A level Business Studies and AVCE Business exam revision resource


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.

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.

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.

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

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

2013 2013 v 2012
% change
% change
% change

TV 4,642 3.6% 7.5% 6.9%

Radio 537 -2.9% 3.9% 6.3%

Out of home 990 2.0% 2.7% 5.9%

National newsbrands 1,456 -5.1% -1.9% 1.4%
..of which Digital 184 19.5% 20.9% 23.5%

Regional newsbrands 1,300 -7.3% -7.3% -3.0%
..of which Digital 139 7.9% 10.7% 9.7%

Magazine brands 1,038 -5.7% -2.1% 0.4%
..of which Digital 252 7.1% 8.7% 9.9%

Cinema 184 -14.2% 6.4% 5.9%

Internet 6,300 15.6% 14.0% 12.7%
..of which Mobile 1,032 95.2% 75.2% 46.6%

Direct mail 1,882 -1.2% 0.6% 1.8%

Total expenditure (m) 17,629

Source: Advertising Association

Marketing spend by the UK Government is forecast to be 250 million in 2013-14 against 532 million in 2009-10. However it has been reported that the UK government will spend 289m on all marketing activity until March 2015, including a significant increase in the digital and social media budget.

Source : Press Association

An example of a Government Advertising Campaign is the Drug Drive TV ad.

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