Advertising Objectives and Budgeting

1. Advertising Objectives and Budgeting

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

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

4. 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 ***

5. Sales vs. Communication Advertising Objectives

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

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

8. Stages of Advertising • Pioneering Stage • Competitive Stage • Retentive Stage

9. 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

10. Egg Beaters: Egg Alternative

11. Purell Built a Need for Hand Sanitizer

12. 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.

13. 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

14. 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.

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

16. The Creative Brief

17. 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.

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

19. Sample Creative Brief

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

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

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

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

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

25. 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?

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

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

28. 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

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

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