ADVERTISING: How much will it cost? How do i work out my budget? Is it worth it? How do I know whether I'm getting value for money?
| Published date | 01 October 1980 |
| Date | 01 October 1980 |
| Pages | 23-24 |
| DOI | https://doi.org/10.1108/eb057137 |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
How much will it cost
How do l work out my budget?
ADVERTISING
Is it worth it?
How do I know whether
I'm getting value for money?
GROWTH is the key to survival.
Growth is dependent upon new cus-
tomers. If your customer doesn't
know you exist - he isn't going to be
your customer, so some expenditure
on outgoing promotion directed at
people you don't yet know of and who
don't yet know you is essential and
inescapable. O.K., but how much?
There is no point in spending a
penny on advertising unless that
expenditure is regarded as an invest-
ment against future return. Repeat
this sentence to yourself every night
before going to bed; it'll make you
feel better and it might lead to a more
commercial attitude to your advertis-
ing budget and your advertising
agency
At worst, advertising is a necessary
that it gets better as you go along.)
a) The 'let's think of a number, and
halve it' school
This technique, if you can dignify it
by any such word, is widespread; par-
ticularly among smaller companies
with managements who are so scared
that they dare not delegate either
authority or responsibility. 'The
Chairman's decision is final', and he
doesn't want any interference from
anyone who might know better, or
even have a useful point of view
because that would unsettle him.
This expenditure is doomed to fail-
ure because it has neither objective to
be achieved nor commercial base to
be built from. It's sad, because not
only does it waste time and money,
but it gets advertising a thoroughly
This is one of the consumer market-
ing techniques turned completely on
its head and introduced to industry by
the dropouts. It seems like an ideal -
the 'self-liquidating' advertising
budget - but it is no more than an
extrapolated travesty of the budget
breakdown that any brand manager
of toilet soap prepares for his market-
ing director. Travesty, because in the
case of the brand manager he is simply
expressing that percentage of total
cost that will in his view be account for
by the advertising expenditure neces-
sary to establish or maintain product
sale.
With the add-a-bit-on school it is
simply a con trick because it has no
bearing either on company finances
or projections, it falsifies the product
end-cost, and it has no relevance to
expenditure as part of a programme
to maintain stable sales; but at best, it
is a carefully calculated investment
for future growth. A sum of money set
aside to perform a specific job of work
for the company, a sum measurable
by results as tightly as the perfor-
mance of each salesman. A sum which
it is the responsibility of your advertis-
ing agency team to be fully account-
able for to you - if you give it a chance.
To some members of industrial
management the foregoing may seem
a bit strong. I make no apologies, as
may be derived from having a brief
look at the major ways that adver-
tising/promotional/marketing
budgets are being fixed by an alarm-
ing number of companies at this very
moment. (I have tried to put them in
descending order of frightfulness so
bad name.
b) The 'let's think of a percentage and
stick to it' school
At least the adherents of this
method have some yardstick by which
they can relate advertising expendi-
ture to other categories. But is has no
relevance to marketing conditions, no
objectives, no chance of being meas-
ured for effectiveness. It also has the
major defect that once voted, those in
charge of the budget are condemned
to spend it willy-nilly. It doesn't much
matter what on, as long as it's spent. If
it isn't, it'll be smaller next year, and
so in proportion will be the job of the
fellow elected to handle it. Why not
just give him a rise instead - it'll cost
less.
c) The 'add-a-bit-on-and-they'll-not-
notice' school
the likely real cost requirements of
promotion.
d) The 'it worked last year, so play it
again Sam' school
I had a headmaster once who used
to out-perform the weather forecas-
ters with alarming regularity. The
technique was simple: the weather
tomorrow will be exactly the same as
today. Fine; even in this country the
weather sticks around the same for
several days, usually. But what was
fine for school cricket matches across
24-hour periods is very much not so in
the heat of competitive marketing and
the span of
a
year or more. Only if you
can safely assume that the demand,
the competition, the product range
and the value of the pound are all
going to be the same in eighteen
months time should you use this
NOVEMBER 1980 23
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