Advertising Budget Planning

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Learn how to plan an advertising budget in order to control costs.
Learn how to plan an advertising budget in order to control costs. (Image: budget report image by TEMISTOCLE LUCARELLI from Fotolia.com)

An advertising budget is the next step after creating a marketing plan, according to the website Inc.com. Your marketing plan contains vital information such as projected sales revenue, target audience and product distribution. Using the various elements of a good marketing plan, you can begin to create a comprehensive advertising budget.

Setting the Budget

Your advertising budget is a component of the revenue projections in your marketing plan. You can figure your budget one of two ways. The first is to set a flat rate for your advertising and apply that flat rate as an expense against revenue. While this makes it easier to establish the advertising budget number, it may not generate a number that will get you the results you are looking for. The second way is to establish a budget as a percentage of the projected revenue. The percentage comes from data gathered in previous advertising campaigns. For example, if your experience with your particular target market shows you that an advertising budget based on 10 percent of projected revenue will get you the results you are looking for, then that is the percentage you will use.

Budget Allocation

The budget number is a broad figure that you will use to meet your sales goals. Once you have the number, you then need to allocate it to the various elements of your budget. Some of the areas that need funding are personnel, office overhead and advertising mediums. Within advertising mediums there are newspaper, magazine, brochures, radio, television, billboards and Internet. Determining how to allocate funds depends on the market research data regarding your target audience. If your target audience prefers to get information from the Internet and television, then you will have to allocate the majority of the funds to those areas.

Duration

Your advertising budget needs to have a timetable, and the budget needs to be broken down within that schedule. In order for an advertising campaign to be effective, it needs defined goals within a predetermined time period. An advertising budget covers one single campaign focused on one single idea, product or service. It is easier to monitor costs and determine the effectiveness of an advertising budget when it has a deadline.

Dynamic

In order for an advertising budget to be effective, it needs to remain dynamic. As you get into your advertising campaign, the results you start to receive may indicate that some of your market research was incorrect. For example, the market research may have indicated that magazine print advertising would be effective. But the actual results show the radio advertising to be more effective than print. You need to re-evaluate your budget on a regular basis and be prepared to make changes that reflect the results you are getting.

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