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Old 05-24-2004, 10:54 PM   #1 (permalink)
 
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Hi Everyone! What has been your average or "round-about" advertising costs or percentage annually? Im trying to plan an advertising budget and want to get a general consens on what most of the industry leaders spend on advertising.
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Old 05-25-2004, 06:56 AM   #2 (permalink)
 
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You have to make your own judgement on this one as everyone's business is different. There are too many factors to consider eg location, size of town, number of competitors, your current exposure, passing trade, reputation etc etc. What's your main reason for advertising? When you work out your main focus, look at all the different avenues for achieving your objective. You also need to consider the cost as advertising can be expensive. Will the outlay justify the income? Will it be worthwhile or are there other ways to achieve your objective?
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Old 05-25-2004, 04:05 PM   #3 (permalink)
 
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The main reason is because the the salon is not open yet however I assumed that I would at least need a radio spot to get the name out there on top of promotional incentives for annual memberships and a grand opening celebration. Do you suppose Im thinking too big for a start-up? Im basically going off of the feel for Atlanta. Its very flashy and people flock toward media centered events especially if they are hosted by radio stations.
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Old 05-25-2004, 06:05 PM   #4 (permalink)
 
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In Atlanta, you're wasting your money on radio. Over 99% of the listeners won't be in your market area - so you'd be advertising for your competitors in other areas of town - they'd love you. Radio is also way too expensive and not media efficient for a single salon. You'd have to have over 20 locations in Atlanta to be media efficient and get an ROI with radio. (Of course that doesn't stop the inexperienced or unknowledgable from wasting money - it has happened before!)

To make a big splash for your Grand Opening you need to do:

1)A Postcard Mailing to a radius of 2-3 miles around the salon targeted to those who have the most money and are between 18-45 age females. This is your prime market. To capture those who live in the area.

2)Community Outreach. Beat feet in the neighborhoods surrounding the salon and ply people with your handouts as part of your Neighborhood Ambassador and Campus Ambassador Programs.

3)Coupon Holders. Placed at local area non-competitive businesses such as nail salon, hair salon, car wash, blimpies, etc. to capture those who work in the area but may live 20 miles away.

4)Business cards and Referral Cards. Needed after you open.

5)If YOU want to appear flashy in a hot area of town, do Beverage Napkins with your name and special offer given to local area hot bars and nightclubs.

Grip does all of these for you. We'll keep you out of trouble.

To answer your question: "What has been your average or "round-about" advertising costs or percentage annually? Im trying to plan an advertising budget and want to get a general consens on what most of the industry leaders spend on advertising."

You bought equipment and expect to get a Return on Investment (ROI), you bought signage and expect a ROI, you bought employees and expect to get ROI, you also must buy the market. And you'll expect to get a ROI from your marketing, too.

Spend less on equipment and buildout. Buy more of the market and leave room in your budget for two things: marketing and cash to get you through slow periods.
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Old 05-25-2004, 09:49 PM   #5 (permalink)
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Radio is pointless. What I have done is alloweded myself a percentage of what I make goes back into advertising, the more I make the more advertising I do. Low budget advertising I found works great. Use other businesses to network with. Take some flyers with your grand opening to local merchants, they in turn might want to sometime use flyers in your business. But hey its FREE. You might find many businesses will be happy to place your flyers in their businesses. Use your local paper. I found that consistency is the best way to go. Don't just put your ad in for one week and say oooppps that did not work. I do just little add to keep my name in the front of their minds twice a week. Very affordable. You might want to join some non profit organizations. By doing this your getting involved with your community but it will open the doors for you to donate some prizes here and there which is a great means for free advertisement. Join the chamber of commerce and get involved with them. They will open new doors for you. Call local gyms and offer a special for them, or see if they want to do some cross promotions. Call your local travel agency (people need to be tan for their mexican vacations in the winter). Local coffee shops work great. Upon opening you will encounter many unforseen expenditures, you can make a huge impact on your community and get your word out effectivly. Just think outside the box.
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Old 05-26-2004, 12:39 PM   #6 (permalink)
 
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Radio can be one of the best forms of advertising. You must establish an advertising campaign that will gain the greatest response. Certainly Grip offers many wonderful forms of advertising material and programs but they don't sell radio so they will never like radio. All of my clients do some form of radio as well as different types of mailings provided by grip, and my salons are all top producers. You should spend at least 12% of your gross income on advertising, the more you spend on advertising the more business you will do. We are now at a time of year that you should be doing direct mailings to your data base with very specific messages. No general public advertising unless you are just opening, in that case you must get your mane out by all means available to you.
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Old 05-26-2004, 07:53 PM   #7 (permalink)
 
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Steve:

Most of your salons are in mostly in small towns and small metro areas and radio works great there! We recommend it highly in that circumstance.

We like radio. Our furniture company spent over $5 million/yr on radio! so we've got the experience. And we've produced radio spots for tanning salon chains and salons.

What we don't like to see is single-unit operators in a top 10 major metro of 4.5 million people with a land area that is 70 miles across trying to be media efficient with radio. It will be a lot of flash, a lot of dash, but no cash!

Someone who lives in Jonesboro won't drive 60 miles to Roswell to tan. So a salon in Roswell can't take advantage of radio's greatest asset: "reach". With radio you can "reach" across the entire market.

In smaller towns such as Lubbock TX you can buy the entire city, which is only 10 miles across (100,000 population) with a $30 radio spot on the top station with a two week minimum contract.

In Atlanta, that same spot on the top station costs $950 with a yearly contract of minimum 26 weeks.

Radio is not for everybody. And particularly not for a single-unit operator in Atlanta, or even a multi-unit operator in Atlanta with fewer than 20 units. The math won't work.

Javabean, BTW you should contact Steve - his salons are awesome!
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Old 05-26-2004, 10:59 PM   #8 (permalink)
 
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My YTD advertising has been 6.9% of gross income.
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Old 05-27-2004, 11:28 AM   #9 (permalink)
 
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Typical % is 5%-14% depending upon what you are trying to accomplish: buy the market or just coast along in it.
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Old 05-27-2004, 11:35 AM   #10 (permalink)
 
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Chunn,

Based on spending 6.9% on advertising, what % has that 6.9% increased your business?

For example, if you spend $10,000 on advertising, is it bringing in $15,000 or more in revenue.

Does anyone have any idea what the advertising ROI for the tanning industry is?
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