Look at the financial statements, specifically the expense reports and budget plans, of any business, and you will find that they have allocated certain significant amounts on advertising.

Some may have spent more than others, while others may have done so sparingly, and that could be due to various reasons. Advertising is considered to be one of the necessary expenses of a business.

In order to advertise or gain exposure for your product or brand, you have to spend some money. That is what we call Ad Spend.

Advertising Techniques to Lower Ad Spend

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In this article, we will 1) check what do you know about ad spend and 2) how to effectively lower your ad spend with the right advertising strategies.

WHAT DO YOU KNOW ABOUT AD SPEND?

Ad Spend, which is short for “advertising expenditure,” is literally the amount of money that is spent by a business, company or organization on advertising and announcements for a product, service, brand or activity. Usually, the figure presented is on an annual basis.

In this digital age, there are those who are under the impression that digital advertising expenditure should be differentiated from the expenses incurred in traditional advertisement, and the former is what truly composes what we now call ad spend. This notion is not entirely correct, because ad spend also covers spending on advertising media other than digital or online advertising.

So what constitutes Ad Spend?

Basically, anything that is classified as “advertising expense”. Depending on the marketing and advertising strategies of the company, it may include spending on the main advertising channels such as print (e.g. newspapers, magazines), television, and radio. If the company also advertises in movie theaters and outdoor drive-in cinemas, these expenses will also be classified as ad spend. Other forms of outdoor advertising will also fall as part of ad spend.

If you look at how Procter & Gamble defines it, ad spend is composed of advertising through traditional media (print and television), online advertising, in-store advertising via displays or third party vendors, and agency fees paid to advertising agencies and professionals. It excludes, however, the salaries and benefits paid to its marketers.

Controlling Ads Spending

Controlling business spending, in general, is easier said than done. In order to earn profit, you have to be willing to spend some money. That is a given. You cannot keep a tight grip on your company’s purse strings, refusing to spend more than you have to or want to, and expect revenues to pour in. That is not how it works.

However, this does not mean that you have to completely let go of your grip and splurge on business expenditures. You have to control your spending, and one of the areas where businesses find themselves having trouble controlling their expenses is in advertising.

The first step to lowering ad spend is to set a budget and to stick to it. It is important to set a spending limit on how much you are willing to spend on advertising your products, services, brand or projects.

When setting an advertising budget, some of the factors to be considered are:

  • Advertising strategies of competitors. If competitors are spending tons of money on their advertising, does this mean you have to do the same? Not necessarily. What you have to do is study how your competitors are advertising, and where. Information on how much they are actually spending on ads may not be readily available to you, so what you can do is make an estimate out of your observation of their advertising. You may use that estimate as your benchmark, and find ways to be competitive without necessarily matching their cost.
  • Your company’s advertising objectives. What do you want to achieve by the end of the year? Do you want to increase the number of customers you have by 15%? How much revenue do you expect to earn from this? The estimate may then be used to set a budget for advertising.
  • Your previous years’ ads spending. If your business has been operating for several years already, you can use historical information. How much have you spent on advertising in the past three to five years? Were you satisfied with the results of incurring such costs? Do you need to increase or decrease your ads spending? By what fraction?

Budgeting is not the only way for you to control ads spending, since you may also employ advertising techniques to reduce this type of expense.

Get some overview on the biggest advertising channels, advertising trends, and benchmarks from the following slides.

 

HOW TO LOWER AD SPEND THROUGH ADVERTISING

A. Evaluate your advertising placements or locations

You may not know it, but you may be spending your advertising budget on an area or location where you do not have customers. Think about it. You are selling winter clothes, but a great chunk of your advertising is spent in a country that does not even have winter or snow. That’s a huge waste of ad spend right there.

From the market studies and research you conducted when starting the business, you already know who your target market is – geographically and demographically. These are the areas and groups of people that you should target with your advertising.

More often than not, the location considerations will include the following:

  • The country or nation where your target consumers are.
  • The state in the country where your target consumers live in.
  • The specific city or cities where your consumers are.

Be as specific as you can. You want to be able to reach as many of your potential customers as you can.

By identifying and evaluating the locations of your target market, you can choose where to spend the bulk of your ads spending, and where to spend less. It is time to pull out all winter wear ads from that tropical country and turn them instead to your customers in the North.

The same is true when considering physical placement of ad signs and materials. A LED screen featuring footage of a product ad situated overlooking a major intersection or thoroughfare will definitely cost more than a simple poster hung on a sidewalk in a sidestreet. Again, consider the product and the market.

If your target customers do not really frequent that thoroughfare and they are more the type to walk through that sidewalk, it won’t make sense to spend thousands of dollars on a billboard or LED screen advertisement.

B. Evaluate your advertising timing or scheduling

How often, and how long, do you run your ads? Is it 24 hours a day, 7 days a week, 4 weeks a month, 365 days of the year? While this idea gives your advertising department an easy time, since they will just let them run without bothering to work out a schedule, it may be costing you.

There are periods known as downtimes, where the ads are not generating clicks. Or, even if they are generating clicks, there are no significant conversions that come out of these clicks. Running ads during these periods is a waste of resources.

  • In social media advertising, run your campaign at times when your target market is online. There is no point running your ads when the people you are trying to reach are not there, to begin with. If you are a company with customers living in a different time zone, make sure you run the campaign when they are awake on the other side of the world. This may require some sacrifice on your part, as you have to be awake when everyone on your time zone is asleep, but that is unavoidable.
  • Change it up a little. Maybe you thought your ad has killer content. “Nobody could possibly resist it” or “they are definitely going to like it and be intrigued by it”. Well, that kind of thinking may not last. Target markets are naturally fickle and may have short attention spans, so they may end up being bored after being exposed to the same ad for a specific period. That’s why it is a good idea to have several versions of the ads, so you can offer variety. You do not want your target market to get tired of you too quickly.
  • Do not get too attached. This is somehow related to the previous tip. No matter how much you believe in the content of your ad, there will come a time when you have to face facts and admit that it is no longer engaging the market. It has already run its course and now performing poorly, which means it is only wasting your ad spend. Pull it out and replace it with something new, instead of spending your advertising budget on something that is no longer generating any return.

Once you have identified the times when clicks and conversions are high, you know which schedule to run your paid ads on. That way, you do not waste precious ad spend on advertisements that will not result in any clicks or conversions.

Your choice is to either not run ads at all during those times, or you may continue to run them, but negotiate for lower ad or bid rates. Doing this will help reduce at least 5% of ad spend.

C. Evaluate ad content used

It is the content of your advertisement that will catch the attention of your target market. If they are not catchy enough, or do not pique their interest, then there is no way that they will be convinced to look at it a second time, click on it, or even act on it.

  • Review images and words used. For this, you may need to consult with your advertising experts on picking which images should be used, and what words should appear on your ads. Do not fall victim to verbose tendencies, where you pack too much information on an ad, turning it into a short novel or a short story.
  • Evaluate search terms and keywords. It is possible that you are paying for clicks that are not related to your business. For example, a flower shop may pay for the phrase-match keywords “free delivery”. This key phrase may then trigger other search terms, such as “pizza free delivery”, “Chinese food free delivery”, and the like. Your ad spend is basically covering all these clicks as well, and the fact that they are not contributing to your business means you are wasting your money. When picking search terms, choose terms that relate specifically to your business, so you will avoid wasting ad spend.
  • Rethink the size of your ads. Ad size also means money. In the Yellow Pages, magazines and newspapers, the bigger the size of your ad is, the higher price you will have to pay. Find a way to decrease the size of your ad without sacrificing content and visibility.

D. Go digital.

This is something that many business – especially the conservative and traditional ones – are still apprehensive about. Many are still dubious about the idea that digital advertising costs less than traditional advertising. Considering that technology is the main tool used, how can that be possible?

While it is true that traditional advertising – print and broadcast – still makes up the bulk of the whole advertising pie, internet advertising is steadily growing, spurred further by mobile technology advancing at a fast clip. Online ads are now viewed, and clicks and conversions are made, not only in desktop PCs and laptops, but also in smartphones and mobile devices.

By going digital and taking your advertising online, you will be spending less than what you company is currently incurring on usual advertising channels such as television, radio, magazine, newspapers, and the Yellow Pages. In fact, more and more users are even choosing to go online rather than browse through the Yellow Pages, so you can be sure that moving your ad spend in the Yellow Pages to online advertising will not be a waste.

The reach of online advertising is also greater than, say, television, which may only be local or national. Advertise on national TV, and the ads will only run in the country. Advertise online, and you can reach your customers in other countries as well.

E. Perform regular organic tests on your social media ads.

What you may be doing is this: you pick one or two ads that you like and feel will work to promote your product and your brand. Then you immediately use these two ads on your paid social media campaigns.

You will be commended for your bravery and confidence. But it is not an assurance that you were putting your advertising money to good use. Why? Because you did not test whether the ads that you chose – and paid for – are the ones that will engage your target market the most.

Now here is what you should do when we say you should test your social media ads organically:

  • First, decide on the content that you want to appear in the ad. Be selective; do not pack it all in; otherwise you will have an ad that looks too stuffy and all over the place.
  • Create the ad – several versions of it. If you can create more than three, or even more than five, go for it. You can use different images, messaging techniques, and aesthetics, but always focusing on the same content.
  • Publish the different versions of your ad to your social media profiles at the same time. Simultaneously, if you can. This will take some time, and may normally run over a few weeks.
  • Monitor the published or posted ads and identify the one that generated the highest number of click-throughs. Which ad, and which version, garnered the highest engagement? Which post performed the best?
  • The posts or published ads that registered the highest engagement will be the ones that you should use on your paid social advertisements. These are the posts worth spending your advertising budget on.

 

F. Monitor campaigns regularly.

This is where many companies unknowingly hemorrhage ad spend. They picked an ad, they spent on it, let it run, then leave it at that. They just let the ad “do its work”, without following up on whether it is actually working, or if it continues to work.

Ads, especially on social media, have a very short life spans. Its lifecycle is fairly quick, which is to be expected, considering how quickly the movement is in social media. What you post today may be buried by other, newer, posted ads tomorrow. Therefore, vigilance is required, and monitoring is of utmost importance.

The great thing about monitoring is how you will be kept on your toes. The moment you realize that an ad is not working, or its engagement is in a decline, you can quickly figure out the reason why and act on it promptly. Being able to catch it early means you can make the adjustments earlier, and prevent your advertising funds from being drained.

 

G. Split or piggyback.

Another way to lower your ads spending is to split advertising costs with companies or entities that sell to you, or that you use as a distribution channel. Collaboration in your advertising may reduce your spending on advertising.

Similarly, you know when consumers receive their bills or other flyers, and there are other brochures thrown in? That is called “piggybacking”. If you can find a way to piggyback with flyers of your own, offering to pitch in on the advertising cost, that will save you on your ads spending.

Prioritization is one of the things that you have to learn if you want to minimize or reduce your spending on advertising. Choose the ones that work, and prioritize them. It is through identifying which you should pour your advertising budget on that you can get started on a more streamlined ad spend, and use your resources on what matters most.

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