What is a typical advertising budget for companies shown as a percentage of sales?
November 11th, 2009 | 
Author: what do companies spend on advertising? What is the percentage of sales that a consumer electronics company spends on advertising? How are advertising budgets decided?
This is a very broad scoping question. Each specific industry will spend a different percentage of gross revenue on advertising. If a company has good exposure to a physical location, lets say they are located on a busy street and they are a retailer, they don’t need a large budget for advertising. Furthermore, product specific companies will fluxuate advertising costs based on where they are in the product life cycle (Educational advertising costs may be larger than other costs).
There are two primary ways that a company can decide budgets for advertising; top-down and bottom-up. Imagine upper management on top and marketers on bottom. In a bottom up situation, the marketers will design the budget and propose it to management. In a top-down approach, the management will give marketers a budget cap. From here, it gets more intricate and complex as to how actual figures are determined, but they are mainly determined by an analysis of your target market and the eficacy of different advertising channels in communicating the marketing message to said audiences.
Overall, advertising is normally one of the largest expenditures that a company makes. Consumer electronics companies like Sony and Panasonic spend a large amount on marketing. Advertising is a part of marketing and represents a large portion of the marketing budget. But, again, it all depends on the specific company and its current exposure and what point on the PLC you are talking about. Answer those questions and you should be able to find a more specific answer via your resources.
Posted in advertising
Every company is different. I’ve noticed that the companies I have worked for spend approx 20% revenue on marketing and advertising. So if you make 1 Million in Revenue they’d spend about $200,000 on marketing/advertising. but it all depends on profitability. if most of your revenue is going back into your overhead you’ll have to spend less.
References :
spent my career in marketing/advertising.
This is a very broad scoping question. Each specific industry will spend a different percentage of gross revenue on advertising. If a company has good exposure to a physical location, lets say they are located on a busy street and they are a retailer, they don’t need a large budget for advertising. Furthermore, product specific companies will fluxuate advertising costs based on where they are in the product life cycle (Educational advertising costs may be larger than other costs).
There are two primary ways that a company can decide budgets for advertising; top-down and bottom-up. Imagine upper management on top and marketers on bottom. In a bottom up situation, the marketers will design the budget and propose it to management. In a top-down approach, the management will give marketers a budget cap. From here, it gets more intricate and complex as to how actual figures are determined, but they are mainly determined by an analysis of your target market and the eficacy of different advertising channels in communicating the marketing message to said audiences.
Overall, advertising is normally one of the largest expenditures that a company makes. Consumer electronics companies like Sony and Panasonic spend a large amount on marketing. Advertising is a part of marketing and represents a large portion of the marketing budget. But, again, it all depends on the specific company and its current exposure and what point on the PLC you are talking about. Answer those questions and you should be able to find a more specific answer via your resources.
References :