1. The AdBudget Calculating

2. MASTER There is more money wasted in advertising by underspending than By overspending. Underspending in advertising is like buying a ticket halfway to Europe. - Morris Hite 3. There is no advertising so cheap as expensive rent. 4. Most businesses budget approximately 5% to 6% of their total sales for advertising and another 5% to 6% for rent, also called, Cost of Occupancy 5. The purpose of advertising is to increase the exposure of a business beyond whats provided by its physical location. 6. An extremely high Cost of Occupancy for a landmark location is often the least expensive advertising available. 7. Businesses who save money by investing in weak locations always have to advertise much more heavily. 8. Step 1: Budget 10% of total projected sales (to a maximum of 12%) for Total Cost of Exposure. 9. Step 2: Multiply by the stores average markup above Cost of Goods. 10. Step 3: Deduct the Cost of Occupancy 11. The remaining balance is the ad budget. 12. Total Annual Sales $1,000,000 Cost of Occupancy Average Markup x 10% $100,000 Budget for TOTAL Cost of Exposure (Cost of Occupancy plus Advertising) x 92% $ 92,000 - 36,000 Adjusted Budget for Total Cost of Exposure AD BUDGET $ 56,000 13. Total Annual Sales $1,000,000 Cost of Occupancy Average Markup x 12% $120,000 Budget for TOTAL Cost of Exposure (Cost of Occupancy plus Advertising) x 92% $110,400 - 36,000 Adjusted Budget for Total Cost of Exposure AD BUDGET $ 74,400 14. Total Annual Sales $1,000,000 Cost of Occupancy Average Markup x 12% $120,000 Budget for TOTAL Cost of Exposure (Cost of Occupancy plus Advertising) x 61% $110,400 - 36,000 Adjusted Budget for Total Cost of Exposure AD BUDGET $ 74,400 15. Total Annual Sales $1,000,000 Cost of Occupancy Average Markup x 12% $120,000 Budget for TOTAL Cost of Exposure (Cost of Occupancy plus Advertising) x 61% $ 73,200 - 36,000 Adjusted Budget for Total Cost of Exposure AD BUDGET $ 37,200 16. Total Annual Sales $1,000,000 Cost of Occupancy Average Markup x 12% $120,000 Budget for TOTAL Cost of Exposure (Cost of Occupancy plus Advertising) x 117% $ 73,200 - 36,000 Adjusted Budget for Total Cost of Exposure AD BUDGET $ 37,200 17. Total Annual Sales $1,000,000 Cost of Occupancy Average Markup x 12% $120,000 Budget for TOTAL Cost of Exposure (Cost of Occupancy plus Advertising) x 117% $140,400 Adjusted Budget for Total Cost of Exposure AD BUDGET $104,400 - 36,000 18. Total Annual Sales $1,000,000 Cost of Occupancy Average Markup x 12% $120,000 Budget for TOTAL Cost of Exposure (Cost of Occupancy plus Advertising) x 117% $140,400 Adjusted Budget for Total Cost of Exposure AD BUDGET $104,400 - 36,000 The same total annual sales and cost of occupancy gave us three different ad budgets - $74,400 $37,200 and $104,400 respectively the only difference being Average Markup. 19. Step 1: Budget 10 to 12% of Projected Sales for Total Cost of Exposure 20. Step 1: Budget 10 to 12% of Projected Sales for Total Cost of Exposure Step 2: Multiply by the stores average markup above Cost of Goods Sold 21. Step 1: Budget 10 to 12% of Projected Sales for Total Cost of Exposure Step 2: Multiply by the stores average markup above Cost of Goods Sold Step 3: Deduct the Cost of Occupancy 22. Step 1: Budget 10 to 12% of Projected Sales for Total Cost of Exposure Step 2: Multiply by the stores average markup above Cost of Goods Sold Step 3: Deduct the Cost of Occupancy The balance is the Ad Budget. 23. Thank You Marion 24. Mike Slover www.whatsthemeat.com mikeslover@wizardofads.com 618-889-0674