Advertising budget

The advertising budget can be written before or after a business owner has developed the advertising strategy. When to make a budget decision depends on the importance of advertising and the resources available to the business. If, for instance, a business knows that they only have a certain amount of money for advertising then the budget will tend to dictate what advertising is developed and what the overall marketing objectives will be. On the other hand, if a business has the resources available, the advertising strategy can be developed to meet predetermined marketing objectives. For small businesses, it is usually best to put together an advertising budget early in the advertising process.

The following approaches are the most common methods of developing an effective budget. All the methods listed are progressive ones that look to perpetuate growth:

* Percentage of future or past sales
* Competitive approach
* Market share
* All available funds
* The task or objective approach

The easiest approach—and thus the one that is most often used—is the percentage of future or past sales method. Most industry experts recommend basing spending on anticipated sales, in order to ensure growth. But for a small business, where survival may be a bigger concern than growth, basing the advertising budget on past sales is often a more sensible approach to take.