A Successful advertising budget helps a company reach the ideal prospective customer at the lowest cost.
Preparing a successful advertising budget is critically important to assure that ad dollars are used as efficiently as possible to yield the highest return in new customers, sales and increased brand awareness. Whether you are a seasoned marketing person or someone responsible for creating an advertising budget for the first time, review the key components of a successful advertising budget to make optimal use of advertising dollars.
Objective
Clearly define measurable objectives for your advertising program before allocating dollars. Measurement criteria could include, for example, number of inquiries received or number of new customers acquired. After a preliminary budget has been prepared, check the dollar allocation against your objectives to make sure your allocation makes sense. For example, if one of your objectives was to penetrate a new market, and only 1 percent of your entire budget was allocated to advertising in that market, you may have not allocated enough.
Target Market
Before allocating dollars, decide on the target audience you want to reach. Determine who your ideal customer is. If your target market is too broad, you lessen the impact of your advertising and will not be as efficient. For example, it would be a smarter decision to advertise a cure for a serious disease to those who have it as opposed to advertising to the general public.
Budget Amount
The amount to allocate for advertising should be determined by looking at last year's expenditure, projected sales for the new year and new marketing initiatives that call for special funding such as entry into a new market. If you are establishing the advertising budget for the first time, check the percentage of sales in your industry generally allocated to advertising. This should be used only as a general guide, however, because every business is different.
Media
To plan a successful advertising budget, you must decide what type of media best reaches your target market. For example, media types include television, radio, newspaper, Internet and magazines. Once you decide on media type, examine media outlets such as specific television stations and how well these outlets reach your target market. One method of measuring the efficiency of your media placement is by calculating the cost per thousand (CPM) targeted individuals to reach. In addition to media type and outlet, another factor to consider is discounts the media offer for larger purchases.
Net Media Cost
If your company has an in-house agency, you can usually deduct 15 percent off your gross media costs -- the fee the company normally pays to advertising agencies. An in-house agency performs the same functions as an advertising agency
