Advertising Objectives and Budgeting

Focus & Coordination Focus & Coordination Plans & Decisions Plans & Decisions Measurement & Control Measurement & Control Helps Decision-making Helps Decision-making Focus & Coordination – “Sanity Structure” Why Have Advertising Objectives? Objectives

Attainable Measurable Specific Realistic Specific Promotional Goal Measurable Goal – “degree of change sought” Attainable/ Realistic Target Audience Time Frame Characteristics of Objectives Objectives

Some Generic Ad Objectives  stimulate sales  grab attention  create awareness  establish brand identity  establish/cue brand position and/or image  create mental associations  cue emotional appeal  stimulate interest  provide information/educate  promote understanding of features, benefits, advantages  demonstrate how to use/do something  create brand liking  stimulate brand recognition  stimulate message recall  stimulate brand preference or intention to buy  create conviction or instill belief  stimulate change of opinion, viewpoint or attitude  stimulate behavior (buy, call, click, visit, donate, etc.)  stimulate repeat purchases  build brand loyalty  remind  generate buzz or word of mouth advertising  create advocacy and referrals  increase general category sales/awareness ***

Sales vs. Communication Advertising Objectives

20% Trial Conative 40% Liking Affective 90% Awareness Cognitive 5% Use 70% Knowledge 25% Preference 90% Awareness 70% Knowledge 40% Liking 25% Preference 20% Trial Pyramid of Communications Effects

Execution: Where are your consumers? Teaser campaigns Affective Realm of emotions. Ads change attitudes and feelings Cognitive Realm of thoughts. Ads provide information and facts. Conative Realm of behaviors. Ads stimulate or direct desires. “Image” copy “Transformational ads” Status, glamour appeals Announcements Descriptive, Long Copy Demonstrations Comparative ads Argumentative copy Point of purchase ads Direct Response, Deals “Last-chance” offers Price appeals, Sales Promotions Purchase Conviction Preference Liking Knowledge Awareness

Stages of Advertising Pioneering Stage Competitive Stage Retentive Stage

Pioneering Stage Educate consumers about new products Show people they have a need and that the advertised product can fulfill it Show that a product now exists to meet a need that had been previously recognized but unfulfilled

Egg Beaters: Egg Alternative

Purell Built a Need for Hand Sanitizer

Competitive Stage The competitive stage is the advertising stage a product reaches when its general usefulness is recognized but its superiority over similar brands has yet to be established.

Competitive Headlines “All the sound without the wires.” – Bose Wave Music System “There is a better way to soothe your skin.” – Nivea “He spent decades researching the right wood for his wine barrels. You can taste the results in just a sip.” - Woodbridge Wine “The most fuel-efficient midsized sedan.” – Ford Fusion+Hybrid

Retentive Stage The retentive stage is when a brand’s general usefulness is widely known, its individual qualities are thoroughly appreciated, and it can retain its patronage merely on the strength of its past reputation and brand equity.

Brands in the Retentive Stage McDonald’s Nike Jell-O Pepsi-Cola Mountain Dew Budweiser Disney ESPN Google Gillette

The Creative Brief

Creative Brief A creative brief (strategy or work plan) is a short statement that clearly defines the audience, how consumers think or feel and behave, what the communication should accomplish, and the promise that will create a bond between the consumer and the brand.

Creative Brief Key observation Communication objective Consumer insight Promise and support Audience Mandatories

Sample Creative Brief

Balancing Objectives and Budgets Dollars Goals What we’re willing and able to spend What we need to achieve our objectives

Principles of Marginal Analysis Increase Spending Decrease Spending Hold Spending Hold Spending If the increased cost is less than the incremental (marginal) return If the increased cost is equal to the incremental (marginal) return. If the increased cost is more than the incremental (marginal) return

Assumptions for Marginal Analysis Sales are the principal objective of advertising and promotion Sales are the result of advertising and promotion, and nothing else

Marginal Analysis Advertising / Promotion in $ Sales in $ Point A Profit Sales Gross Margin Ad. Expenditure

Advertising Sales/Response Functions Incremental Sales Advertising Expenditures A.Concave- Downward Response Curve Incremental Sales Advertising Expenditures Range ARange BRange C B.S-Shaped Response Function High Spending Little Effect Initial Spending Little Effect Middle Level High Effect

Peckham’s Rule of Thumb Ad expenditures on newly launched products as a % of sales should total twice the desired market share. Example: If a company wants a 30% market share for its new computer, what % of sales should it spend on advertising?

The Promotion Budget Adheres to the Spending Limit Top Management Sets the Spending Limit Top-Down Budgeting

Affordable Method Competitive Parity Percentage of Sales Percentage of Sales Return on Investment Return on Investment Arbitrary Allocation Percentage of Sales Percentage of Sales Competitive Parity Arbitrary Allocation Top-Down Budgeting Methods Top Management Top Management

Advertising Expenditures as a % of Revenue Ranked 30 among the leading national advertisers in terms of ad spend Advertising was 28.6% of revenues Ranked 40 among the leading national advertisers in terms of ad spend Advertising was.5% of revenues

Ad Budget Is Approved by Top Management Ad Budget Is Approved by Top Management Cost of Activities are Budgeted Activities to Achieve Objectives Are Planned Activities to Achieve Objectives Are Planned Promotional Objectives Are Set Cost and Contribution of Activities are Budgeted Activities to Achieve Objectives Are Identified Activities to Achieve Objectives Are Identified Promotional Objectives Are Set Bottom-Up Budgeting

Estimate Costs Associated with Tasks (determine costs of advertising, promotions, etc.) Estimate Costs Associated with Tasks (determine costs of advertising, promotions, etc.) Determine Specific Tasks (advertise on market area television and radio and local newspapers) Determine Specific Tasks (advertise on market area television and radio and local newspapers) Establish Objectives (create awareness of new product among 20 percent of target market) Establish Objectives (create awareness of new product among 20 percent of target market) Determine Specific Tasks (advertise on local television, radio and in local newspapers) Determine Specific Tasks (advertise on local television, radio and in local newspapers) Establish Objectives (create awareness of new product among 20 percent of target market) Establish Objectives (create awareness of new product among 20 percent of target market) Objective and Task Method Monitor and Adjust (Did our projections come true?) Monitor and Adjust (Did our projections come true?) Estimate Costs and Contribution Associated with Tasks (determine costs of space/time, production, and corporate resources, and project contribution) Estimate Costs and Contribution Associated with Tasks (determine costs of space/time, production, and corporate resources, and project contribution)