How do you set the marketing/advertising budget? Traditionally, companies peg it as a percent of revenue.

When business is down, like it has been for the past two years, the advertising and marketing budget drops, too. Just when you most need advertising and marketing to drive sales, there is less budget.

This may make prudent financial sense but terrible business sense. As Jonathan Shapiro, CEO of MediaWhiz, New York, points out in a recent article, today “the Internet offers numerous ways to create demonstrable and predictable ROI from one’s marketing efforts.” If you knew with a very high level of assurance that each dollar you spent on marketing would produce, say, $10 in revenue and $5 in net profit, wouldn’t you direct every dollar you could into that marketing? more