When developing an advertising campaign for their enterprise, many are faced with the problem of calculating the optimal amount of the advertising budget. Indeed, on the one hand, these costs cannot be dispensed with, but on the other, I would like to minimize them to the maximum. To identify the most effective solution, it is necessary to use one of the many techniques that are currently widely used.
Instructions
Step 1
Use the residual advertising budget method. For this purpose, those amounts of profit are allocated for advertising, which remained after distribution to other types of expenses of the enterprise. This method of calculating the advertising budget is rather ineffective, since it does not reflect the real tasks and goals of the company, and is suitable only for short-term financial projects.
Step 2
Set your budget in relation to a percentage of sales. In this case, it is necessary to take into account the fixed costs of the enterprise and identify the optimal percentage that will not have a significant impact on the activity. You can also include this value in the cost of manufactured products for maximum efficiency. The indicator should be adopted for the entire reporting period and can be adjusted in case of fluctuations in the sales of production. In addition, you can use the percentage accepted by competitors. At the same time, the advertising activity and sales volume in monetary terms of the second enterprise are estimated and applied for the current production.
Step 3
Calculate your advertising budget by equating your advertising market share to your business's product market share. In this case, the advertising situation in the given industry and the general market position are assessed. The position of the company in it is calculated and the linear dependence of advertising costs and shares of the product market is determined. It must be remembered that with an increase in the total volume of the advertising market, you must also increase your own budget in order to maintain the ratio of planned shares.
Step 4
Analyze the goals of the advertising campaign and calculate the costs of their implementation. This method is applicable only for companies that are not limited in financial opportunities, striving for the most effective advertising, and not to optimize costs.
