ADVERTISING BUDGET

SUBMITTED BY: -

Suman Kumar Singh

Roll no: M08103

2ND session exams
 TOPICS COVERED

• Definition

• Process of Advertising Budget

• Budgeting Methods
Definition:

Advertising budget is not an exception to the general

budget. It is translation of an ad plan in to money. It
include a large body of information embracing sales
goals, products facts, marketing information,
competitive situation.
 PROCESS OF ADVERTISING BUDGET:

• Collection of data and preparation of budget :

Determining the size of future advertising appropriation
and the budget must be allocated among different market
segment.
• Presentation and approval of the budget:
After it is developed by the advertising head it in
consultation with the agency personnel it is presented before
CEO for approval.
• Budget execution:
The next step is purchase of authorised time and space over
the media and the agency handles handles the job on behalf
of the advertiser.
• Control of budget:
It is the duty of the advertising manager to see whether
actual advertising expenditures coincide with the budgeted
expenditure or not.
 Budgeting Methods:

• Percent-of-Sales
Percent-of-SalesBudgeting
Budgeting
• Objective-and-Task
Objective-and-TaskMethodMethod
• Competitive Parity Method
Competitive Parity Method
(match competitors method)
(match competitors
• Affordability Method method)
Affordability Method

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 Percentage-of-Sales
Budgeting
A company sets a brand’s advertising budget by
•simply
A company
multiplyingsets a year
the past brand’s
sale or projected
advertising
sale for the budget budget
period withby simply
a predetermined
establishing the budget as a fixed
percentage.
percentage of past or anticipated
Advertising allocation= a% x Rs. sale
sales volume
• Criticized as being illogical
Why??

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Objective-and-Task Method

The most sensible and defendable

• The most sensible and defendable
advertising budgeting method
advertising budgeting method
•Specify
Specifywhat
whatrole
rolethey
theyexpect
expect
advertising
advertising to to play
play forfor a brand
a brand and
and
then
then setset
thethe budget
budget accordingly
accordingly

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 The Competitive Parity
Method

Sets the ad
• Sets budget
the by basically
ad budget following what
by basically
competitors
followingare doing
what competitors are
doing

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 Affordability Method
•Only
Onlythe the
fundsfunds that
that remain remain
after after
budgeting for
budgeting
everything else arefor everything
spent on advertisingelse are
spent on advertising
• Only the most unsophisticated and
Only the most unsophisticated
impoverished firms and impoverished
• However, affordability and
firms
competitive
However, considerations
affordability and competitive considerations
influence the budgeting decisions
influence the budgeting decisions of all companies
of all companies
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