DEFINITION of 'Promotional Budget'

A promotional budget is a specified amount of money set aside to promote a business’s or organization's products or beliefs. 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 the intended growth rate.

BREAKING DOWN 'Promotional Budget'

Advertising and promotion of a business is a cost which most businesses have a tough time predicting, which is why a percentage method might be used. If new product lines are set to release in the near future, the budget could be increased. High promotional budgets cut into profits in the period of use and are intended to increase sales or awareness in the future.

How Promotional Budgets are Spent

Promotional budgets usually include money to be put towards advertising across all mediums such as radio, television, Internet, and print. Email campaigns, social media outreach, and outdoor signage would also fall within a company’s promotional budget. The promotional budget might also go towards procuring outside experts and consultants who develop the campaigns and place them in appropriate media and locations. This can include marketing intelligence firms that gather and interpret data to better understand how dollars spent in a promotional budget translate into new or recurring business for the company.

The ways organizations allocate these funds continues to evolve, in particular with shifts in public attention 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 that once was solely 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.

The return on investment that companies see from their promotional budgets often has a significant impact on where they continue to put their funds. If billboard campaign fails to attract attention while marketing messages spread through social media channels increase sales, chances are 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. Promotion Expense

    A promotion expense is a cost that a business incurs to make ...
  4. Budget Committee

    A budget committee is a group of people that creates and maintains ...
  5. Marketing Mix

    The marketing mix, which focuses on product, price, placement, ...
  6. Budget Deficit

    A budget deficit occurs when expenditures exceed revenue. The ...
Related Articles
  1. Personal Finance

    10 Reasons People Don’t Create a Budget

    Don't avoid putting together a budget, an essential part of a personal financial plan, for these reasons.
  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. Personal Finance

    Budgeting Basics

    What is budgeting? Basically, it's making sure that you're spending less than you're bringing in and planning financially for both the short and long term.
  6. Personal Finance

    3 Alternative Budgeting Styles: Which One Suits You?

    Not everyone is cut out for online or heavily-involved budgeting. Here are some budgeting solutions.
  7. 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.
  8. 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. Which countries run the largest budget deficits?

    Discover the countries with the largest budget deficits and what it means. Deficits are influenced by the economy and also ... Read Answer >>
  2. Which United States 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. Can state and local governments in the US run fiscal deficits?

    Discover why most state and local governments do not – or cannot – run fiscal deficits in the same manner as the U.S. federal ... Read Answer >>
Hot Definitions
  1. Return On Equity - ROE

    The profitability returned in direct relation to shareholders' investments is called the return on equity.
  2. Working Capital

    Working capital, also known as net working capital is a measure of a company's liquidity and operational efficiency.
  3. Bond

    A bond is a fixed income investment in which an investor loans money to an entity (corporate or governmental) that borrows ...
  4. Compound Annual Growth Rate - CAGR

    The Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer ...
  5. Net Present Value - NPV

    Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows ...
  6. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing a company that measures its current share price relative ...
Trading Center