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
what’s 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 store’s
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 store’s 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 store’s 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 store’s 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