ADVERTISING BUDGETING

Advertising Budget

• An advertising budget is the money a company is

willing to set aside to accomplish its marketing
objectives.

• A subset of the larger sales budget .

2
 answering several important questions?

• Who is the target consumer?

• What media type will be most useful in reaching the

target consumer?

• What is required to get the target consumer to

purchase the product?

• How much profit is likely to be earned for each dollar

spent on advertising?

3
 Two Approaches to decide budget

Top –Down Approach

Activity based or
Management Object Oriented
decides how much approach by
to spend managers

Bottom- Up Approach

4
 Methods to determine --Affordable method

• Budgets on what we can afford.

• Small business

Methods to determine –Percentage of Sales Method

• Most commonly used by small business.

• Takes a percentage of either past or anticipated sales

and allocates that percentage of the overall budget to
advertising.
5
 Methods to determine --Competitive Parity Method

• If a business is aware of how much its competitors are spending to

advertise their products and services, the business may wish to budget
a similar amount on its own advertising by way of staying competitive.

Methods to determine –Objective and Task Method

• Correlate advertising expenditures with overall marketing objectives.

This correlation is important because it keeps spending focused on
primary business goals.