ADVERTISING BUDGET

Advertising

planning, co-ordination and control are hinged on advertisement budget.

Advertisement Budget & Advertisement Appropriation

Advertisement appropriation is the total amount granted or earmarked by the top management for advertising. Such sum is based at by arbitrary calculations based on guess work. Advertisement budget is plan that sets limits on the advertising expenditures, states how expenditures will be allocated and controls the disbursement of advertising over a designated period of time, normally a year. Projects how much money we have at our disposal and how we are going to spend to get the best results over the coming year or years

Items included in advertisement budget

Media costs Mechanical or production costs Administrative costs Research costs

Printers guide to allocation of advertising appropriations

White lists

Black lists

Consists of those systems which are always justified under any scheme of accounting practice and therefore belong to advertisement account Those advertisement charges (expenses) which cannot and shouldnt be justified under any scheme of accounting Includes those expenses which are justified only in some cases Justification for charges depends upon the method used in carrying the advertising activity Its the border line list

Gray lists

Advertisement expensesin conclusion

Media costs Point of sale advertisement expenses Costs of producing the advertisements Advertising research expenses Payroll expenses including the costs of outside technicians Advertisement department supplies and equipment charges Travel expenses on a/c of advertising programme

Advertisement Budget Procedure

Budget preparation

Matter of time & Brain Planned & designed by advertisement manager with the assistance of staff & advertisement personnel Based on market, sales, distribution, completion & the like Should be based on suitable method
Presented to the higher-ups for approval

Budget presentation

Budget Implementation Budget control

Deciding the Advertising Budget (how much should a company spend?)

No Standard Formula or Norm Varies from industry to industry Varies from company to company Varies from company to company within same industry Varies within same company over time

Factors influencing the size of the advertisement budget

Objectives to be achieved;

Coverage expectations

Act as standard for advertisement performance Higher the priority given to a goal or a set of goals, more will be the willingness to spend the funds in achieving them.
Implies no of persons to be reached thru different media Convenience goods-----large advertisement Shopping goods------less advertising (self evaluation) Specialty goods----normal spending on advertising

Product class

Stages in the product life cycle

Introduction---heavy advertisement Growth ----substantial Maturity ----budget gets reduced Sour economic conditionscut in budget Boom---fatten their budgets beyond limits Demand & supply conditions----decide spending Old company----new product launched easily New company----spending on new budget

Prevailing economic conditions

Age of the company

Size of the company

Bigger companies----vast financial resources--liberal adv. Budget Big company get better results with moderate spending than a smaller company

Funds available Competitive activities The approach to advertising

Setting Advertising Budgets

Affordable Method
Setting Promotion Budget at the Level the Company Thinks They Can Afford.

Percentage-ofSales Method
Setting Promotion Budget at a Certain % of Current or Forecasted Sales

Competitive-Parity Method
Setting Promotion Budget to Match Competitors Outlay

Objective-and-Task Method
Setting Promotion Budget by Defining Objectives, Tasks & Costs.

Advantages & Disadvantages of all

Self study