One thing to consider is that Mike is a manufacturer selling direct to consumer, as opposed to a retailer or a manufacturer selling wholesale only. He has higher profit margins to work with and when compared to other manufacturer—>consumer companies, his budget is not out of line. It is common for direct mail/internet merchants to spend a higher percentage of their budged on advertising.

If he were solely a DE, selling primarily to wholesale accounts, then yes, the number would be too high. But since that is not his business model, the % is not unreasonable.

You mentioned that you don’t put out a budget for the year; Mike I will be perfectly honest that I think that is a good way to spend way too much on advertising…but respectfully, I don’t know your specifics.

Our advertising is designed to drive qualified traffic to our website. We primarily use keyword advertising to do that.

The key metric for us in choosing how much to spend is cost/new account. Once we’ve determined that, the “budget” boils down to “as high as possible.” We can write down what we think “as high as possible” will be, but it is an irrelevant number since we really only care about how much each new customer costs.

I think that new media is awesome. After all, FI is certainly a part of that revolution. What I got out of the article was that using non-traditional means to promote your company is a powerful tool(which is true). It addresses trends in consumer behavior that are really new. There are pitfalls tho’. I am of the mind that the company dictates the methods used to advertise, which usually involves a carefully planned mix. Being a DE is great for these new media blitzes, especially with the tell-all kind of programs out there like Project Runway and other types of celebritizing-gritty-this is how we do it kind of shows. Having a blog is almost necessary. If there is one thing I could say about being a designer is that everyone wants to know about it…apparently it’s glamorous!

Little bit advertising/little bit PR, with the key being “new media.” The article opens with a DE case study from NY; that made it all the more interesting. Check it out if you have a chance.

One typically spend the most money on acquiring new customers. You spend much less retaining and upselling existing customers.It depends on your goal

Your system works for you and that’s great. I probably wouldn’t suggest it, I think the return on your investment could be better, just my opinion. You mentioned that you don’t put out a budget for the year; Mike I will be perfectly honest that I think that is a good way to spend way too much on advertising…but respectfully, I don’t know your specifics.

I would be curious to know your numbers and see what percent of a return you get on your advertising program…just the geek in me talking.

A start up company will spend approximately 1-5% of their projected annual sales for marketing.

The spend can be more variable than that.

In our first year, we spent 15% of sales on marketing. 99% of that was on advertising.

In our second year, we spent almost 28% of sales on marketing. About 98% of that was on advertising.

This year to date, we’ve spent 20% of sales on marketing. About 98% of that was on advertising.

We sell direct and have more in common with direct mail merchants than with DEs in the more traditional mode covered extensively in KF’s book.

In our business, we don’t really think in terms of “how much am I going to spend on advertising this year?” so much as “how much am I willing to pay to acquire a new customer?”