It’s clean slate time, people.

Budgeting for advertising is an important part of the planning process, and if you’re hoping to get more for your investment this year, it pays to keep a few best practices in mind. First, you should take a hard look at recent history.

Okay, 2016. Show Me The Money.

The obvious first step is to review the effectiveness of last year’s advertising program.

Hopefully, you have a detailed campaign calendar from 2016 which you can compare to a monthly sales report. In our experience, it’s not unusual to see a few abnormalities – an unexplained spike or decline in business here and there – but a well executed ad strategy should demonstrate clear and measurable growth.

If your analysis doesn’t paint a good picture, several factors may have contributed to the disappointing results, including changing market conditions, increased competition, or poorly managed campaigns. Budget may have played a role as well, and we’ll explore some things you should consider as you finalize the ad bank for 2017.

Base Your Advertising On a Percentage of Sales

A business that generates $500,000 or more a year is generally able to base an ad budget on a percentage of sales. The actual amount often depends on industry type and profit margins, but most companies set their ratio anywhere from 3 to 20 percent. You may also want to factor in the cost of your media mix and how much revenue growth you are hoping to achieve.

How much spending is too much?

Every business needs to advertise, but not the same budget. A thorough review of last year’s results should demonstrate whether you invested enough to get the job done. Use those findings to make projections for this year, and decide on the smartest path forward.

Keep the budget focused on marketing channels that have produced the best measurable results for you in the past. For instance, if you are working with a relatively small budget, you might do better to invest in a targeted AdWords campaign rather in a social media platform you haven’t tried before. You may want to do both, but unless the budget is growing, I would concentrate on the channels that bring you the most success.

Flight Your Campaigns

One of the best ways to increase efficiency is by “flighting” the campaigns. This tactic allocates advertising dollars to crucial periods throughout year, and nothing during the slow months. This makes some people really nervous. They feel like the brand needs to be in the public eye at all times, but in reality most businesses have a busy and slow season that are consistent from one year to the next. Running heavy advertising just before the kick-off to the busy time, and winding down when business slows will help you maximize exposure when it matters most.

You will always achieve the best ROI by advertising when pool of buyers is large, not thin.

Test And Monitor Your Channels

Online advertising channels like YouTube, Google AdWords, and Facebook have built in analytics, allowing you to measure every click. Offline advertising is much tougher to track, of course, but it can be done by assigning custom phone numbers and coupon codes to the ads. The more guesswork you can replace with cold hard analytics, the better chance you have of plotting a stable ad budget moving forward.

Insure Yourself Against Underperforming Media

Most media partners are reliable and honest, but they do make mistakes.

Broadcasters and cable operators often make scheduling errors and under deliver their audiences due to ratings declines. An advertising agency can help you monitor your campaigns and request “make-good” ads when a vendor screws up.

There is no such thing as a “perfect advertising budget.” By definition, a good advertising strategy evolves to suit campaign metrics and changing trends, but by following the tips laid out above, you should be able to find your way to a better advertising budget for 2017.

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