5 Steps to Setting a Successful Small Business Advertising Budget

If you’re running a small business, you know that marketing is essential – but figuring out how much to spend can feel like navigating a maze with no map. Should you go all-in on social media ads? Invest in traditional media? Or maybe focus on pay-per-click advertising? With so many choices and a limited budget, it’s easy to feel overwhelmed.

Don’t worry! Setting the right advertising budget doesn’t have to be a guessing game. In this blog, we’ll walk you through the process of creating an advertising budget that fits your business and goals, with a special focus on local businesses looking to connect with their community.

How Much Should You Spend on Advertising?

Before diving into the details, let’s answer the burning question: how much should a small business spend on advertising? There’s no one-size-fits-all answer. According to the U.S. Small Business Administration, small businesses allocate about 7-10% of their annual revenue to marketing. However, this can be based on your industry, business stage, and growth goals. You might spend more upfront for a new business to build brand awareness, while established companies could spend a bit less, focusing on retention and targeted campaigns.

Step 1: Know Your Marketing Goals

The first step in setting your advertising budget is to define your goals. Are you trying to increase brand awareness, drive foot traffic, boost online sales, or introduce a new product or service? Understanding your goals will help you decide where to invest your advertising dollars.

Brand Awareness

Suppose you want to get the word out and build recognition. In that case, you may need to allocate a larger portion of your budget to broad-reaching channels like social media ads, search engine marketing (SEM), or even traditional media like radio ads.

Lead Generation

If you’re focused on getting people to take action – sign up for your newsletter, book an appointment, or download a free guide – then digital ads, pay-per-click (PPC) campaigns, and email marketing could be key players in your marketing journey.

Local Engagement

If your business is locally focused, such as a restaurant, retail store, or service provider, you’ll want to allocate some funds to community-based marketing, like sponsoring events, hosting promotions, or running local search ads.

For example, Arizona Painting Company sought to expand its presence in affluent neighborhoods where traditional marketing efforts were ineffective. Our experts at Big Marlin Group developed a hyperlocal, multi-channel campaign that included geo-targeted postcard mailers featuring personalized details like the homeowner’s name and images of completed projects in their neighborhood. This tailored approach created a sense of familiarity and trust, resulting in an impressive 1,202% return on ad spend (ROAS).

This case study shows how personalized, local marketing can help you connect with your audience and deliver results. By using strategies like these, your small business can build trust, increase visibility in your community, and create meaningful engagement that drives growth.

Step 2: Break It Down by Marketing Channels

Once you’ve defined your goals, you can break your budget into specific channels. Some of the most common types of advertising for small businesses include: Social Media Ads (Facebook, Instagram, TikTok, LinkedIn)

These platforms allow you to target your audience based on interests, behaviors, and demographics, making them a powerful tool for small businesses.

Google Ads

Pay-per-click ads can help you capture potential customers when they search for keywords related to your business.

Local Advertising

Flyers, posters, sponsorships, or local radio and TV ads can be effective for businesses serving a specific geographic area.

Email Marketing

While not technically “paid advertising,” email campaigns can be a great way to keep your existing customers engaged with minimal spend.

How much you allocate to each channel will depend on where your target audience spends most of their time and which channels are most effective for your type of business. (possibly a good place for the lead magnet?)

Step 3: Factor in Your Audience

Think about your target audience. If you’re targeting young professionals, social media might be your best bet. If you’re trying to reach seniors or families, consider traditional media, community events, or local TV and radio spots. For businesses serving a local market, hyper-targeted local ads (like Google My Business or Local Facebook ads) can often yield the best results without blowing the budget.

Step 4: Monitor, Analyze, Adjust

The key to a successful advertising strategy is continuous improvement. Start small, track results, and adjust as you go. Many digital platforms offer detailed analytics, allowing you to see exactly where your money is going and what’s working. For example, if you’re running Facebook ads and notice that ads featuring a specific product are driving the most engagement, you can allocate more of your budget toward that ad type.

Budget-Friendly Advertising Tips for Local Small Businesses

For small, locally owned businesses, advertising budgets are often leaner, which means every dollar counts. Here are some creative ideas to get the most bang for your buck:

Sponsor Local Events

Partnering with local festivals, charity runs, or community fundraisers can help you reach your audience in a fun, engaging way. Sponsorships often include your business logo on promotional materials and media shout-outs.

Google My Business

This free tool allows local businesses to manage their online presence. Make sure your profile is fully optimized with correct business hours, photos, and engaging content. Paid local search ads through Google Ads can help boost your profile’s visibility.

Partnerships with Local Influencers

Look for local influencers or micro-influencers with small but engaged audiences in your areas. Collaborating with them can increase your visibility within your community at a fraction of the cost of traditional advertising.

Promotions and Discounts

Offering limited-time promotions or discounts can create buzz and encourage people to visit your business in person or online. You can also cross-promote with other local businesses to share costs and expand reach.

Step 5: Stay Flexible and Have Fun!

Advertising doesn’t have to be serious business all the time. Don’t be afraid to try new tactics, experiment with different platforms, and inject some creativity into your campaigns. Whether it’s a quirky social media post, a humorous ad, or a fun collaboration with another local business, having some fun with your marketing can make your brand more memorable.

Frequently Ask Questions

Should I spend more on digital ads or traditional media?

It depends on your target audience. If you’re targeting a younger, tech-savvy demographic, digital ads may offer better ROI. However, if you’re serving a local market, traditional media like radio, local TV, or print ads might be worth considering.

How often should I adjust my advertising budget?

Reviewing your budget every quarter is a good idea, especially after running campaigns. Analyze performance data to understand what’s working and shift your spending to the most effective channels.

How can I get the most out of my small advertising budget?

Focus on highly targeted, cost-effective strategies like social media ads, local SEO, email marketing, and partnerships with other local businesses. Track and adjust your campaigns regularly to maximize your ROI.

Is it better to hire a marketing agency or handle my own ads?

It depends on your time and expertise. If you’re just starting out, managing ads on your own with the help of online resources or tutorials can be effective. However, if you have the budget, hiring a marketing agency, like Big Marlin Group, can save you time and help you optimize your campaigns.

Start Maximizing Your Marketing ROI

Setting an advertising budget for your small business doesn’t have to be overwhelming- it’s about focusing on what matters most and using your resources wisely. By defining your goals, breaking your budget down by channels, and continuously monitoring your campaigns, you can maximize your return on investment (ROI) and ensure every dollar works toward growing your business. Remember, successful advertising isn’t just about spending more – it’s about spending smarter to achieve measurable results.

At Big Marlin Group, we understand the unique challenges small businesses face in marketing. As a full-service marketing agency, we specialize in helping small businesses create tailored marketing strategies that align with their goals and budget. Let us be your partner in growth and make your advertising dollars go further!