The so-called advertising expenses refer to the expenses paid by enterprises to stimulate consumers' purchasing desire for their products or services through various media publicity or distribution of gifts, so as to achieve the purpose of promotion.
Advertising expense generally refers to the total expense of advertising activities. Generally speaking, advertising expense consists of two parts:
Such as: advertising production costs, media distribution costs, etc.
1. Advertising survey expenses;
2. Advertising design and production costs;
3. Advertising media release costs;
4. Flexible expenses for advertising campaigns.
Advertising budget is the advertiser's plan and control plan for advertising activities. It is the total amount of funds that an enterprise plans to spend on advertising within a certain period (usually one year).
The reasons why enterprises should budget advertising expenses are as follows:
1. Conducive to the scientific advertising behavior;
2, is an important means to control advertising activities;
3. Provide economic indicators for the evaluation of advertising effects;
4. Help enhance the sense of responsibility of advertising activities.
There are many ways to prepare advertising budget, and some simple ways are often used in practical operation:
1. Goal achievement method
This method is based on the enterprise's marketing strategy and sales target, specifically establish the advertising target, and then according to the advertising target requirements need to adopt the advertising strategy, formulate the advertising plan, and then advertising budget. This method is more scientific, especially to launch a strong marketing of new products is very beneficial, can be flexible to adapt to changes in marketing. Advertising stage is different, advertising offensive strength is different, the cost can be adjusted freely. Goal achievement is the advertising plan to determine the advertising budget. Clear advertising objectives are also conducive to the examination of advertising effect. The formula is:
Advertising cost = target number of people × average per AD arrival cost × advertising times
2. Sales percentage method
This converse works out the total amount of advertising revenue as a percentage of sales over a certain period of time. Due to different implementation standards, it can be divided into four methods: planned sales percentage method, last year's sales percentage method and the combined compromise method -- average compromise sales percentage method, and planned sales increase percentage method.
Sales percentage calculation is simple and convenient, but too rigid to adapt to market changes. Such as increased sales, you can reduce advertising costs; Sales less, can also increase advertising costs, strengthen advertising.
3. Sales unit law
This is the method of calculating the advertising budget according to the advertising cost share of each product. The method is simple and easy to calculate according to the base number of sales. By using this method, we can grasp the advertising expenditure and its changing rules of various commodities. At the same time, it is convenient to grasp the advertising effect.
Formula: advertising budget =(advertising fee of the previous year/number of products sold in the previous year)× number of products planned to be sold in the current year.