DEFINITION of 'Promotional Budget'

A promotional budget is a specified amount of money set aside to promote the products or beliefs of a business or organization. Promotional budgets are created to anticipate the essential costs associated with growing a business or maintaining a brand name. The budget is often set according to a percentage of sales or profits in order to maintain an expected growth rate.

BREAKING DOWN 'Promotional Budget'

The advertising and marketing of a business represent costs that most businesses have a tough time predicting, which is why a percentage method might be used. A promotional budget could be increased in anticipation of new product lines are set to release in the near future. High promotional budgets can reduce profits during the period such assets are expended. Companies may allow for such higher costs based on an assumption that sales or awareness will increase among customers.

How Promotional Budgets Are Spent

Promotional budgets usually include money put towards advertising across mediums such as radio, television, Internet and print. A company’s promotional budget can include expenses for email campaigns, social media outreach and outdoor signage. The promotional budget might also go towards hiring outside experts and consultants who develop the campaigns and place ads in appropriate media and locations. This can include contracting marketing intelligence firms to interpret data that shows how dollars spent on marketing translate into new or recurring business for the company.

The decision-making process at organizations continues to evolve when it comes to allocating funds for promotional budgets. Budgeting strategies change as public attention continues to shift away from older, traditional mediums such as print to focus more on digital, online and mobile media.

While the overall size of a company’s promotional budget might not have changed, the way the money is divided up may have. For instance, money previously dedicated to advertising through television might now include campaigns that reach people on the smartphones.

The shifts that occur with promotional budget trends can have a direct effect on media industries that rely on those proceeds. A reduction in advertising dollars for newspapers and other print media, as companies directed those assets instead to digital media and other outlets, contributed to a decline in the newspaper and magazine industries.

Companies regularly measure the return on investment from their promotional budgets. The results often have a significant impact on where companies continue to put their funds. For example, a company will likely change its strategy if a billboard campaign fails to attract attention at the same time social media marketing messages increase sales. In many cases, the promotional budget at the company will be adjusted to favor more investment in social media.

RELATED TERMS
  1. Promotion

    A promotion can refer to the advancement of an employee's position, ...
  2. Balanced Budget

    A balanced budget is a situation in financial planning or the ...
  3. Budget Manual

    A budget manual is a set of instructions used by large organizations ...
  4. Budget Planning Calendar

    A budget planning calendar is a schedule of activities that must ...
  5. Performance Budget

    A performance budget is a budget that reflects the input of resources ...
  6. Marketing Plan

    A marketing plan is a business's operational document outlining ...
Related Articles
  1. Investing

    Capital Budgeting

    Learn the process through which businesses determine whether projects are worth pursuing.
  2. Personal Finance

    Why It’s Essential to Create a Budget for Yourself

    Budgeting may sound elementary, but it is the cornerstone of sound fiscal management.
  3. Personal Finance

    5 Steps Toward Creating an Effective Budget

    Creating a budget can seem daunting, but it doesn't have to be. Use these five steps to create an effective budget you can live with.
  4. Personal Finance

    5 Budgeting Steps for Young Families

    Here are five steps young families can take to create and stick to a budget.
  5. Small Business

    6 steps to a better business budget

    Learn how budgeting helps owners understand how to keep their businesses running. These six tips can help you create a top-notch small business budget.
  6. Trading

    Top 5 Budgeting Questions Answered

    You don't need a degree to understand your money, begin saving and pay down debt.
  7. Personal Finance

    4 Easy Techniques for Budgeting Money

    To be successful at creating and sticking to a budget, it’s helpful to have some tricks up your sleeve.
RELATED FAQS
  1. How should a company budget for capital expenditures?

    Learn the difference between capital expenditures and operational expenses, and discover the importance of budgeting for ... Read Answer >>
  2. Which U.S. presidents have run the largest budget deficits?

    Take a look at which presidents were in office for the largest budget deficits in U.S. history and how the responsibility ... Read Answer >>
  3. Why is social responsibility important in marketing?

    Drive consumers toward products and services by prioritizing social responsibility in marketing to enhance the company's ... Read Answer >>
  4. What are common concepts and techniques of managerial accounting?

    Understand the difference between managerial accounting and financial accounting. Learn about the common concepts and techniques ... Read Answer >>
  5. How does fiscal policy impact the budget deficit?

    Find out how the different uses of fiscal policy impact a government's budget deficit, and the difference between contractionary ... Read Answer >>
  6. How important is advertising revenue in the Internet sector?

    Learn about the importance of advertising revenue in the Internet industry. Find out how much Internet firms rely on advertising ... Read Answer >>
Trading Center