help you stay on track, and that’s a good thing. But what about your slow seasons?

Do you keep spending the same amount of money on advertising during your slow seasons? If so then you are probably losing money.

No matter how much money you spend, there is no guarantee you’re going to get new business based on that advertising spend. Therefore, it makes sense to scale back on your advertising during the slow season and use that money for advertising for your peak season. But you don’t want to stop advertising altogether. What you want to do is spread your budget out across the entire year.

Here’s what it looks like: Let’s say your advertising budget is 15% of last year’s revenue, which was $100,000. So you know you’ll spend 15,000 on advertising in the coming year. You can do it in one of two ways:

1. Month-to-Month Comparison - Your advertising budget is set at 15% of the revenue for the same month last year (i.e. June 2009/June 2008).
2. Monthly Adjustments From The Whole - You take your 15% and move it up or down for each month depending on your expected revenue

There are advantages to doing it either way, of course. If you choose the first method and your revenue in July of last year was $5,000 then you know you’ll spend $750 in advertising for that month. It’s an easy way to keep track of your spend. By the end of the year you will have spent 15% of your total yearly revenue from the previous year on your advertising efforts.

On the other hand, if your base is 15%, using the second method, what you want to do is figure out your average month. Take your total revenue - $100,000 - and divide it by 12, which comes to $8,333.33. That’s your average revenue for any given month so for months that you earned that much, or close to that much, in the previous year you’ll spend your 15% of total advertising revenue for the year during that month. In other words, you’ll spend $1,250 on advertising for any month during the year that hits around that revenue figure for the corresponding month of the year before. Example:

Last year you brought in $8,050 in January, $8,290 in March, $8,445 in May, and $8,300 in August. For each of those months you’ll spend $1,250 in advertising. But what about months that are above or below those revenue figures?

You’ll need to establish a window for each percentage of ad spend. For instance, you’ll spend 15% for expected revenues between $8,000 and $8,500. Make percentage adjustments for each $500 window above and below that. The percentage can be any figure you want but make it the same for both above and below. So if you adjust the ad spend by 2% for each $500 window, do that for the window below $8,000 ($7,500-$7,999) and the window above ($8,500-$8,999). Based on these windows you’re ad spend will be 13% and 17%, respectively.

How much you adjust for each window and the size of each window above and below your average revenue figure is up to you, but you want to be consistent in your approach. It’s a little more complicated doing it this way but it’s a good way to control your ad spend.

                      Category: PPC Bidding Strategies, PPC Management