WHAT IS ADVERTISING BUDGET ?

• Advertising budget is a financial document

that shows the total amount to be spent on
advertising and lists the way this amount is to
be allocated.
• It is a translation of an advertising plan into
monetary units.
• It shows the plan of allocation of available
funds to various advertising activities.
 WHY ADVERTISING BUDGET ?
Many companies are spending a lot of money
on sales promotion than on media advertising.
The budget allocation depends upon no of
factors including-
• the campaign
• the market
• competitive situation, &
• the brand's stage in its lifecycle.
 The purpose of Budgeting is to-
• Provide a forecast of revenues and
expenditures.
• Enable the actual financial operation of the
business to be measured against the forecast.
ADVERTISING BUDGETING PROCESS
Setting advertising objectives
Determining the task to be performed to
achieve the objectives.
Preparing advertising budget.
Approval of the top management.
Allocation of advertising budget
Monitor and control
WHAT ARE THE FACTORS INFLUENCING
ADVERTISEMENT BUDGET ?
Stages in the PLC
Frequency of the advertisement
Competition and Clutter
Product Substitutability
Market Share and customer base
Product Life Cycle Stage
METHODS OF SETTING ADVERTISING BUDGET

 Affordable method
 Percentage of sales method
 Competitive parity method
 Objective and task method
 Judgement Method
 incremental Method
 Return on Investment
 Quantitative Method
 Experiemental Approach
 Measuring Advertising Effectiveness

What to test Where to test

• Source factors • Laboratory tests
• Message variables • Field tests
• Media strategies
• Budget decisions

How to test When to test

• Testing guidelines • Pretesting
• Appropriate tests • Posttesting
 ADVERTISING EFFECTIVENESS: WHAT TO TEST
Testing the Method: Choosing the appropriate method will
have a substantial impact on its success. Therefore, is
important to determine how well the chosen program is
working and to measure its performance against a
predetermined standard. The testing process should consider
the following
a) Advertising Method (ex: Banner vs. sponsorship)
b) Subclass (ex: regular vs. content sponsorship)
c) Location (ex: Banner at the top or Sky-Scraper on the side)
d) Time (ex: pre or post product release)
e) Size (ex: Pop-up (full page) or Banner (small bar at the top of the
page))
f) Vehicle Option Source Effect - e.g. perception through pop up ad
or Banner
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 ADVERTISING EFFECTIVENESS: WHAT TO TEST
Testing the Content:
If the intended objective of an ad is to get consumers to
try a new product that is being launched, the marketers
might test the following:
a) If the advertisement is effective in attracting consumers
attention
b) If it is informative enough to allow the consumers to evaluate
c) Is the ad persuasive enough to convince the consumers to try
d) Is the content memorable to ensure the consumers will
remember
e) If the ad content is appealing to it’s intended target market

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 ADVERTISING EFFECTIVENESS: WHAT TO TEST
Testing the Media Strategies
Examining the media options identified and the media planning for
running an advertising campaign for a specific time period

a) Type of media –Social networking, Print Media, Broadcast

Media, Visual Media, Audio, etc
b) Media Combinations
c) National Channels– most widely viewed media
d) Local Media: Language Preference
e) Billboards, Websites, Internet, etc depending on target
audience

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 ADVERTISING EFFECTIVENESS: WHAT TO TEST

Testing the Budget Decisions:

Finally, the advertisers often try to examine effects of their budget

decisions on the ad’s effectiveness. Address the following

a) Is the budget allocated for campaign appropriate for its size?

b) Will a larger budget increase sales?
c) Is the allocated budget greater than the anticipated sales?
d) Should more money be spent in enhancing the current
campaign?

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 ADVERTISING EFFECTIVENESS: WHERE TO TEST

Laboratory Testing: In a lab testing environment, participants from the

target market are brought in to be asked questions about the ad or to
evaluate their reaction towards it.

The major advantage of using this type of testing environment is the

control it providers for the researchers

The major disadvantage of using this type of testing environment is the

lack of realism. The general consensus is that when people are brought
into a lab they may scrutinize the ads much more than they would at
home – leading to biased responses.

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 ADVERTISING EFFECTIVENESS: WHERE TO TEST

Field Testing: In a field test, researchers might go out to the

participants’ homes or offices and observe their reaction to the ad.
It provides more realistic opinions of respondents as they consider
external factors, competition, etc.
The major disadvantage of field testing is the lack of control. The
participants may evaluate the ad based on factors outside the
attributes of the ad itself (their mood, feelings towards the
company, feelings about the competition, etc.).

Field testing often requires a larger investment of time and money.

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 Pretesting Methods

Laboratory Field
Consumer Juries Dummy Ad Vehicles

Portfolio Tests On-air Tests

Physiological Measures

Theater Tests

Rough Tests

Concept Tests

Readability Tests

Comprehension and Reaction Tests

 Post testing Methods

Recall Tests

Association
Tracking Studies
Measures

Methods

Recognition Single-Source
Tests Systems

Inquiry Tests
 ADVERTISING EFFECTIVENESS: WHEN TO TEST

Pre-testing: Actions taken before campaign is executed.

Comprehension and reaction testing: The concern is whether the

ad conveys the meaning intended, and also the consumer's reaction
to the ad.
Reaction tests, Personal interviews, group interviews, and focus
groups have all been used to assess these responses. Examples of
questions asked to consumers are:
1. Which ad did you find most interesting?
2. Which of these ads would interest you the most?
3. Which layout would be most effective in causing you to buy?

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 ADVERTISING EFFECTIVENESS: WHENTO TEST

PRE TESTING

1. Portfolio tests (print) – RECALL DATA on folder of

different versions of “TEST advertisements” viewed in
many instances.

2. Readability tests (print) – Legibility, Comprehension,

Text, Short sentences, personal words and references.
E.g. conveying the Best Message using the Best of
Words and using short sentences

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 ADVERTISING EFFECTIVENESS: WHEN TO TEST

PRE TESTING
3. Dummy advertising vehicles (print) - Dummy magazines
contain regular test advertisements inserted. These pretend
magazines are distributed to a random sample of households.
Readers are encouraged to observe and later they are asked
questions about the editorial and the advertisements.

4. Theater tests (broadcast)

5. On-air tests – single source ad research – inserting

commercials into actual TV and/OR Radio Programs in certain
test markets

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 ADVERTISING EFFECTIVENESS: WHEN TO TEST
PRE TESTING
Halo effect-- sometimes participants rate an ad good on all
characteristics because they like a few and overlook specific
weaknesses. This Halo effect distorts the ratings.

Preferences for specific types of advertising may overshadow

objectivity-- Ads that involve emotions or pictures may receive
higher ratings or rankings that those employing copy, facts, or
rational criteria. The latter may be judged less favorably by
participants who prefer emotional appeals.

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 ADVERTISING EFFECTIVENESS: WHEN to test

PRE TESTING

Physiological Measures: This involves a laboratory setting in which

physiological responses are measured. They indicate the receiver’s
involuntary response - thus eliminating biases associated with
voluntary measures. This includes:

1. Pupil dilation- designed to measure dilation and constriction of

the pupils of the eyes in response to stimuli. Advertisers have used
this to evaluate product and package design as well as to test ads.
Pupil dilation suggests a stronger interest and response to an ad.

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 ADVERTISING EFFECTIVENESS: WHEN to test

2. Eye tracking- viewers are asked to view an ad while a sensor aims

a beam of light at the eye and follows the movement to show the
spot on which the viewer is focusing. This shows how long viewer is
focusing on each image and the sequence of viewing.

Key Points:
Pretesting can help companies improve their ads and save them
money before it is too late. However, many marketers skip pre-
testing because many believe being first in the market offers them
an advantage over competitors.

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 ADVERTISING EFFECTIVENESS: WHEN to test

POST TESTING
Post-testing: Occurs after the ad has been in the field. It is
designed to determine if the campaign is accomplishing the
objectives.
Inquiry Tests: designed to measure advertising effectiveness on the
basis of inquiries generated from ads. The inquiry may take the
form of the number of coupons returned, phone calls generated
immediately after an ad release, or direct inquiries through reader
cards.
Recognition Tests: To identify the recognition of the Brand by the
target audience – do potential buyers recognize the brand easily

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 ADVERTISING EFFECTIVENESS: WHEN to test

POST TESTING

Recognition tests – EXAMPLE

1. Noted: % of readers of an issue who remembered seeing the

ad
2. Associated: % of readers who saw part of the ad that clearly
indicates the brand or advertiser
3. Read Most: % of readers who read 50% or more of the
material in the ad

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 ADVERTISING EFFECTIVENESS: WHEN to test

POST TESTING

Recall tests: Traditional interviews with Web users help determine

recall and whether viewers remember the ads they see.

Scores are based on percentage of respondents who can

accurately recall the ad, idea communication, and likelihood of
purchase.

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 ADVERTISING EFFECTIVENESS: WHEN to test

POST TESTING

Running split-run tests: In this case the variations of the ad appear

in different websites, targeting different audience which examines
specific elements of the ad or variations on it.

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 ADVERTISING EFFECTIVENESS: WHEN to test

POST TESTING

QUANTITATIVE METHODS

Measuring the effectiveness of the internet ADVERTISING

is done by variety of methods, most of which can be done
electronically.

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 ADVERTISING EFFECTIVENESS: WHEN to test

POST TESTING

Hits: The number of times that a specific component of a site is

requested.

Since perhaps 5 out 6 "hits" are for graphic images, the number of
"hits" can be grossly misleading. Usually people mean by "hits" the
number of times a webpage has been seen, but to be precise, the
better term is "page views" or "page impressions."

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 ADVERTISING EFFECTIVENESS: WHEN to test

POST TESTING

Page impressions or Page views: the number of times a

webpage has been requested by the server

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 ADVERTISING EFFECTIVENESS: WHEN to test

POST TESTING

Banner views: The number of times a banner has been viewed.

Almost the same as "page views," but some banner

server programs don't count the banner view unless the visitor
stays on the page long enough for the banner to be fully
downloaded from the banner server.

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 ADVERTISING EFFECTIVENESS: WHEN to test

PACT – Positioning Advertising Copy Testing

Principles ADOPTED AND PRACTISED by the largest ad agencies for

conducting appropriate effectiveness studies

Establish communications objectives

1. Use a consumer response model

2. Use both pre and post tests
3. Use multiple measures

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