Cost to Advertise online

Billboards can cost thousands of dollars per month.

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Ultimately, the costs involved in advertising a business are mostly controlled by the business owner or manager. While you are at the mercy of the media you select for pricing, you choose how much to budget for advertising and which media to use to reach the intended audience.

Budgeting Approaches

Companies use several different approaches to budget for advertising. The most common and simple approach is to allocate a percentage of projected or actual annual sales. Small businesses typically allocate anywhere from 2 to 12 percent of annual sales to advertising, according to LegalZoom. At 5 percent, a $200, 000 annual sales projection would mean $10, 000 toward advertising. You could also look at what competitors in the same market invest and try to match or exceed that amount. Mark-up approaches are an alternative as well. This is where you compute fixed and variable costs and take a portion of the anticipated mark-up or profit to put into advertising for the business.

Geography

Geographic location has an impact on advertising costs for your business. Costs for production and media purchases are typically higher in metro areas as opposed to small towns. This is partly because of less business demand for advertising. Media must have reasonable rates to accommodate what companies in the community can afford for ad space. Additionally, the amount of money in the hands of businesses and customers in certain communities is much higher than it is in other areas. Advertising in Los Angeles is more expensive than advertising in a small rural town.

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Media Selection

The media you choose for advertising is a major factor in the costs. Typically, your budget guides the potential to use certain media. Many small business budgets don't allow for television commercials because it may cost $5, 000 to $25, 000 just to produce a single commercial, and another several thousands to buy a package of spots on a TV station. Local newspapers and radio are commonly used by local businesses. A one-day newspaper placement in a small- to mid-sized town may only cost $100 to $300. A package of 100 to 200 radio commercials, even in a metro area, may only cost a few thousand dollars as well.

Free Alternatives

Your access to and use of all possible unpaid communications may limit how much it costs to advertise your business. Many small businesses contact local newspapers and TV media at business launch and for significant events to pitch feature stories. It is common, for instance, for a new business to have a ribbon-cutting ceremony to gain coverage in a local newspaper. Outdoor signage can also gain you exposure in a smaller community. Participating actively in community events and giving to local charities can also improve word-of-mouth conversations among consumers, which is huge for small businesses.