Formulation method of advertising budget

At present, there are dozens of ways for advertising industry to formulate advertising budget. There are seven common methods: sales percentage method, profit percentage method, sales unit method, goal achievement method, competitive confrontation method, expenditure possibility method and arbitrary increase and decrease method. (Fixed sales percentage method)

This calculation method is based on a certain proportion of sales in a certain period to calculate the total advertising expenses. Due to different implementation standards, it can be subdivided into four methods: planned sales percentage method, previous year's sales percentage method and its comprehensive compromise-average compromised sales percentage method and planned sales growth percentage method.

The calculation method of sales percentage is simple and convenient, but it is too rigid to adapt to the changes in the market. For example, if sales increase, advertising fees can be appropriately reduced; If the sales volume is small, you can also increase advertising fees and strengthen advertising. This is a method to calculate the advertising budget according to the distribution of advertising fees for each product. Based on planned sales, the method is simple, especially suitable for small profits but quick turnover. Using this method, we can master the advertising expenses of various commodities and their changing rules. At the same time, the advertising effect is also easy to grasp. Formula:

Advertising budget = (advertising fee last year/number of products sold last year) × number of products planned to be sold this year. This method is to establish advertising objectives according to the market strategy and sales objectives of the enterprise, and then make advertising plans according to the advertising strategies required by the advertising objectives, and then make advertising budgets. This method is more scientific, especially for the newly listed products, which is very beneficial and can flexibly adapt to the changes in marketing. The advertising stage is different, the intensity of advertising activities is different, and the expenses can be adjusted freely. The goal achievement method is to determine the advertising budget with the advertising plan. A clear advertising goal is also conducive to checking the advertising effect, and its formula is:

Advertising cost = target number × per capita advertising arrival cost × advertising times This method is used to determine the advertising budget of enterprises according to the advertising cost of competitors of advertising products. Here, advertisers clearly regard advertising as a tool for market competition. There are two specific calculation methods, one is the market share method and the other is the percentage increase and decrease method. The calculation formula of market share method is as follows:

Advertising budget = (opponent's advertising expenses/opponent's market share) × expected market share of this enterprise.

The calculation formula of percentage increase or decrease method is as follows:

Advertising budget = (1 competitor's advertising fee increase or decrease rate) × advertising fee last year (note: this method is costly and must be used with caution. ) Based on the advertising expenses of the previous year or the previous period, increase or decrease the advertising budget according to financial resources and market needs. This method has no scientific basis, and is mostly adopted by ordinary small enterprises or temporary advertising fees.

Besides, there are many other ways to calculate the advertising budget.