Study Room - Marketing - Advertising

App

1 Introduction to Marketing

2 The Marketing Department

1 What is Advertising

2 Advertising Objectives

3 Advertising Budget

4 Advertising Strategy

5 Selecting Advertising Media

10 Outdoor Advertising

Links

	Committee of Advertising Practice

	Advertising Standards Authority

	JCDecaux

	Advertising Association

	ADSlogans Unlimited

Exam Hall

Multiple Choice
	Advertising Test
Exam Questions
	AVCE, Edexcel, Spec 2000

	A2, AQA, Unit 4, Jan 2004

	AVCE, Edexcel, Spec 2000

3 Advertising Budget

Having identified advertising objectives, the advertising budget must be set. Determining exactly how much a business should spend on advertising to achieve the desired level of sales, is more an art than a science. Commonly, the decision is based on past experience of expenditure on advertising, and the sales subsequently achieved. There are however a number of factors that can be considered in setting the advertising budget.

Factors influencing the setting of Advertising Budgets

Product life cycle stage	New products in the 'Launch' stage of their Product Life Cycle, will normally require greater expenditure on advertising to create product awareness, and encourage consumers to trial the product. Whilst products that have reached 'Maturity' in their product life cycle, will often require smaller advertising budgets to achieve the level of sales required.

Competition	The number of competitors in the market, and their expenditure on advertising competing products, will influence a business to spend to a similar or higher degree.

Product Differentiation	A product very similar to other products on the market may require greater expenditure on advertising to differentiate it from its competitors.

Advertising Expenditure

Whilst businesses will differ in their approach to setting advertising budgets, UK advertising expenditure as a whole has increased over the last decade.

Total advertising expenditure by media sector at current prices (�m)

Media Sector	1990	1991	1992	1993	1994	1995	1996	1997	1998	1999	2000	2001

National Newspapers	1187	1121	1155	1220	1336	1433	1510	1650	1824	1991	2252	2071
Regional Newspapers	1715	1628	1640	1715	1871	1963	2061	2238	2390	2483	2762	2834
Consumer Magazines	541	506	466	448	499	533	583	660	709	727	750	779
Business & Professional	790	708	746	714	785	897	1018	1106	1209	1195	1270	1202
Directories	492	504	523	551	589	639	692	737	780	831	868	959
Press Production Costs	412	417	427	438	472	514	550	577	620	650	702	670

Total Press Expenditure	5137	4884	4957	5085	5552	5979	6413	6967	7531	7877	8609	8514

Television	2325	2295	2472	2604	2888	3136	3379	3704	4029	4321	4646	4147
Direct Mail	979	895	945	907	1050	1135	1404	1635	1666	1876	2049	2228
Outdoor & Transport	282	267	284	300	350	411	466	545	613	649	810	788
Radio	163	149	157	194	243	296	344	393	460	516	595	541
Cinema	39	42	45	49	53	69	73	88	97	123	128	164
Internet	-	-	-	-	-	-	-	8	19	51	155	166

Total expenditure (�m)	8925	8532	8859	9139	10136	11026	12080	13340	14415	15412	16988	16548

Source: Advertising Association

Government expenditure on advertising

In 2001 it was reported that the government overtook consumer giants Unilever and Proctor & Gamble to become the country's biggest spender on advertising. The government spent over �16.4m on advertising campaigns in February 2001, according to figures from media monitoring service ACNielsen MMS. The second highest advertiser, Unilever, spent �12.2m, while rival soap giant Proctor & Gamble was at number three with �10.1m.

The government's main advertising campaigns in February 2001 included encouraging families to claim the new children's tax credit, attempting to recruit more nurses, and urging people to plan sufficient pension provision.

In 2000, the government was ranked as the fourth biggest advertiser, below Unilever, Proctor & Gamble, and BT. Government spending on advertising has increased steadily since Labour was elected. In 1997, spending totalled �43.8m, but by 2000 this had more than doubled to �102.7m.

Source : Press Association

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