Advertising Strategy

3. The Budget

Deciding how much you should spend is as much an art as a science.

3.1 How much do you normally spend?

• How much did you spend last year, and how effective was it, in relation to your business objectives?

3.2 What are your competitors doing?

• If your competitors are advertising heavily, you may need to match their budgets to ensure that your message is heard.
• If a new competing product has been launched, you may need to fight off the competitive threat.

3.3 How far are you from achieving your objectives?

• If you are launching a new product into a new market, you may need to spend heavily to achieve customer awareness.
• If your product is already well established, you may only need a few advertisements to keep up 'front of mind' awareness.

3.4 What is your advertising worth to you?

• What sales margins do you make and how much repeat business can you expect?
• What is the lifetime value of a new customer?
• Are you considering a brand-building investment? Are you planning a short-term sales drive or longer-term awareness?
• How effective do you expect your advertising to be?

3.5 What media can you afford to consider?

Your choice of medium will affect budget decisions, as there may be a minimum threshold of spend to be effective (see 4).