The ’70-20-10 rule’ is a widely accepted concept in business. Google, Coca-Cola, and other big brands manage their resources in a specific ratio to stay cutting-edge and grow. The idea is that 70% of a company’s investment should go to the core business, 20% to new developments, and 10% to new and untested ideas. If you are trying to maximize your ad budget and don’t know how to fit in all the opportunities, try this method. Here is a look at an annual advertising budget of $120,000. The clients’ best months of the year are November and December. Here is how the 70-20-10 rule could be applied to maximize returns while minimizing risks.
70%: Proven Strategies – $84K
The foundation of your advertising budget should be built on proven strategies that consistently deliver results. Allocate 70% of your budget to these safe bets. These are proven campaigns that you know will work from history or borrowing tactics from industry-trusted sources. In general, these are ad campaigns on proven platforms, such as radio, TV, Google and Facebook. Advertisers should use these tactics 12 months a year to provide a consistent return. This will establish a solid foundation for your advertising strategy while minimizing risk. Spend $7,000 each month on proven winners.
20%: Competitor Tactics – $24K
To unlock higher returns and explore new opportunities, allocate 20% of your budget to advertising initiatives that you have never tried before, but maybe your competitors are using successfully. These activities could include OTT commercials, TikTok or email marketing. You could handle these chores yourself or ask a trusted media partner, like your TV or radio rep, to assist you with their locally based digital department. It is sometimes easier to rely on trusted partners when exploring new spending in areas you are unfamiliar with. Since the best time of year for this business is November and December, this $24,000 should be spent in these two months to maximize results. Attacking the busiest time of the year with an extra $24,000 in advertising can yield the best outcome. Testing new initiatives when business is slow is like trying to sell parkas in July. Good luck.
10%: Out-of-the-Box Ideas – $12K
Trying new concepts is critical to long-term success in advertising. Allocating 10% of your budget to experimental tactics that encourage outside-the-box thinking may lead to results you can’t quickly gauge or have a long-term benefit. Support a local cause or sports team. Generate buzz by handing out mini fans at the local summer fair. Put your ads on car dashboard monitors with QUU from your local radio rep. Spend the money wherever it makes sense for the tactic you are buying; fall, summer, or morning and afternoon drive times. Go with the flow and see if it pays back. These tactics can set you apart from your competition and endear you to audiences. Here is the latest on QUU.
Read and React
Try adapting the ’70-20-10 rule’ to your specific business and goals. Regularly evaluate the performance of your advertising efforts, measure ROI, and be open to adjusting your allocations based on sales AND metrics. Every business wants to be an early adopter of money-making new ideas. No one wants to be the business that holds onto the past and gradually declines. The road is littered with brands that didn’t evolve: Blackberry, Blockbuster, MySpace, etc. Mix up your ad spend with the proven, borrowed, and new to achieve sustainable growth in the long run.
Jeff Caves is a sales columnist for BSM working in radio and digital sales for Cumulus Media in Dallas, Texas and Boise, Idaho. He is credited with helping launch, build, and develop Sports Radio The Ticket in Boise, into the market’s top sports radio station. During his 26 year stay at KTIK, Caves hosted drive time, programmed the station, and excelled as a top seller. You can reach him by email at jeffcaves54@gmail.com or find him on LinkedIn.
