Advertising Objectives and BudgetingAdvertising Objectives and Budgeting

Focus &Coordination

Focus &Coordination

Plans &DecisionsPlans &

Decisions

Measurement& Control

Measurement& Control

HelpsDecision-making

HelpsDecision-making

Focus & Coordination – “Sanity Structure”

Focus & Coordination – “Sanity Structure”

Why Have Advertising Objectives?

ObjectivesObjectives

AttainableAttainable

MeasurableMeasurable

SpecificSpecific

RealisticRealistic

Specific Promotional Goal

Specific Promotional Goal

Measurable Goal – “degree of

change sought”

Measurable Goal – “degree of

change sought”

Attainable/ Realistic

Attainable/ Realistic

Target AudienceTarget

Audience

Time FrameTime Frame

Characteristics of Objectives

ObjectivesObjectives

Some Generic Ad Objectives

stimulate salesgrab attentioncreate awarenessestablish brand identityestablish/cue brand position and/or imagecreate mental associationscue emotional appealstimulate interestprovide information/educatepromote understanding of features, benefits, advantagesdemonstrate how to use/do somethingcreate brand likingstimulate brand recognitionstimulate message recallstimulate brand preference or intention to buycreate conviction or instill beliefstimulate change of opinion, viewpoint or attitudestimulate behavior (buy, call, click, visit, donate, etc.)stimulate repeat purchasesbuild brand loyaltyremindgenerate buzz or word of mouth advertisingcreate advocacy and referralsincrease general category sales/awareness ***

Sales vs. Communication Advertising Objectives

20% TrialCon

ativ

e

40% LikingAffec

tive

90% AwarenessCog

nitive

5% Use

70% Knowledge

25% Preference

90% Awareness

70% Knowledge

40% Liking

25% Preference

20% Trial

Pyramid of Communications Effects

Execution: Where are your consumers?

Teaser campaigns

AffectiveRealm of emotions.Ads change attitudes and feelings

CognitiveRealm of thoughts.Ads provide information and facts.

ConativeRealm of behaviors.Ads stimulate or direct desires.

“Image” copy “Transformational ads”Status, glamour appeals

AnnouncementsDescriptive, Long CopyDemonstrations

Comparative adsArgumentative copy

Point of purchase adsDirect Response, Deals“Last-chance” offersPrice appeals, Sales Promotions

Purchase

Conviction

Preference

Liking

Knowledge

Awareness

Stages of Advertising

• Pioneering Stage• Competitive Stage• Retentive Stage

Pioneering Stage

• Educate consumers about new products• Show people they have a need and that the

advertised product can fulfill it• Show that a product now exists to meet a

need that had been previously recognized but unfulfilled

Egg Beaters: Egg Alternative

Purell Built a Need for Hand Sanitizer

Competitive Stage

• The competitive stage is the advertising stage a product reaches when its general usefulness is recognized but its superiority over similar brands has yet to be established.

Competitive Headlines

• “All the sound without the wires.” – Bose Wave Music System

• “There is a better way to soothe your skin.” – Nivea

• “He spent decades researching the right wood for his wine barrels. You can taste the results in just a sip.” - Woodbridge Wine

• “The most fuel-efficient midsized sedan.” – Ford Fusion+Hybrid

Retentive Stage

• The retentive stage is when a brand’s general usefulness is widely known, its individual qualities are thoroughly appreciated, and it can retain its patronage merely on the strength of its past reputation and brand equity.

Brands in the Retentive Stage

• McDonald’s• Nike• Jell-O• Pepsi-Cola• Mountain Dew

• Budweiser• Disney• ESPN• Google• Gillette

The Creative Brief

Creative Brief

• A creative brief (strategy or work plan) is a short statement that clearly defines the audience, how consumers think or feel and behave, what the communication should accomplish, and the promise that will create a bond between the consumer and the brand.

Creative BriefKey observation

Communication objective

Consumer insight

Promise and support

Audience

Mandatories

Sample Creative Brief

Balancing Objectives and Budgets

Dollars Goals

What we’re willing and

able to spend

What we need to achieve our

objectives

Principles of Marginal Analysis

Increase SpendingIncrease Spending

Decrease SpendingDecrease Spending

HoldSpending

HoldSpending

If the increased cost is less than the incremental (marginal) return

If the increased cost is less than the incremental (marginal) return

If the increased cost is equal to the incremental (marginal) return.

If the increased cost is equal to the incremental (marginal) return.

If the increased cost is more than the incremental (marginal) return

If the increased cost is more than the incremental (marginal) return

Assumptions for Marginal Analysis

Sales are the principal

objective of advertising

and promotion

Sales are the result of

advertising and promotion, and

nothing else

Marginal Analysis

Advertising / Promotion in $

Sale

s in

$

Point A

Profit

Sales Gross Margin

Ad. Expenditure

Advertising Sales/Response FunctionsIn

crem

en

tal S

ale

s

Advertising Expenditures

A. Concave-Downward Response Curve

Incr

em

en

tal S

ale

s

Advertising Expenditures

Range A Range B Range C

B. S-Shaped Response Function

Hig

h S

pendin

gLi

ttle

Eff

ect

Init

ial Sp

endin

gLi

ttle

Eff

ect

Mid

dle

Level

Hig

h E

ffect

Peckham’s Rule of Thumb

Ad expenditures on newly launched products as a % of sales should total

twice the desired market share.

Example: If a company wants a 30% market share for its new computer, what % of sales should it spend on advertising?

The Promotion Budget Adheres to the Spending Limit

The Promotion Budget Adheres to the Spending Limit

Top Management Sets the Spending LimitTop Management Sets the Spending LimitTop Management Sets the Spending LimitTop Management Sets the Spending Limit

Top-Down Budgeting

Affordable Method

Affordable Method

Affordable Method

Affordable Method

Competitive Parity

Competitive Parity

Percentageof Sales

Percentageof Sales

Return onInvestmentReturn on

Investment

Arbitrary AllocationArbitrary Allocation

Percentageof Sales

Percentageof Sales

Competitive Parity

Competitive Parity

Arbitrary AllocationArbitrary Allocation

Top-Down Budgeting Methods

TopManagement

TopManagement

Advertising Expenditures as a % of Revenue

• Ranked 30 among the leading national advertisers in terms of ad spend• Advertising was 28.6% of revenues

• Ranked 40 among the leading national advertisers in terms of ad spend• Advertising was .5% of revenues

Ad Budget Is Approved byTop Management

Ad Budget Is Approved byTop Management

Cost of Activities are BudgetedCost of Activities are Budgeted

Activities to Achieve ObjectivesAre Planned

Activities to Achieve ObjectivesAre Planned

Promotional Objectives Are SetPromotional Objectives Are Set

Cost and Contribution of Activities are Budgeted

Cost and Contribution of Activities are Budgeted

Activities to Achieve ObjectivesAre Identified

Activities to Achieve ObjectivesAre Identified

Promotional Objectives Are SetPromotional Objectives Are Set

Bottom-Up Budgeting

Estimate Costs Associated with Tasks(determine costs of advertising, promotions, etc.)

Estimate Costs Associated with Tasks(determine costs of advertising, promotions, etc.)

Determine Specific Tasks(advertise on market area television and radio and local newspapers)

Determine Specific Tasks(advertise on market area television and radio and local newspapers)

Establish Objectives(create awareness of new product among 20 percent of target market)

Establish Objectives(create awareness of new product among 20 percent of target market)

Determine Specific Tasks(advertise on local television, radio and in local newspapers)

Determine Specific Tasks(advertise on local television, radio and in local newspapers)

Establish Objectives(create awareness of new product among 20 percent of target market)

Establish Objectives(create awareness of new product among 20 percent of target market)

Objective and Task Method

Monitor and Adjust(Did our projections come true?)Monitor and Adjust(Did our projections come true?)

Estimate Costs and Contribution Associated with Tasks(determine costs of space/time, production, and corporate resources, and project contribution)

Estimate Costs and Contribution Associated with Tasks(determine costs of space/time, production, and corporate resources, and project contribution)