Marketing

Setup: Linear Programming

Its time to plan how to spend the next years Marketing budget. Currently, we use a mix of web ads (a combination of banner ads and social media), print ads in trade publications, and booths at trade shows to gain new customers. We plan to spend $250,000 next year on these marketing venues, and wed like you to put together a recommendation on how to distribute these funds in order to maximize our total return. We have historically seen a 100% return from web ads, 150% return from print ads, and 75% return from trade booths. Trade show booths are expensive and have our lowest returns, but they help us build and maintain relationships that can make the efforts of our sales team easier in the long run. The minimum we would usually invest here is 25% of our budget. Print ads are surprisingly lucrative, but there are only so many publications in which our ads would be useful. We like to keep this budget tied to our web advertising budget; we dont want to spend more then two-thirds of our web budget on print ads. Please provide us your recommendations of how much to spend on each marketing venue.

Follow-up Questions:

After youve built your model, we would like some input from you. Our Sales team has indicated that we might be underestimating the ROI for trade shows given the number of times theyve made deals based on continuous conversations over the course of several trade shows, which is admittedly a complicating factor. Based on their figuring, we could be getting as much as 100% return on trade shows. They argue that we should be spending more here. What are your thoughts on this?

Finally, weve been speaking with a consulting firm about our web ads. We think that we should be getting a better return, and they agree. They think that they can increase our web ROI to 125%. We were wondering if this would change how we allocate our budget. Also, do you think that their price of $25,000 a year is worth it?

Marketing Venue	ROI
Web	100%
Print	150%
Booths	75%