Dear Reader,
“How much should I spend on my advertising budget?”
After the question is answered, question #2 is:
“What is that in dollars?”
See, I grew up in the world of percentages and margins. I think in percentages. So, I answer questions in percentages.
A. Percentages: The percentage out of 100% a line item is deducted from the total sales price. Used to easily describe costs and profitability.
(Selling Price – Cost) / Selling Price
B. Mark-up: The percentage you increase the cost to get to the sales price. Used to easily set prices.
(Selling Price – Cost) / Selling Price
Have you ever been in a conversation that really mattered, and then you found yourself struggling to stay up to speed? That’s exactly how I felt!
Because I think in percentages and margins, Roy had my head spinning in the episode. He thinks in mark-ups.
In the show, you will hear me make a promise to define margins and mark-ups in the show notes. This is me keeping my word.
In This Episode, You'll Learn:
- Ad Budget Benchmark: 10–12% of top-line revenue (future revenue, not current)
- Word Flags: Emotional, memorable ad phrases
- The Procter & Gamble ‘Like a Girl’ campaign
- Radio vs. Pay-Per-Click comparison
- Gross margin vs. markup distinctions in services
Episode Chapters & Summary
Calculating Your Ad Budget
“If you want to do $2 million, advertise a $2 million company.”
Roy explains the difference between markup and margin—and how each impacts ad spend calculations.
He recommends using markup to determine ad budgets, especially in service businesses where gross margin is typically 50%.
The magic number? Spend 10–12% of your top-line revenue, or what you plan to be, not just what you are.
Key Takeaways:
Use 10–12% of top-line revenue as your advertising benchmark.
Calculate gross margin using markup for better clarity.
Only stretch your ad budget if failure doesn't break your business.
Occupancy Costs vs. Advertising Impact
“There is no more efficient advertising than extremely expensive rent.”
Roy distinguishes between real cost of occupancy versus what business owners often include.
He emphasizes that prime physical location creates branding advantages beyond advertising.
Todd adds how a facility's appearance also helps recruit top-tier talent, not just attract customers.
Key Takeaways:
Only include actual expenses when calculating cost of occupancy.
Your building's look affects both recruitment and branding.
Physical presence and emotional environment matter more than people realize.
Budgeting for Growth
“You want to grow? Budget like you're already there.”
Roy advises budgeting for the company you want to become—not just the company you are.
The idea: if you want to be a $5M company, advertise like one—if you can afford the risk.
Don't bet the business. But if you'll only be mad (not broke), then go for it.
Key Takeaways:
Set your budget based on the future you want.
Stretch responsibly—only if the downside is irritation, not disaster.
Growth requires courage in how you spend.
How to Know Your Ads Are Working
“People will start to say, 'I never listen to radio—but I hear your ad all the time.'
Roy explains that anecdotal feedback—friends or customers repeating phrases—is an early sign of success.
He introduces the concept of 'word flags'—memorable phrases that create recall.
Later, look at hard data: increases in branded keyword searches mean your brand is sticking.
Key Takeaways:
Watch for rising branded keyword searches online.
Anecdotes often precede analytics.
Use emotional, memorable phrases to anchor your brand.
Why ROAS Can Mislead You
““Return on ad spend only works for short-term ads.””
Roy warns against using ROAS to measure brand-building campaigns.
He explains how timeless, long-term messaging accumulates value over time, unlike limited-time offers.
Short-term ads are measurable—but they don't build emotional connection.
Key Takeaways:
Avoid relying solely on ROAS if you're building a brand.
Some of the best ads can't be measured overnight.
Think in years, not weeks, when evaluating success.
Radio vs. Pay-Per-Click
““Kiss my ass, pay-per-click.””
Roy argues that traditional media like radio is wildly underpriced compared to digital.
He calculates the cost to reach someone 156 times a year via radio—about 60 cents total.
With digital media rising in cost, radio offers incredible frequency at scale.
Key Takeaways:
Radio offers unmatched repetition for the price.
Mass media is still highly measurable—and undervalued.
Don't dismiss traditional media as outdated.
The Courage to Offend
““If you're not offending someone, you're not saying anything that matters.””
Roy and Todd analyze Procter & Gamble's 'Like a Girl' campaign as an example of effective, provocative branding.
Roy explains how fear of offense kills creative effectiveness.
Brands like Nike and P&G succeed because they take bold stands—and measure the impact over time.
Key Takeaways:
Persuasion requires saying something meaningful—even if it risks backlash.
Avoiding offense leads to average messaging.
Strong beliefs make memorable brands.
Guest Spotlight
**Roy H. Williams – Founder, Wizard Academy**
Roy is a bestselling author, ad strategist, and pioneer in emotional storytelling. He helps business owners use clarity and repetition to build market-dominating brands.
