Advertising Budgeting & Allocation Models – A Critical Literature Review
- Hitesh Ruparel, N. R. Institute of Business Management
Abstract:
Companies spend billions of rupees annually on advertising. Such advertising spending decisions are usually made in two stages. First, in the budgeting stage, the firm’s management decides how much to spend on advertising and then, in the planning stage, the firm decides how to spend the given budget during the upcoming year. These decisions may include questions of how to allocate the advertising budget over multiple brands or product categories, over geographic areas or regions, across available media and across time periods of the planning horizon, i.e., scheduling decisions. In the paper researcher has reviewed selected normative models and decision rules for determining annual advertising budgets, i.e., the advertising investment (monetary expenditures or adspend) decision with respect to a single market. Subsequently, the researcher has also focused on decision problems concerning the distribution or allocation of advertising monies across multiple market entities.
Examination of various models for budget allocation for advertising money along-with critical review provides the merits and flaws of various models and provides an idea that improvements in the marketing resource allocation decisions would often have a much more significant impact on profitability than changes in the size of the total marketing budget. Thus, not only the rationalization of the marketing budget is critical and essential, but how the total marketing expenditure is distributed among various advertising efforts as well as among various brands in the portfolio is also very decisive for brand managers in organizations.