Determining Your Budget

Task objective method

Historical method

Percent-of-sales method
Combination method Payout Planning

Objective-and-Task Method
The most sensible and defendable advertising budgeting method Specify what role they expect advertising to play for a brand and then set the budget accordingly

Determining Your Budget

Historical Method
Working from a base budget, you increase it by a certain percentage each year If you have a budget of Rs.10,000,00 this year, increase it by 5% next year Your ad plan is then limited by what you have available to spend

Determining Your Budget

Percent-of-Sales Method

forecast your sales and then allocate a certain percent of sales to your ad budget
Past advertising money divided by past sales equals percent of sales Percent of sales multiplied by next years forecast equals the new advertising budget Average advertising budgets are 20% of sales

Determining Your Budget

Combination Method
You dont need to pick just one method, compare the numbers and use a combination Evaluate your situation

How much can you afford? What will it take to reach your objective? Do you need to set aside extra budget to take advantage of unexpected opportunities?

Determining Your Budget

Payout

Planning

A payout plan is a budget used in new product introductions where more money than usual is needed to launch a brand. The extra money comes not only from the sales made by the brand but also from allocating the brands profits to advertising for a limited time