Mp+ +b chapter++13
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This document discusses several methods for determining a media budget: 1) Adjusting last year's budget by a percentage, such as for inflation, which is common but not ideally task-oriented. 2) Using an advertising-to-sales (A/S) ratio based on industry norms or a company's adopted percentage applied to projected sales figures. 3) The "task method" which determines how much media exposure is needed to achieve specific communication goals and tasks, such as raising awareness by a certain amount. 4) Considering a brand or product's "share of voice" versus its "share of market" and aiming to have higher share of voice to increase market share, with evidence that 50-100
Mp+ +b chapter++13
- 1. Budgets & Budgeting CHAPTER 13 Media Planning & Buying in the 21st Century
- 2. Agenda DETERMINING A BUDGET ALLOCATING THE BUDGET ADJUST LAST YEAR’S BUDGET A/S RATIO TASK METHOD SHARE OF VOICE VS. SHARE OF MARKET Media Planning & Buying in the 21st Century
- 3. Last Year’s Budget + X% Beginning with last year’s budget, apply an inflationary or other adjustment Very common, unfortunately Finance & Accounting like this method! 2011 Budget $1,000,000 Inflationary increase 2012 Budget +4.2% $1,042,000 Media Planning & Buying in the 21st Century
- 4. A/S Ratio A/S Ratio – Advertising as a % of past or future sales Applying an A/S ratio to projected sales is somewhat more task oriented than the inflationary increase method of budget development Ratio can be based on industry norms for same product category Of can be the company’s adopted ratio 2012 Sales Forecast Industry A/S Ratio 2012 Budget Media Planning & Buying in the 21st Century $55,000,000 5% $2,750,000
- 5. Task Method To develop a budget by the task method requires a good understanding of the relationship between communications levels and tasks, e.g., how much media is needed to raise top of mind awareness by X% or to generate Y number of leads? Task A B C Total TRPS Needed 500 750 1,000 2,250 Media Planning & Buying in the 21st Century Cost of TRPS $5,000,000 7,500,000 10,000,000 $22,500,000
- 6. Share of Voice Many advertisers are concerned about the ratio between their share of voice and share of market There is a fair amount of evidence that, especially for successful new packaged goods products, share of voice leads attained market share of 50-100% There is similar evidence for certain considered purchase products Example: • SOM Objective • SOV Goal • Cost for 40% SOV Media Planning & Buying in the 21st Century 25% 40% $20,000,000