Budget: It’s Part of Your Advertising Strategy

It’s amazing how many businesses come to us for an advertising strategy without having decided on an advertising budget.  If you’re going to plan for your advertising to work for you, you’ve got to start by planning how much you want to invest in that plan.  Every business needs an advertising budget...every business!  With a budget, you can make intelligent decisions on your advertising strategies, and be able to work with a specific set of goals in mind.

We have a simple form that will help you through the budgeting process.  For a free copy of our 3-Step Advertising Budget form (in Adobe Acrobat PDF format), just ask and we’ll e-mail it to you.

Developing your advertising budget is easy, if you remember these three principles:

1. As you sow, so shall you reap — if your advertising is done right, the results of your advertising (that is, your company’s sales) should be proportionate to your investment.
2. Fish when the fish are biting — it’s best to advertise when your customers are buying (actually, in anticipation of seasonal fluctuations).
3. Special challenges, special solutions — unusual circumstances (grand openings, product launches, awareness campaigns, crisis) call for extra promotional efforts and investments.

Here’s a three-step process for preparing your advertising budget, based on these three principles, and on your company’s past history.  If you don’t have a history, you may have to do some research to find out what the norms are in your industry.

Step 1: Historical data

PART A.  Gather up the amounts your company invested during the last 12 months on these advertising and advertising-related activities:  Media charges, Printing, Creative and Graphics, Strategic and consulting services, Postage used for advertising, Mailing services, Promotional items, and any other expenditures related to your advertising effort.      The total is your last-year’s investment.

PART B.  Take your total sales for last year and calculate the percentage of that total that each month represents (example: June = 8% of the total year).  List them beginning with the FEBRUARY percentage and ending with JANUARY.

Step 2: Setting your goals

Total the following percentages:  a) Percentage you would like your sales to increase; b) How unusual circumstances will affect your promotional needs; the expected rate of inflation and a contingency fund to set aside.  Total these percentages.  Multiply times your last year’s investment.  This, plus your last year’s investment is your Advertising Budget for Next Year.

Step 3: Allocating your budget

Multiply your monthly sales percentages (beginning with the FEBRUARY amount) times your total Advertising Budget for Next Year, and list the figures for your monthly budget for next year beginning with JANUARY (that is, your FEBRUARY percentage of sales should equal your JANUARY percentage of your advertising budget).

If you’d like, ask for a free copy of our simple 3-Step Advertising Budget & we’ll email it to  you.

Once you’ve completed your advertising budget, you can then begin to formulate your media plans and other ad strategies.  That’s also where we can help.  Call us at 781-821-1818.