Factsheet: How much to spend on advertising

We all recognise that we need to spend money on advertising and other publicity (websites etc). But how much is a reasonable amount to spend.

More specifically, the question is 'at what point does further expenditure on marketing fail to increase your occupancy rates?'

Typically an internet advertising site will cost £100-£150 per year, six months advertising in a widely read magazine might cost £400, and a 'one off' advert in a sunday newspaper might cost £50-£80. An internet site wil cost less than £100 and last perhaps two - three years before it needs substantial changes - hence £40-£60 per year.

The problem really is that if you are advertising only one small gite or rental property, on which your annual income might be £2500, it is not easy to justify spending £600 on advertising. on the other hand if you have several rental properties on one site, with anticipated income of £25,000 that same £600 seems very reasonable. Put another way, if you decide to spend 5% of potential income on advertising, that will allow the former setup £125 to spend and the latter £1,250. £125 is probably not enough to advertise any property, and £1,250 would sem excessive. So the percentage you need to spend will be greater if you have less expected income.

For me, the minimum spend required would be:

1) Website. Best value for money, although it is a long term investment and unlikely to generate immediate returns. Cost now £100 for one property, perhaps £150 for several properties.

2) Paid Property Listing Sites. At least two, one at the cheaper end and one at the more expensive end, chosen using the techniques described under 'Marketing Help'. Cost £300 per year. Probably worth selecting three if you have several properties - cost £450 per year.

3) Free Rental Property Listing Sites. Again, as discussed under 'Marketing Help' I would choose two or three of these. Cost £0.

4) Google Adwords Campaign. I would allow £50 to spend on a Google AdWords campaign (ads appearing on appropriate other internet sites), in order to decide whether this method of publicity would work for my property, with a daily limit of £1.

5) Press Advertising. I wouldn't use this because it is relatively expensive.

So overall I think that a total spend of £450 - £650, including setting up a new website, (otherwise £350-£500) is roughly the right amount to spend.

If you spend a lot less than this and are full most of the time, it could be that your prices are too low. Unnaturally low rental rates can easily 'cost' you £1000 per year or moer in lost income.

On the other hand if you are often unbooked and you spend as much or more than this, perhaps there is a problem elsewhere - are your prices too high? is your marketing material of high quality (good photographs etc)? are your rental listing sites failing to perform? and so on.

The question then remains - if you increase your marketing spend by £100, by how much will your income increase? Well, I think that if you have significant periods unbooked with the levels of marketing above, you should first check whether there is a problem with your existing marketing. Only then should you consider increasing spend.

But if you have an 'expensive' rental property, or several properties, it could well be worth spending an extra £100 even if it fills only a couple of extra weeks at the beginning or end of the season. I would spend this extra on a further paid rental site.

But beyond that, I suspect that the benefits gained will not be significant, and further unbooked periods reflect a flaw in your existing pricing or marketing, or you have unreasonable expectations of how many weeks you can fill.