Advertising Budgeting Wheres The Evidence

What budget approaches have empirical support to demonstrate they

work?
Do different approaches give similar answers?
What is the most prudent budgeting approach to employ?
Any spend is only as good as what you spend it on
Not all copy is equal Powerful copy can be 10-20 times more sales
effective than mediocre copy

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Key Lessons
o Different budget approaches give very different answers.
o Some are more evidenced based than others.
o Forecasting research offers insights into advertising budgeting.

2 key Budgeting/forecasting principles

o Be conservative
o Average multiple (evidence based) perspectives

Evidence based budgeting

o Individual level
o Single Source
o Systematic media experiments
o Split Cable testing
o AI Advertising Intensiveness
o Profit algorithm
o Task & objective

AI Advertising Intensiveness
o SOV compared with SOM

advertising is better than less but with diminishing returns

Inflation adjusted
Ratio Ad/Margin
Gut Feel
AI Differential
Match competitor
Experiments
WWW
BOT
Ratio Ad/Sales
Maintain SoV
Fixed amount
Task Objective

Share of Voice (SOV) - Brands advertising weight as a % of

total spend in the market (for time period).
Share of Market (SOM) The % of market (in units or
revenue) accounted for by the specific brand.
o Jones (1990) demonstrated that milking brands accelerate
downturn
o SoV/SoM patterns replicated in other markets/categories
o Hansen and Christensen (2005) added conditions
o Binet and Fields (2013) Excess Share of Voice
o Danenberg, Kennedy, Beal and Sharp (2016) for different media
and markets
o AI Benchmark Graph (SoV SoM) over SoM
Relationship holds across different media Television,
Internet
o Approach 2:
Ad Elasticities A way to describe short term effects.
Defined as Percent change (increase) in sales for 1%
change in ad spend
Meta-Analysis across 260 studies > Empirical
Generalization = 0.1 elasticity
o Use the evidenced based knowledge about media for brand
growth to work out the objective and plan/cost to that.
For example, expose all buyers to at least one
advertisement a maximum of 14 days before they make a
category purchase
Cost competing approaches to achieve the goal to
determine how much should be spent.
o When to reach category buyers
With recency
With continuity
When cost effective
Learn to be evidence based to grow your brand, gain market share and
increase sales
The fastest way to make your marketing team more efficient and
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