Advertising Budget

What is an 'Advertising Budget'

An advertising budget is an estimation of a company's promotional expenditures over a period of time. An advertising budget is the money a company is willing to set aside to accomplish its marketing objectives. When creating the advertising budget, a company must weigh the trade-offs between spending one additional advertising dollar with the amount of revenue that dollar will bring in as revenue.

BREAKING DOWN 'Advertising Budget'

Companies can determine what level to set their advertising budget several different ways, each of which has its positives and negatives. A business can set its budget as a percentage of sales, at the same level as its competitors, as the amount required to meet a certain objective, as the entirety of its profits or as a function of the units of product it wants to sell among others.

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RELATED FAQS
  1. What are the key differences between marketing and advertising?

    Understanding the role advertising plays in the marketing mix will help business owners define their promotional strategies ... Read Answer >>
  2. What's the difference between budgeting and financial forecasting?

    Learn about financial budgeting and financial forecasting and the main differences between the two management decision-making ... Read Answer >>
  3. What factors should a company consider when creating a marketing budget?

    Understand the process of creating a marketing budget, and learn the specific factors that should be considered for any company ... Read Answer >>
  4. Why should I bother creating a budget?

    Creating and using a budget is a valuable tool for all demographics; it's not just for those who need to closely monitor ... Read Answer >>
  5. Is there a difference between the cash budget and a credit budget?

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