Setting an advertising budget
How to set the right budget for your advertising campaign, and how to measure its effectiveness as a part of your overall marketing spend.
Your advertising budget will usually be a proportion of your total marketing budget. From the point you consider using an advertising agency, you should have a clear idea of how much it is.
The type and volume of advertising you want will determine how high your budget should be set. Remember to allow for your other marketing needs, such as PR or promotions.
Consider whether you want:
- a one-off advertisement or an ongoing campaign
- business-to-business or consumer advertising
- traditional advertising like press, outdoor, TV and radio
- local or national advertising
- online advertising like search, social media and display
An agency should advise you on which types of media best suit your objectives. Once you know what you can afford to spend, what you want to spend it on and over what period, any agency you engage should work toward this.
Measuring advertising effectiveness
You need to consider, together with your agency, how you will measure the effectiveness of your advertising. Only then will you be able to determine whether you are getting value for money. Having clear goals at the outset will be key to measuring the success of your advertising.
Key metrics
Key metrics or key performance indicators (KPIs) to consider are:
- return on investment (ROI) - measures overall campaign鈥檚 effectiveness and whether it has performed against its goals
- return on ad spend (ROAS) - measures the revenue earned for each pound spent on ads. It helps check the campaign's performance before it ends
Different agencies may use varying methods to calculate ROI and ROAS. Choose an agency that matches your measurement preferences. It will help you accurately evaluate your campaign's success.