ADVERTISING

APPROPRIATION
 Build Up Approaches
Budgeting strategy is established by designing
the communication objectives and budget
that is deemed necessary to attain these
goals. This includes:
1. Objective and Task Method.
2. Payout Planning.
3. Quantitative Models.
 Objective and Task Method
• Scientific approach
• Most common method.
• Looks at objectives set for each activity, and
determines the cost of accomplishing each
objective
• This process is easier if there is a past experience.
• Consists of a build up approach consisting of
several steps
 Establish Objectives

Determine Specific
Tasks

Estimate Required
expenditure

Monitor

Re evaluate objectives
 Payout Planning
• Marketers often develop a payout plan that
determines the investment value of the
advertising and promotion appropriation.
• Basic idea is to project the revenues the
project will generate as well as the cost it will
incur.
• The advertising expense is highest in the first
year and declines the next year.
 Quantitative Model
• Employs statistical technique to determine the
relative contribution of the advertising budget
to sales.
• Uses methods like regression analysis to
determine the relative contribution of
advertising budget to sales.
 Methods Of Advertising Appropriation

• Budgeting Decisions
Budgeting decisions involve determining how
much money will be spent on advertising and
promotion each year and how the money will
be allocated
Two major decisions
•Establishing the size of the budget
•Allocating the budget
Allocation of Advertising Budget
After determining the size of budget, it is
then allocated according to a variety of
parameters
 ADVERTISING BUDGET

PRODUCTS
SALES TOTAL
MEDIA TO BE
TERRITORIES EXPOSURE
ADVERTISED
 Media
• Largest part of the advertising budget.
• Large amount allocated to buying space in the
selected media.
• Use of media depends on the needs of the
strategy chosen, availability of media in the
country and the extent of exposure of the target
audience to the selected media.
• Latest media includes product placements in
movies and video games and advertising in social
networking sites etc
 Sales Territories
• Marketing-and-sales department and the
advertising departments work together in
allocating the total advertising expenditure by
sales territories.
• This distribution depends on
– Number of dealer outlets
– Population
– Number of salesmen
– Sales potential
– Character of the media
 Total Exposure
• Determined by the frequency, continuity and
amount of advertising
• Each advertiser, within the budget limitation,
must develop the pattern of coverage,
frequency, continuity and quantum of
advertising in a way he deems best for
achieving the advertising objectives
 Products To Be Advertised
• Advertising budget should be broken down
into products to be advertised and the
amounts to be spent on each.
• If the manufacturing schedules of the
company is determined by the seasonal
pattern of sales, then these factors must be
considered in distributing the advertising
appropriation for these products.
 Factors affecting advertising budget
• Market size
• Stages in product life cycle
• Advertising strategy
• Product differentiation
• Price charged
• Competitive spending
• Nature of product
• Approach to advertising
• Prevailing economic condition
• Financial resources
• Market potential
• Other factors
– Frequency of purchase
– Expected returns
 Advertising scene in India
• Increase in advertising spending
• Growth in media
• Growth of ad agencies
• Legal regulations on advertising
• Professional bodies
• Increase in market coverage
• Increasing trend of branded products
 Top 10 Indian Spenders
1. Hindustan Unilever
2. Reckitt Benckiser (India) Ltd
3. ITC Ltd
4. PepsiCo
5. Bharti Airtel Ltd
6. Coca-Cola India Ltd
7. Procter & Gamble
8. Colgate Palmolive India Ltd
9. Nokia Corporation
10.Johnson & Johnson Ltd
Thank You

sowmya..