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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)