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Mp+ +b chapter++13-2

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Mp+ +b chapter++13-2

  1. 1. Budgets & Budgeting CHAPTER 13 Media Planning & Buying in the 21st Century
  2. 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. 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. 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. 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. 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

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