Are We Spending Too Much on Ads

Are we spending too much on ads?

If you’re here, you are wondering if your company is spending too much of your money on advertisements. We are ready to help. 

 

How much should I be spending on advertising?

Generally, you’ll hear 10% of your budget should be spent on advertising. In fact, Deloitte says firms spend an average of 11.3% of their budgets on it. You can use that as a benchmark, but every company is different. This budget can be allocated in different ways, though. You could use all of that on one method of advertising, give it all to an agency to split up, or anything in between.

 

Are you tracking conversions?

The first key to truly help you answer this question is conversion tracking. If you don’t have this in place, you won’t be able to get a well-rounded answer. Many programs make conversion tracking very easy, but some you’ll have to work a bit harder for. 

Google ads allow Google Analytics and Tag Manager integration to help you measure conversions, impressions, clicks, and more. 

LinkedIn also has integration with Google Analytics and its own Insight Tags. 

With other media, you can feature an ad-specific phone number or web URL to directly track leads that come from your ad.

 

Analyze Your Return

Next, to analyze your current spending and truly find a good number for your company, ask yourself a few questions. We suggest making a spreadsheet to list these out and help you organize.

  • What advertisements are you currently running? PPC, billboards, print, podcast, radio, television, partnerships, etc. List each of these out.
  • How much are you spending on each channel? Write this next to the advertisement.
  • What has been the return you’ve recorded on each channel? Impressions, clicks, conversions, leads, etc. 

Now, take a look at your spreadsheet. Ask yourself, are you seeing the results you wanted? Which channels are producing the best return on your investment?

If there are any advertisements that are more of a liability to you, then you may want to boot it. It isn’t valuable to keep ads around that are dishing out more cash than they are bringing in. Advertisements are meant to bring in sales, leads, and value that will benefit your company 

If you are wanting to calculate your ROI on ads, Hubspot has a great tool to do so.

 

You may be spending too much if…

Now that you have implemented conversion tracking and analyzed your current spend, let’s work together to figure out if you are spending too much. Here are a few red flags that you are spending too much:

  • Cost per conversion is high
  • Return on ad spend is low
  • Quality score is low
  • Targeting is too broad
  • Ad copy or keywords are attracting the wrong audience
  • Advertising isn’t warranting any leads or sales

We hope this helps you optimize your advertising budget. Of course, if you have any questions, we are happy to direct our brains towards answering your questions (and making you money).

Share this post

Share on facebook
Share on twitter
Share on linkedin
Scroll to Top