A marketing communication budget plans for and measures the impact of marketing communication spend. It is a part of marketing planning and sets targets for not only spending but return on investment (Linton, 2017). A marketing communication budget covers the messaging that communicated out to consumers in the form of public relations, online marketing, events, advertisements, billboards, printing, trade shows, website design, promotional items, and mailings (Smyth, 2020).
When making marketing communication and budget allocation decisions, marketing managers must determine the target market, market segments, and markets where the company would benefit most from marketing investment in the long- and short-term (Smyth, 2020). Marketing managers have to determine what the best ROI will be across different cost items (ads, events, online marketing, etc.) (Smyth, 2020). Results and ROI from the previous quarter and the previous year’s expenditure is a feedback loop that plays an important role in determining the marketing communication budget. KPI performance for the last quarter and year are important as well (Smyth, 2020). Another factor that must be considered is what agencies or platforms will be used, as each has its own efficiencies and expense (Linton, 2017). Another factor is timing. Promotion is often the hype before and during the initial launch, but can be further in the lifecycle. Promotion can be short-term bursts, but they do have long-term loyalty effects. Advertising is usually a longer-term strategy, is more expensive, and is more targeted (Milano, 2019).
Timing and where the product is in its lifecycle are factors that determine how much marketing communications budget is allocated towards promotion and advertising. If the product is at initial launch, a lot of money is spent in both advertising and promotion to build hype around the product. Initial sales, samples, and special offers are examples of promotions that might be used to move product and generate short term revenue. Advertising is the paid messaging that is used to build awareness and excitement about the new offering. As the product moves through its lifecycle, advertising messaging will change, and ad spend may decrease.
ROI and KPis are important factors in deciding the allocation. If the expected ROI of an advertising campaign is higher than a promotion, then the communications budget would be allocated in favor of the advertising spend. Certain KPIs may necessitate more promotion or more advertisement. For instance, a strategic goal of getting a PC on every desktop may have a KPI of “% of desks with PCs.” In addition to an ad spend which communicates the need for everyone to have a PC, there would need to be consistent, ongoing promotions which would burst toward that goal, give people sales and incentivize them to buy their PC.
Linton, I. (2017, September 26). What is a Marketing Communication Budget? https://bizfluent.com/info-8119264-marketing-communication-budget.html
Milano, S. (2019, January 28). What is the Difference Between Advertising and Promotion. https://smallbusiness.chron.com/difference-between-advertising-promotion-52856.html
Smyth, D. (2020, September 17). How to Prepare a Marketing Communication Budget. https://smallbusiness.chron.com/prepare-marketing-communication-budget-62386.html