Standard Article

The Advertising Budget

Part 4. Advertising and Integrated Communication

  1. Douglas C. West

Published Online: 15 DEC 2010

DOI: 10.1002/9781444316568.wiem04035

Wiley International Encyclopedia of Marketing

Wiley International Encyclopedia of Marketing

How to Cite

West, D. C. 2010. The Advertising Budget. Wiley International Encyclopedia of Marketing. 4.

Author Information

  1. University of Birmingham, Birmingham, UK

Publication History

  1. Published Online: 15 DEC 2010

Abstract

The advertising budget is the sum allocated to communications activities in the financial year. Many of the methods used are historic and to a great extent a muddled business reality has been formalized and compartmentalized by researchers. The leading approaches are the judgmental (arbitrary and affordable), the objective and task, measurement (return on investment (ROI), incremental and quantitative models), percentage of sales (percentage last year, percentage anticipated, unit sales), and competitive (competitive absolute, competitive relative). Heuristic methods continue to be popular because they do not put a strain on decision making whereas algorithmic methods, such as the objective and task, can be highly contentious and discordant. Nevertheless there is a certain inherent logic to using heuristic methods as they enable an organization to avoid dysfunctional behavior and to continue to function whether or not the optimal allocation of resources has been made. Furthermore, they make perfect sense when combined with algorithmic methods.

Keywords:

  • advertising;
  • budget;
  • decision-making;
  • organization;
  • resources;
  • ROI