If you want to increase your sales, you have to promote your product. But to do that, you always have the same questions in mind! How much should you spend? How will you break down your advertising budget? Not to mention how it all fits into a schedule to make it happen. We will address these questions in this chapter.
Set Your Advertising Budget
It will come as no surprise that setting your budget will significantly impact how you roll out your advertising strategy. When faced with this challenge, you can use one of the five methods below. It will help you to have a broader view of the different options to set your budget.
Available Resources
Many companies use this approach. You invest what you have available. The available resources approach can lead to fluctuations in your advertising budget and make your advertising strategy's long-term planning difficult.
Average Cost
With this approach, start by stating how many people you need to reach, then work backward to calculate the amount of money you need to achieve this goal. You have to take several variables into account, starting from the assumption of exposure to your advertisement according to the selected media and understanding your advertising message.
If you start manufacturing 100 advertising posters for $400,000, the average total cost per poster is $4,000.
Average cost = $400,000/100 = 4,000
Share of Voice
Also known as alignment with competitors, this is a measure of advertising exposure based on a brand's investment compared to other companies competing in the same market.
If you increase your investment and your competitors keep theirs at the same level, your share of voice increases.
On the other hand, if your competitors also increase their investment, your share of voice will not increase as significantly, and the response curve will be less sensitive to your investment.
For example, if a cosmetic brand invests $300 million in advertising in its market, and the overall ad spend in this market is $1 billion, then the share of voice will be 30%.
Percentage of Sales
Determine your budget based on the revenue (current or potential) you will achieve with your product. That means that your advertising expenses increase or decrease depending on your sales.
To help you identify the correct percentage, you can research what your competitors spend. Depending on your development stage, you may decide that you need to outspend your competitors to provide further visibility to your product. It's a good idea to talk to your teams before making a decision.
If you estimate your revenue at $1 million, and the percentage of investment in your market is 25%, the amount of your advertising budget will be $250,000.
Sales Response Curves
This approach relies on statistical studies of economic data that measure the advertising's sentiment and recall and its effect. You'll want to determine two threshold factors: saturation and perception.
You reach the perception threshold when someone notices your advertising, and you can change their mind in your favor. The process has four phases: attention to information (using the five senses), interpretation (how someone gives meaning to data based on experience), understanding, and recall.
You reach the saturation threshold when any additional investment won't bring greater visibility or have a measurable effect on increasing your products' sales.
🥤 Discover How Bio Boost Defined Their Budget
Now let's look at what Bio Boost🥤could consider regarding the budget:
Which methods could Candice and Julien apply?
❌The available resources method: They could apply this method by using a portion of the resources freed up by the conventional product range to inject into the organic product launch. But this could hurt their initial product range, which will lose a portion of its promotional budget.
✅The average cost method is a possible solution. However, Candice and Julien will have to estimate the number of people they want to reach to limit the margin of error in the calculation.
❌The share of voice method: This method appears challenging to apply. Candice and Julien need quantitative information to make the right choices. It would be possible to use similar products in another market to get an idea. Still, it will be challenging to define a budget in unknown areas.
✅The percentage of sales method: It seems to be a possible solution for a new market; there is usually no competition for the first six months or the first year. It will be easy to increase or decrease the budget without being afraid that the competition will take advantage of it to acquire market share. The smaller advertising investment will result in a less visible product.
❌The sales response curve method: This method also needs more information and quantified studies to make the right choices. It will be difficult to define the perception and saturation thresholds.
You now have various methods available for establishing a budget. The next thing to consider is the timetable: to properly manage a campaign, you must consider the time constraints involved.
Be Aware of the Timing
Project management is crucial; don't lose sight of deadlines and always keep an eye on your calendar. You may be wondering why. It is all a matter of control and time management: your schedule will allow you to properly organize your daily work and make sure you can properly implement your advertising strategy.
Time for Reflection
Take time to reflect. It helps you be more efficient and see ideas more clearly. You'll also be able to see your current situation, where you want to go and anticipate obstacles.
Good planning makes for better campaigns. By taking time for reflection - and considering the obstacles you may encounter - you improve your decision-making and avoid costly mistakes!
Time for Production
As part of your advertising strategy, you have to develop creative assets (the commercials or advertising copy) to promote your products and services. Time will play an essential role in creation and production.
You also need to take time to brief the creative teams on developing your physical assets. Be aware that this doesn't happen at once; there is some back and forth before you get what you want for your campaign, whether its audio, visual, or text.
Lead Times
You must take into account the lead times for your various media types. You have to book media space in advance, and may have to get approval for some types. Build these lead times into your schedule.
Let's Recap!
To calculate your budget, use one of these approaches, depending on the information and data you have available:
Available resources.
Average costs.
Share of voice.
Percentage of sales.
Sales response curve.
Once you've set the budget, you can also draw up a schedule to ensure you have enough time to meet any deadlines that impact your campaign.
Now that you know all the tools and components to create your advertising strategy, you can move to the second part of the course to discuss how you are going to conduct your campaign.
