Headline and body copy

should create word

pictures for the reader.
To get your advertising
noticed and remembered,
ask yourself:
“What is the one
simple image my
advertising
needs to project?”
Coupon advertising
means giving your
product away.

In advertising, keep
your focus on the
customer.

Set a budget based

on an estimate of
N. D.
MINN. next year’s gross
WIS.
S. D.

IOWA
MICH. sales.
NEB. OHIO
Ill. IND.

KANSAS MO

North Central Regional

Extension Publication #299
Revised April 2001
For more information
Visit the Iowa State University Extension Hotel Restaurant Institution
Management Web site for information and links to other sites.
http://www.extension.iastate.edu/Pages/families/hrim/

In cooperation with NCR Educa- Prepared by Jim Huss, Iowa State University
extension hotel, restaurant, and institution
tional Materials Project
management specialist; Carol Ouverson, ISU
Issued in furtherance of Cooperative Extension communication specialist; Joy
Extension work, Acts of Congress of Banyas, former ISU Extension communication
May 8 and June 30, 1914, in specialist; and Diane Nelson, ISU Extension
communication specialist.
cooperation with the U.S. Depart-
ment of Agriculture and Cooperative Extension programs are available to all without
Extension Services of Illinois, regard to race, color, national origin, religion,
Indiana, Kansas, Michigan, Minne- sex, age, or disability.
sota, Missouri, Nebraska, North
Dakota, Ohio, South Dakota, and
Wisconsin. Stanley R. Johnson,
director, Cooperative Extension
Service, Iowa State University,
Ames, Iowa 50011.
Advertising: An Investment Not an Easy Task
in Your Business’ Future Getting the public to notice and
remember your advertising messages
Many small business owners are
can be a tough task. A recent
overly cautious about advertising.
research study of television
First of all, it is an expense and they
advertising found that only 10 percent
do not like expenses. They like
of viewers could correctly identify the
income—and profits. Second, many
brand advertised in a particular
find it difficult to measure the results
commercial when they were asked
of advertising in dollars and cents.
about it later. Worse, eight percent
Third, many business people distrust
said the commercial was for a rival
advertising because they may not
product. Another study revealed that
understand how or when to use it
84 percent of people had no reaction
effectively. This publication offers a
at all to an advertisement in print or
short overview of advertising for the
broadcast.
independent business person, with
some tips and techniques for getting
How, then, do you get your advertis-
the most out of the advertising
ing noticed and remembered?
expenditure.

Why Bother To Advertise? Targeting

The primary goal in advertising is to
Advertising is part of a sound market-
get the right message to the right
ing plan. A well-planned advertising
audience at the right time. You will go
program is continuous and has a
a long way toward this goal if you
cumulative effect. It can help improve
know who your current and potentital
your business, but it is not a cure for
customers are, and what business
slow business and low profits. That is
image will appeal to them.
the function of marketing. All too
often, business owners do not con-
Although you probably have a good
sider marketing until they plan their
idea of who your customers are, you
advertising budget. Then, the adver-
can double check it by preparing a
tising is blamed even though the fault
customer profile. To develop a profile,
lies with the marketing plan. Market-
pay close attention to your patrons for
ing includes all the decisions involved
a few days. In some businesses you
in the business effort: the product(s),
may need to profile customers for
production, pricing, promotion, selling,
specific days or times during the day.
service, and customer satisfaction.
For example, restaurateurs may
Advertising is one part of this market-
notice a difference in lunch and dinner
ing plan. It is paid media publicity
offering specific benefits to a target
clientele. Notice age range, gender, Effective advertising
probable income range, marital is made up of simple
audience. With a sound marketing
status, occupational category (retired,
plan in place, advertising becomes an
white collar, service, blue collar, etc.).
words, short sen-
investment in your business’ future. tences, and a few
Use that information to write one or
Those who use advertising success-
more descriptions of your typical carefully chosen facts.
fully use it to accomplish these
customers in terms of age, gender,
purposes:
educational level, occupation, and
marital status. Also, note lifestyle
● Maintain old customers,
preferences. Two people of the same
age, gender, education, etc., may
● Bring in new customers,
pursue quite different lifestyles. Do
they like something elegant, trendy, or
● Establish a position among
sporty? Are they exercise, health
competitors, and
food, or drama enthusiasts? Do they
prefer casual or dressy clothes? Drive
● Reinforce the business’ image as a
sports cars, economy cars, or ride
part of the community. 1
 bicycles? Are you satisfied with
these customer types? Do you
want to attract more just like them?
Next, write profiles of the types of
customers you would like to attract.
Customer profiles help ensure
effective advertising by enabling
you to target a specific customer
audience. You need to know who
your target audience is and what
media are most likely to reach
them. You also need to consider
what message is most appropriate
for a specific customer category.
For example, advertising targeted
to senior citizens will be different
from that meant to attract an
audience of young families. One of
the national hamburger chains (the
one with the arches) does an
outstanding job of targeting its ads.
Notice how each commercial has a
message carefully crafted for a
specific audience.
Since your independent business
does not have the advertising
budget of a national chain, you will
be better off to concentrate your
efforts on targeting one or two
audiences. If you try to reach
everyone, most likely you will not
reach anyone very effectively.
Benefits and Action
To get your advertising noticed and
remembered, ask yourself: “What
is the one simple image my adver-
tising needs to project?” Next,
single out the most unique cus-
tomer benefit that is to be pre-
sented in the advertising. For
example, a restaurant may offer
price, atmosphere, or convenience
of location. However, an ad should
depict the one that is most impor-
tant to the target audience.
Remember, most people cannot
remember an advertiser’s name;
don’t expect them to remember
more than one benefit about your
business.
2
In order to promote a business
“position”—the benefits your
business has that make it special—
you need to find out what it is that
customers like and what keeps
them coming back. Is it location?
Convenience? Fast service?
Atmosphere? Quality? Selection?
Reputation?
To find out what customers like
about your business, listen to them.
Ask your employees to report what
people are saying. You’ll probably
find certain words and phrases
turning up repeatedly. Restaurant
patrons might say “delicious ribs,”
“a short walk from the office,” or
“friendly service.” Note these for
use in advertising. Use customer
survey cards to find out what
people like and don’t like. Promote
what they like; improve on or get rid
of what they don’t like.
In advertising, keep your focus on
the customer. Advertise the things
that your customers consider to be
benefits. This may be different from
what you think are benefits. Adver-
tising based on your opinions
rather than those of the customers
is a waste of money. Also, it may
help to differentiate between
features and benefits. For example,
your new decor may feature
padded leather seats. But comfort
will be one of the benefits. Your
advertising must tell the customer
what the benefit is, not just what
the feature is.
After the benefit is presented, an
effective ad invites the customer to
act and makes it easy for them to
act. One way to do this is to use
action words and phrases (“come,”
“call for reservations,” “bring the
coupon,” “join us on Sunday,” etc.).
The second way is to provide the
information they’ll need in order to
act: address, telephone number,
hours you are open. Those three
elements should be a part of most
ads, whether in print or broadcast.
Media Selection
Generally, the best overall advertis-
ing program is one that combines a
mix of available media. Exceptions
do exist, so be creative. Look
beyond the conventional media,
particularly when planning a special
promotion.
When using conventional media,
keep in mind the following charac-
teristics. In newspapers you have
good flexibility including variation of
size, design, placement, and timing.
Newspapers also have community
prestige. However, your ad may
receive poor placement. Newspa-
pers have a short life span and are
meant for hasty reading. Also,
people tend to read ads only when
they are ready to buy. You probably
face heavy advertising competition
and may not be able to select a
target audience.
Radio can reach selected markets
of loyal listeners. You can change
schedules and copy quickly. How-
ever, you are limited to short-lived
commercials that are part of back-
ground sound for many listeners.
But when heard, a good radio
commercial can stir the imagination
and cause the listener to remember.
Television allows a product or
service to be demonstrated right
before the viewer’s eyes. This
combination of sight, sound, and
movement can reach an audience
with a message like no other
medium. Although TV advertising
can be expensive, it is possible to
design lower budget, creative
commercials. Also, you may be able
to target special market segments
with spots far less costly than prime
time commercials. However, it is
vital in producing TV commercials
that you know what your key selling
message is before you begin.
Involve the video production group
early in your planning for a TV
commercial. They can help you
think “visually” and acquaint you
with special video techniques.
Billboards are essentially reminder
advertising. You have no more than
10 seconds to convey a message. If
located near stoplights, people
driving cars will have a chance to
read and absorb the message. You
should limit copy to five to ten words
and use one to three bright colors.
Billboards can be effective in
directing travelers to businesses
offering food and lodging.
Sometimes, less conventional
media will help a business target a
specific market segment. For
example, a restaurant might target
the downtown business community
for a special lunchtime promotion.
Rather than use traditional media,
the restaurant could drop off a short
menu in flyer form to downtown
institutions, banks, and businesses.
For highly selective markets—such Write radio commercials
as bed and breakfasts (B&Bs), inns, for the ear, not the eye.
hotels, and specialty shops—the
Internet can be an excellent adver-
tising medium.
Some media possibilities are listed
below. Of course, you won’t want to
use all of them; consider which ones
will best serve your needs and
reach the intended target audience.
Traditional Media
Billboard
Bus poster
Direct mail
Magazines
Newsletters
Newspaper
Other local publications
Radio
Shopper
Television (commercial)
Television (low power local channel)
Yellow pages
Other Media
(Select carefully; use only if you will
reach your audience.)
Car cards
Community theater program book
Flyer
3

Ad 1
Ads 1, 2, and 3, shown as preliminary
layouts, achieve a similar look through
use of borders, typeface, and logo. Each
illustration dominates the ad and is
cleverly related to the headline message.
Ads 2 and 3 also show effective use of
body copy following the illustration lines
(i.e., the curving line of the fish and the
diagonal line of the fork).
4
Internet
Posters
School paper
Sports programs
Store window displays
Table tents
Public Relations
Materials and Methods
(Use with caution. These are not
advertising, but may work as good-
will builders. Budget separately.)
Balloons
Bookmarks
Bumper stickers
Calendars
Hats and jackets
Imprints on giveaways
Stickers
Team sponsorship
Coupons and Discounts
Coupon and discount offers can
increase business by introducing
your operation to new customers,
introducing new products, and
drawing customers to a new loca-
tion. However, “deals” for the
customer also can backfire, so pros
and cons of such offers should be
carefully considered.
Excessive use of coupons or dis-
counts may lead customers to
expect price breaks all the time. Too
many coupons also might result in
too many redemptions—a demand
too great for you to meet, with
resulting public relations problems.
Coupons also create extra paper at
the cash register and extra book-
keeping. Some coupon sizes are
either too large or too small for easy
storage in the cash register. Another
problem: bargain hunters may come
only for the specials.
Always have a purpose for the
coupon or discount—to pick up
business on notoriously slow days,
or to draw a new customer market.
Timing is important when using
coupons. For example, avoid
coupons to announce a new store
opening. Instead, open quietly and
get the “bugs” worked out. Coupon
later, when things are going well.
Always evaluate a coupon or
discount promotion. Remember that
coupon advertising means giving
your product away. Make sure the
results justify the cost. To get an
idea, compare monthly sales over a
three-year period. If sales a month
after the promotion are up from
average sales for that month, then it
was successful. For example,
February sales averaged $50,000.
Coupons in February increased
sales to $60,000, well above the
three-year average. Now for the
test: what were March sales? Were
they above the expected average?
If not, you may have given away as
many dollars in free products as
you made in increased sales.
Here are some common methods
for coupons.
● Direct mail coupons—To offset
mailing costs, send two or three
coupons at a time, with sequential
redemption dates. Promote different
items on each. You can expect a
redemption rate of from five to 25
percent for the first coupon, de-
pending on the offer, the type of
coupon, and whether or not the
mailing list is targeted or general.
Whatever the rate for the first
coupon, it will fall off by 50 percent
for the second, and about 75
percent for the third.
● Newspaper coupons—Use in
special newspaper supplements
and weekly shoppers for best
results. Coupons that must be cut
or torn from a page are not used as
often as an insert. Avoid newspa-
pers that have many supplements.
Always wait until the redemption
date has expired before offering
another.
● “BOGO” (buy one, get one)—This
is not a wise option for an indepen-
dent business. it gives away too
much—doubles your product cost
and increases labor without bringing
in additional profit. If you want to use
BOGOs, limit them to introduction of
new products.
● Coupon cards—These cards can
be punched for discounts on specific
items. Test effectiveness by noting
add-on sales when the card is
redeemed.
● Discount identification cards—An
example is a restaurant’s senior citizen
card that offers a free drink with the
purchase of an entree. These cards
can work two ways: the group that
receives them will be appreciative;
those who do not may be resentful.
● Games—National chains offer
these, but the independent should
avoid them. For one thing, customers
may feel a game drives up the price.
Some research shows a growing
customer resistance to games. In
addition, once games begin, there is
pressure to come with new and more
exciting games or perhaps higher
stakes.
Preparing the Advertising
Newspaper
Think in terms of the customer when
preparing your ad, whether you write
your own or let an advertising repre-
sentative do it. If you do your own, try
to avoid the trap of writing wordy or
“cute” copy that ignores or obscures
basic details that people need to
know. Whether an ad is for print
media or broadcast, remember that
effective advertising is made up of
simple words, short sentences, and a
few carefully chosen facts.
Research tells us that readers look at
a print advertisement in this order:
illustration, headline, body copy. Four
out of five readers get no further than
the headline. Therefore, the first two
elements are most important.
Having no illustration is far better than
having a meaningless or unattractive
one. Insist on an illustration that
communicates with the reader, and
make sure the communication is a
positive one. Action is always good Ad 2
in illustrations. Good examples might
include a person choosing food from
a buffet, steam rising from tasty
food, a server placing a heaping
plate before a patron, etc. Some
business owners have logos or other
designs they want to include in
advertising. If the logo is ornate or
complicated, you may not want to
include an illustration. Using both
may make an ad look cluttered.
Most newspapers have clip art files
that contain a selection of illustra-
tions suitable for advertising. if not,
you might have to hire a local
artist—perhaps a talented high
school student—and work with him
or her to develop an illustration or
logo that you can use in all your
printed ads.
Like the illustration, the headline
should communicate with the
customer. Mention the benefit or
some other news. News might be a
coupon or discount, new hours, new
feature, special occasion, etc.
Include a verb in the headline to
convey a feeling of action. Choose
the headline wording carefully. Here
are 10 time-tested words found to be
effective in advertising headlines:
you, new, how, your, who, money,
now, people, want, and why.
Both headline and body copy should
create word pictures for the reader.
Taste appeals are natural for restau-
rant ads—but keep the claims
believable or they’ll backfire. Include
the address, telephone number, and
hours, preferably set apart from the
body and probably in bold face type.
That way the important details are
easy to find.
Remember, effective ads have a call
to action. Include a line that asks the
customer to do something: “call for
reservations,” “shop while selection
is best,” “visit our salad bar today.”
The advertisement’s appearance
projects an image of your business
5
Ad 3 and should appeal to the target
audience. For example, a cluttered
ad projects a messy, disorganized,
perhaps unclean image. That is
another reason why you should
convey just one messge in each
advertisement, and use words and
ample “white space” in print ads.
Ads for the media should be planned
and prepared in a series. Each one
can deliver a different message but all
should look and sound basically the
same. That way, you can deliver
several messages while imprinting
your business name and image on
the public through regular repetition.
Whether you write copy for your ads
or have the media do it, avoid dupli-
cating someone else’s advertising
style. Busy advertising representa-
tives sometimes make ads for several
businesses look or sound the same,
so be alert to keeping your ads
distinctive. Though you should not
copy style, it is helpful to borrow and
adapt. Keep a file of ads that appeal
to you. Look at them to decide what it
is you like and might adapt in your
own advertising. Also, ask to see a
proof (an example) of your advertising
before it goes to press. Don’t OK an
ad that doesn’t meet your standards.
Broadcast Advertising
Advertisements for radio should not
be repeats of newspaper ads. Write
commercials for the ear, not the eye.
Radio tends to be background for
many listeners. Jog their attention
with different sounds (or a short
absence of sound). A good commer-
cial uses natural speech patterns
such as contractions and other
phrases. Always read a commercial
aloud to see if it is comfortable to
speak. Then have somone read it to
you and listen for its ear-appeal.
Commercials should be written in
time segments—15, 20, 30, or 60
seconds are common. Make sure to
emphasize the business name,
address, telephone number, and
6 hours.
The tone of an announcer’s voice or
added sound effects can do much to
convey your business image. If you
can use a local announcer who is
popular with or trusted by the target
audience, the positive feelings may
transfer to your business. For these
reasons, you may want to pay extra
for prerecorded commercials done
by selected announcers, rather than
having copy read by whoever is on
the air.
In planning a TV commercial, look
for the key visual. Keep the picture
simple rather than busy. You have
five seconds to grab the viewer’s
attention; from then on it’s downhill.
Some of the most effective commer-
cials introduce a problem, solve the
problem, and prove the solution by
demonstration. Also, associate your
message with someone or some-
thing that makes people feel good.
Timing and Size
No matter how good a given adver-
tisement is, it will be more success-
ful if repeated. Two techniques to
consider when planning your
advertising are flighting and pulsing.
Flighting stretches a small ad budget
by alternating periods of concen-
trated advertising with breaks when
there is no advertising. For example,
you might run newspaper and radio
ads in four-week flights, separated
by breaks of one or two weeks.
Pulsing is advertising continued at
one level, with periodic bursts of
aditional advertising, perhaps to
recognize seasonality or special
promotions.
Research indicates that biggest is
not always best in advertising. A full
page does not get twice the atten-
tion of a half-page. Actually, design
is more important than size. A
quarter-page ad can dominate a
page if it is well-designed and
attractive to the viewer. In other
words, a series of smaller, well-
designed ads run on a regular basis
will reach more people than a one-
time budget buster. Another interest-
ing point is that research studies show
that readers tend to equate the size of
the ad with the size of the business.
The Budget: How Much Is
Enough?
Some people take a typically “upside-
down” view of the advertising budget.
They want to increase advertising
when the going is good and slash it
when times are tough. You may need
to do just the opposite, because
cutting advertising means cutting
potential sales as. Instead, set a dollar
goal and pursue a level of advertising
that will help you reach that goal.
Plan an advertising budget over a
12-month period. This helps you look
ahead and gives you enough time to
measure results. Of course, there will
be changes during the year, but a well-
planned budget allows for that. Some
experts recommend basing the
coming year’s advertising budget on a
percentage of last year’s gross sales.
That is a cautious approach that looks
backward rather than forward.
A person who considers advertising as
an investment in the future will want to
set a budget based on an estimate of
next year’s gross sales. This is a bit
more risky, but it locks into the future
rather than the past.
Table 1. Advertising as percent of sales
Advertising
Business as % of sales
______________________________________________________________________________________
Specialty contractors 1.9
Auto service and repair 3.4
Auto dealers 1.6
Finance services 2.5
Gas stations 1.6
Apparel retailers 2.5
Shoe stores 2.2
Furniture stores 5.8
Eating places 3.7
Hotels and motels 3.5
Jewelry stores 6.2
______________________________________________________________________________________
Source: Advertising Age, Sept. 1986.
Whether you decide to use this year’s
total or last year’s, allocate a specific
percentage for the advertising budget
(see table 1: Advertising as a percent
of sales). Remember that this percent-
age is a guideline, not an absolute.
You may encounter additional adver-
tising needs as the year progresses.
It also will prove helpful to figure your
advertising budget more than one Plan an advertising
way. For example, what additional
budget over a 12-month
advertising clout could you purchase
by increasing the budgeted percent- period.
age from three to four?
Consider the following in deciding
whether to allocate a percentage
equal to, above, or below the average.
● Is the business fairly new or is it
well-established and well-known in
the community? A newer business
generally needs to invest more in
advertising in order to make itself
known.
● Is the location well-known and
convenient or is it difficult to find?
A less convenient location or a new
location will require more advertising.
●Are you satisfied with your business
image or do you want to improve?
Improvements require more
advertising.
Advertising
Business as % of sales
Computer stoes 2.9
Retail stores (general) 4.2
Real estate agents 1.7
Movie theaters 4.1
Hospitals 3.2
Photo labs 4.7
Renting and leasing 2.5
Radio and TV dealers 4.6
Department stores 3.5
Lumber and materials 2.7
Personal services 7.5
7
 ● What about the competition? Do examples of public relations, not
you need to increase advertising to advertising. Your contingency
firm up your position with competing funds should be spent carefully—
businesses? in ways that appeal to your target
customers. Don’t spend advertis-
●What is the geographic size and ing dollars to support charitable or
population from which you wish to community programs that will not
draw customers? The larger the advance your business interests.
area, the larger the budget must be. If you wish to donate, do so, but
don’t use your advertising funds
● How many newspapers, radio for this purpose.
stations, and other mass media
must you use to cover the desired After the contingency fund is
area? The more media, the more subtracted and set aside, you can
dollars that must be spent. divide the balance of the advertis-
ing budget into 12 monthly
Once a budget figure is established, segments. The segments probably
allocate about 15 percent off the top won’t be equal. Because many
for a special “contingency fund.” This businesses experience seasonal
sum should be set aside for unex- fluctuations, you may want to
pected advertising needs that are organize your budget on a quar-
likely to come up during the year. A terly basis and use advertising
restaurateur may want to introduce flights of 1-5-1-5 or 2-4-2-4 (see
a new item on the menu, for ex- Timing and Size, page 6). For
ample. Perhaps a new competitor purposes of explanation, the
has come to town and you want a monthly segments are used here.
little extra advertising splash. Remember, your monthly or
quarterly allocation will depend on
A contingency fund also allows you your dollar goal for the year and
to score public relations “points” the percentage of that goal you
without affecting your overall adver- plan to make in each time period.
tising plan. For example, you may
be asked to buy an ad in a program Worksheets that you can duplicate
for a special event sponsored by a are included at the end of this
community service group. Or perhaps publication to help you work out
If you are unable the high school basketball team will your annual and monthly advertis-
to plan advertising make it to the state tournament and ing budgets. The worksheets on
you will want to be part of a special pages 9 and 10 are filled in for a
a year in advance, do congratulatory newspaper supple- sample restaurant for a year.
it in three-month or ment. Remember, though, these are
six-month blocks.

Table 2. How average U.S. ad dollar is spent (approximately)

________________________________________________________________________________________________________________________________________________

Newspapers 25%
Television 25%
Direct Mail 18%
Radio 6%
Magazines 5%
Billboards/Outdoor 1%
Other 20% – pay attention to these mini-media
Total` 100%
________________________________________________________________________________________________________________________________________________

Source: CCH Business Owner’s Toolkit.

8
Total Year Advertising Budget Worksheet for C.J.’s Restaurant

Last year Estimated next year

Gross Sales $ 375,000 $ 450,000

x 3% x .03 x .03
= Total advertising budget $ 11,250 $ 13,500
x 15% x .15 x .15
= Contingency fund $ 1,688 $ 2,025
Net annual advertising budget
(Total budget — contingency fund) $ 9,563 $ 11,475

Monthly sales figures and advertising allocation

Last year Advertising Projected sales Advertising

sales dollars this year dollars

January 11,250 288 13,500 459

February 15,000 288 18,000 573

March 18,000 477 23,250 578

April 18,750 477 30,750 1,148

May 31,500 761 37,750 1,032

June 39,000 956 45,000 1,032

July 51,000 1,434 60,000 1,148

August 49,500 1,434 57,000 1,148

September 31,500 761 38,250 1,032

October 31,500 761 38,250 1,032

November 38,250 956 45,000 1,148

December 38,250 956 45,000 1,148

Amounts shown in rounded figures.

9
Monthly Advertising Planning Sheet for C.J.’s Restaurant

Month: May Budget: $1,032

Special events or holidays to consider:*

May 3 - Mother’s Day
May 9 - Style Show and luncheon here
Note: May will have 5 Saturdays and Sundays this year rather than four.

Other considerations:
Continue from April campaign—introduction of new spring menu item.

Weekly budget breakdown:

Week 1 Week 2 Week 3 Week 4 Week 5

Media and
cost:
Paper
(regular ad) $75 $75 $75 $75 $75
New menu $45 $45 --- --- ---
Shopper $75 $75 $75 $75 $75
Radio $68 $68 $38 $68 $68
Total each _____ _____ _____ _____ _____
week: $263 $263 $188 $218 $218

Other notes:
Determine whether funds for new items will be for separate
advertising or increased size of regular ad.

Cut back week 3, use funds during week 4 and 5 for concert series “night out” promos.

Continue catering ads for May-June graduation and wedding parties.

*Special events to think about should be ones that involve your target customers; or, the ad should be constructed to appeal to the target group.
Remember that the most effective special ads will be similar in design to your regular ads. That is how you maintain and reinforce your image.

10
Evaluation Is Vital
Like other aspects of a successful
business, record-keeping and
evaluation are vital in advertising.
Records will help you know what
you have spent and how you spent
it. Records also show whether or not
business picks up after an advertis-
ing pulse and whether or not an
increase is permanent or temporary.
Here’s a highly simplified method of
how to determine the break-even
point in advertising. If CJ’s Restau-
rant spends $500 in December for
advertising and is open for business
25 days that month, the average
advertising cost per day would be
$20 ($500 divided by 25). If CJ’s
makes an average profit per patron
of $1 and spends $20 per day on
advertising, the restaurant needs 20
sales per day to break even on the
advertising investment ($20 divided
by $1).
CJ’s determines that the advertising
program brings in 40 customers per
day or 1,000 customers per month.
With a profit of $1 per customer,
that’s an additional $1,000 in gross
profits per month. If CJ’s subtracts
$500 advertising expense from
$1,000, the additional net profit is
$500.
What if CJ’s increases the advertis-
ing budget for December by 100
percent and spends $1,000?
Assume this brings in 80 customers
per day or 2,000 customers per
month. That’s 2,000 additional
customers at $1 per customer profit
or $2,000. Subtract $1,000 for
advertising; CJ’s net profit is $1,000.
Of course, the opposite may apply. If
CJ’s did not bring in more than 20
customers per day, the restaurant
would not show an immediate return
for the advertising dollars spent.
Other circumstances such as
seasonal fluctuation must be
considered: If CJ’s Restaurant is in
a summer resort area that depends
on tourist trade, it could not be said
that the advertising itself was at fault.
CJ’s needs better timing. The restau-
rant must advertise when the target
audience is in the area.
To further help evaluation, keep a
record of day-to-day circumstances
that surround your business. For
example, inclement weather can
make a special promotional effort less
successful. Community-wide promo-
tions can affect sales on specific days.
These can change from one year to
the next. Also, note the number of
weekends in each month. A restaurant
may experience increased sales in
April if the month has five weekends
compared to four weekends the year
before.
It would be nice to hire a researcher
to evaluate your advertising, but few
small businesses can afford that.
Conduct your own simple evaluations.
• Ask new customers how they heard
about your business.
• Ask repeat customers what brought
them in today. Keep a tally of the
various media mentioned. Include
word-of-mouth advertising, which can
be a most effective promotion tool.
• Ask customers to evaluate your
product or service. Did they find what
they were looking for? Would they like
more choices? Is the quality as
advertised? Are the prices higher,
lower, the same as competitors? Was
it difficult for the customer to get to
your business?
Set a dollar goal and
Informal evaluations such as these pursue a level of
can offer clues as to which advertising advertising that will
is effective and perhaps should be help you reach that
increased, and which might be
dropped. It also can tell you the goal.
customer expectations being created
by your advertising.
One caution in evaluation—avoid
jumping to conclusions. Results are
not always instantaneous; it may be
several months before patterns
appear. Collect evaluation information
regularly, but compile it and draw
overall conclusions about the total
advertising effect only once or twice
a year.
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Advertising Media Chart
Medium Market coverage Type of audience

Daily newspaper Single community or entire metro area; General—Tends more toward men,
zoned editors sometimes available older age group, slightly higher
income and education

Weekly newspaper Single community usually; sometimes a General—Usually residents of a

metro area smaller community

Shopper Most households in a single community; Consumer households

chain shoppers can cover a metro area

Telephone directories Geographic area or occupational field Active shoppers for goods or services
served by the directory

Direct mail Controlled by the advertiser Controlled by the advertiser through

use of demographic lists

Radio Definable market area surrounding the Selected audiences provided by

station’s location stations with distinct programming
formats

Television Definable market area surrounding the Varies with time of day; tends
station’s location toward younger age group, less
print-oriented

Transit Urban or metro community served by transit Transit riders, especially wage earners
system; may be limited to a few transit and shoppers; pedestrians
routes

Outdoor Entire metro area or single neighborhood General—Especially auto drivers

Local magazine Entire metro area or region; zoned editions General—Tends toward better
sometimes available educated, more affluent or toward
specific audiences

Electronic Worldwide; highly selective Internet users (often upper income);

potential visitors to community

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Particular suitability Major advantage Major disadvantage

All general retailers Wide circulation Appeal to target audience dependent

on section placement

Retailers who service a strictly local Local identification Limited readership

market

Neighborhood retailers and service Consumer orientation A giveaway and not always read
businesses

Services, retailers of brand-name Users are in the market for Limited to active shoppers
items, highly specialized retailers goods or services

New and expanding businesses; Personalized approach to an High cost per thousand people (CPM)
those using coupon returns or audience of good prospects
catalogs

Businesses catering to identifiable Market selectivity, wide market Must be used consistently to be
groups; teens; commuters, people coverage of value; appeal may depend on
working at home announcer

Sellers of products or services with Dramatic impact, market High cost of time and production
wide appeal selectivity, wide market
coverage

Businesses along transit routes, Repetition and length of Limited audience

especially those appealing to wage exposure
earners

Amusements, tourist businesses, Dominant size, frequency of Clutter of many signs reduces
brand-name retailers exposure effectiveness of each one

Restaurants, specialty shops, Delivery of a loyal, Limited audience

entertainment and mail-order special-interest audience
businesses

Restaurants, specialty shops, Wide circulation; reach High maintenance; can be highly
on-line businesses potential customers before selective and very market specific
they arrive in community

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Total Year Advertising Budget Worksheet

Last year Estimated next year

Gross Sales

x 3%
= Total advertising budget
x 15%
= Contingency fund
Net annual advertising budget
(Total budget — contingency fund)

Monthly sales figures and advertising allocation

Last year Advertising Projected sales Advertising

sales dollars this year dollars

January

February

March

April

May

June

July

August

September

October

November

December

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Monthly Advertising Planning Sheet

Month: Budget:

Special events or holidays to consider:*

Other considerations:

Weekly budget breakdown:

Week 1 Week 2 Week 3 Week 4 Week 5

Media and
cost:

Total each
week:

Other notes:

*Special events to think about should be ones that involve your target customers; or, the ad should be constructed to appeal to the target group.
Remember that the most effective special ads will be similar in design to your regular ads. That is how you maintain and reinforce your image.

15