Research by the U.S. Small Business Administration recommends spending 7-8% of your gross revenue for marketing and advertising if your business does less than $5 million a year in sales, and up to 20% if you’re a large company. Using a percentage of gross revenue is a good budgeting tactic because it allows your spending to fluctuate as your revenue does. However, all businesses, small and large, must make sure their marketing budgets are getting the most bang for their buck. In marketing, reaching more people means better results, right? Not necessarily. The best way to get your money’s worth is to make sure you are promoting your product or service to the right audience at the right time by using targeted marketing, such as direct mail marketing or email marketing. By using targeted marketing, you have a higher chance of reaching potential customers that are interested in your products and services.

Targeted marketing is a precise form of marketing and communication. It aims marketing messages at smaller, defined targeted segments or even individual people. Mass marketing delivers generic messages to a large and relatively undefined audience. Mass marketing includes mediums such as television commercials, billboards, and newspapers. Although mass marketing has a large reach, it has a limited appeal. Not everyone thinks alike, so a marketing messages that works well in one geographic location or with one demographic might not work well for others. For example, an expensive organic health food store may do better in wealthy suburbs than a college town.

When comparing targeted marketing to mass marketing, the numbers clearly show that targeted marketing is more effective. According to statistics by CMO, targeted advertisements are twice as effective as non-targeted ads. Just because you are marketing to a bigger crowd doesn’t mean you are going to reach a more engaged audience.

One of the major benefits of targeted marketing is that you are distributing your message to an audience that is more likely to respond. Knowing your audience’s demographics, needs, shopping habits, locations and other targeted info can help you deliver effective advertising. For example, if a florist wants to reach couples to promote for Valentine’s Day, they can use a mailing list targeted towards married couples living within a 5 mile radius of the florist. Marketing to a more relevant targeted audience will increase the effectiveness of your marketing and improve sales and ROI.

Some businesses are wary of targeted marketing because they fear excluding prospects who could potentially become customers. It’s true that, by utilizing targeted marketing, you will be marketing to a much smaller group of people. However, when targeted marketing is done right, you will only be excluding people who are unlikely to purchase from you. This will ensure that you do not waste your marketing budget on a non-converting audience.