An advertising budget is an estimate of a company’s promotional expenditures over a certain time period.
The term ‘advertising budget’ in essence is nothing but planning the advertising expediture. The amount of money to be utilized for advertising purpose is charged to the profit and loss account of the co. and therefore is of vital importance both to the co. and to the advertising agency that handles advertiser’s account. Advertising costs money & before spending, it is necessary to ensure its proper investment.
Every ad is a long term investment in the personality of a brand. Therefore, when advertising is recognized as a type of future investment, care must be taken today to make it more effective with proper planning of advertising budget.
More importantly, it is the money a company is willing to set aside to accomplish its marketing objectives. When creating an advertising budget, a company must weigh the value of spending an advertising dollar against the value of that dollar as recognized revenue.
1. Check on advertising expenditure
Advertising budget helps to have a check on advertising expenditure. Depending upon the budget, the advertiser will utilize the right funds to achieve the advt. objectives. There will be no wastage of funds by over spending on advertising the right amount will be spent to achieve the advertising objectives.
2. Approval from top management
The framing of advertising budget will enable the advertising manager to obtain approval from the top management. If the top management feels that the budget amount is more, then the advertising manager may have to provide necessary justification for higher budgets.
3. Balanced focus
The ad budget is prepared taking into consideration the requirements of the products that are to be advertised. The right product is to be allocated the right amount of money. Again, there will be proper focus on the right place & the right period of advertising.
4. Facilitates Planned Execution
The right amount will be spent on the right product in the right media at the right period and place. This will enable the advertiser to achieve ad objectives.
5. Provides direction for drafting of Ads
The Ad budget provides a proper direction for drafting of ads. Depending upon the budget, the ads will be filmed or drafted. When there is a large budget ,the advertiser may think of selecting popular personalities, shooting the film at exclusive locations, using sophisticated computer graphics & so on.
6. Selection of Media
When advt. budget is large, the advertiser can select rich media mix which includes television channels, various magazines, newspapers & even outdoor media. However, if the budget is small, the advertiser has to be very selective in the choice of media.