FSB -- Dear FSB: What percentage of a startup's revenues should be spent on advertising? We're a direct-mail ad agency with small-business clients who ask us what their total ad budget should look like, and what proportion should go toward direct mail. Do you have any suggestions?
- Rusty Pang, President, Supercoups of Solano County, Vacaville, Calif.
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Dear Rusty: Generally small businesses spend between 2% and 5% of revenues on advertising, according to the Kelsey Group, a research firm based in Princeton, N.J. (kelseygroup.com). But, "It's not about finding a magic revenue percentage," says Neil Shaffer, CEO of Longview Consulting Group in Princeton (longview-cg.com).
"Instead help your clients by expanding the discussion. Ask what they want to achieve. Then help them get there." Devising an overall strategy may mean sending clients to other firms to handle what you don't do - radio spots, for example.
That may seem self-defeating, but Shaffer disagrees: "Your business will do better if you take the long view. Don't just go for a quick commission. Help clients get results with combined methods. Then you're a trusted advisor, and they'll refer others to you."
Shaffer also believes that direct mail can be useful for startups, especially for those that sell to other businesses and plan to introduce a new product or service locally.
According to the Kelsey Group, 39% of small businesses use direct mail. Only the yellow pages, used by 66%, are more popular. 
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