Promotional Budget

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.