How do you figure out an advertising and public relations budget
A small BBQ company in business for 6 years needs to put together a budget for investors. Need to know how to figure out the 2 budgets.
Answers (2)
Rich T.
Global Business Director at Wirestone
Best Answers in: Sales Techniques (3), Advertising (2), Direct Marketing (2), Internet Marketing (1), Business Development (1), Lead Generation (1)
I'd suggest the first thing you do is carefully define the geography and territory to be covered, as this will significantly impact their budget needs.
If the company is a local or regional player, then they should identify and investigate key brands they are competing with.
On the other hand, if they are trying to compete at a national or global market level, the competitive set and list will be much broader.
There are two fast and quick ways to explore budget setting for Advertising and PR. First, gather industry information from a trade association that identifies the total gross revenues (sales) for their product category annually. Also gather market share information to identify what proportion of these sales the Client's competitors represent.
Typically, Advertising and PR budgets are propotionate to market share. Meaning if the category leader represents say 25% of all annual sales, they will likely represent 25% of all advertising spending. As a general rule of thumb, advertising spending is commonly proportionate to market share.
So if you're Client intends to grow it's business to a 5% share of the category, they would want to budget at a level that allows them to spend 5% share of voice.
Share of voice is a term that relates to advertising spending. You can determine it by analyzing information form LNA (Leading National Advertiser). LNA provides information on both local, national and global advertising spending. You may have to purchase this information (unless you know a media planner/buyer that has access to it).
To calculate Share of Voice, take total spending for the category and divide it by any individual brands reported spending. This gives you their "share of voice (spending)" relative to others on an annual basis.
Comparing share of voice (spending) data to share of market information can help you assess which brands are investing in growing their business through advertising.
To budget properly, you need to invest the time and resources necessary to compile good market share and advertising/pr spending data. If this kind of data is something you don't have access to, I'd suggest trying to work with a consultant, Ad Agency or Media Planner/Buyer who can help you.
Hope this helps. Good luck
Gary A. S.
Marketing Director at CocoaBella Chocolates
Best Answers in: Small Business (2), Advertising (1), Business Development (1)
It will take a lot longer than using rules of thumb, but I recommend you build a marketing plan from the bottom up, particularly for a retail business. This means thinking through each and every activity you would like to implement, the timing of the event or activity, and estimate the activities and cost of those activities, to implement them.
If you've had success at advertising and PR in the past, then you have a historical basis to estimate those costs. If you are thinking of doing them for the first time, you'll want to consider hiring an agency (or agencies) or managing the components yourself through freelancers.
Although I've done it in the past, I'm personally not a big fan of advertising for retail, particularly restaurants. PR can be great as long as there is a big idea that generates customer support and enthusiasm. My preference would be to create loyalty promotions (free birthday meals, anniversary / founders birthday celebrations, charitable tie-ins / donations, live music evenings, holiday celebrations, limited availability special dishes, etc) targeting existing customers as well as neighborhood marketing programs (i.e., grassroots) such as street teams, vehicle wraps, event sponsorships and good old networking.
