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January 07, 2010

How Much Should Be Budgeted for an Integrated Program?

The Essential Insight:
This article explains the thought process and importance of allocating a budget.

Fast Facts:

  • The budget should be immediately decided upon after the objectives have been decided
  • Beginning budgets are normally tentative budgets that can be changed later on

Budget Determination
Once the communications objectives have been decided, the next step is to determine a promotional budget.  At this juncture, two basic questions need to be both asked and answered. First, what will the promotional program cost?  Second, how will these funds be allocated?  The amount a company needs to spend on promotions should be determined by what needs to be done in order to attain the communications goals. In reality, though, promotional budgets are often determined in a far more simplistic way, namely, how much money is available? Sometimes, a fixed percentage of a company or brand’s sales revenue is allotted into the budget. At this stage, the budget is often tentative. Until the final promotional mix strategy is developed, the budget itself will not be carved in stone.