Advertising is a big word in business, especially in the black community. We can't make much money without it yet most of us think we can't afford it. Our businesses must advertise to be competitive. But most entrepreneurs don't look at advertising the right way.

While advertising may show up as an expense on your profit and loss statement, it is really an investment. You play the lottery, invest in stocks and attend college all with the hope that your return will be greater than what you spent. Advertising is no different.

But the fundamental question is not "Should I advertise?" but "How should I advertise?" I say, "It depends." In my opinion, it depends on your profit margin percentage (the difference between what you make and what you spend.) A quick way to calculate how much money you need to make for an ad to be worth it is to take the cost of the ad and divide it by your profit margin.

For example, if you spend $250 on an ad in a local publication and your profit margin is 5%, you will need to bring in at least $5,000 to break even. If you make $500 to $1,000 from a $250 ad you are still losing money because you have to deduct the cost of the merchandise you sold from your revenue. Plus, the higher the cost of the ad and/or the lower your profit margin, the more money you must make to break even. Since most entrepreneurs don't understand or simply do not know how this principle will affect their bottom line, most don't know whether their advertising efforts really work.

So what do we do? Consumers are more discerning than ever so your advertising must be cost-effective or else you'll be wasting money, time and effort. Here are five ways to get more bang for your advertising dollar:

1) Develop a tracking system - Your advertising must be trackable to determine its effectiveness. An exclusive offer on a postcard, a coupon on a flyer, a coupon code offer on your website are inexpensive ways to advertise and easily measure your revenue as a direct result.

2) Partnerships - This decade is what I call the Partnership Decade. Businesses are learning that partnering with other local businesses can lower advertising costs and build a sense of community. Partnering with complementary businesses can also create a pipeline of business for you and for them.

3) Attend local networking events - These events, usually free, are great opportunities to advertise your business to future clients in a friendly atmosphere. Some of my strongest business relationships have come from these events.

4) Classifieds - Most readers view expensive display ads in magazines and newspapers as interruptions. However, many readers scour classifieds with great attention to detail. Believe it or not, your rate of return can be much higher from a classified ad than an expensive display ad.

5) Cost-per-click - With traditional advertising you spend money up front praying for a return. If you have a web presence this method allows you to pay only when people who visit your website through keywords. However, you must do your research on which keywords will drive visitors and buyers to your website.

The advertising world is ever changing so we must stay current on methods to bring in consumers. But remember: It's not what you make or what you spend that counts; it's what you keep.

About the Author
Anthony Quiñones is the President and CEO of Unity Card (www.unitycards.com), a black-owned and operated marketing company based in New York City. His company's mission is to connect, promote and empower black entrepreneurs and their consumers through education, networking and advocacy. He also has 16 years of experience as an accountant in the publishing, non-profit and insurance industries.

© March 2006 By Afromerica

Brother Anthony Quiñones will be keeping the Black community educated on financial issues to ensure a future of prosperity. Visit regularly for new information that could help you overcome and make the best of your everyday experiences.

To subscribe to Quiñones' column join the Afromerica email list to receive new information as it is updated. Or E-mail Quiñones at: aquinones@theunitycard.com

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