5 Methods of Allocating The Advertising Budget

1. Historical Method :

  • Common budgeting method.
  • May be based on last year’s with a percentage increase.
  • Nothing to do with advertising objectives.

2. Task-Objective Method: Bottom-Up

  • Most common method.
  • Looks at objectives set for each activity, and determines the cost of accomplishing each objective.

3. Percentage-of-Sales Method :

  • Compares total sales with the total advertising (or marketing communication) budget during a previous time period to compute a percentage.

4. Competitive Methods:

  • Relates the amount invested in advertising to the product’s share of market.
  • Must understand share-of-mind.

5. All You Can Afford Method:

  • Allocates whatever is left over to advertising.
  • Companies who use this don’t value advertising very much.