Advertising Appropriation

Published by MBA Skool Team, Last Updated: May 17, 2020

What is Advertising Appropriation?

Advertising appropriation is the amount of money or budget which is kept aside for marketing / advertising for a specified time period by an organization. Advertising appropriation is an important aspect of marketing and advertising, so that better planning can be done with the allocated funds. There are numerous ways in which advertising appropriation amount can be allocated.

It can be allotted based on certain parameters like a certain percentage of revenues or sales. However, this is not a very definite way of allocating funds as fluctuations in sales or revenues can adversely affect the advertising appropriation.

Factors affecting budget decisions:

1. A stage in the product life cycle-new products requires large advertising budgets to build brand awarenessin comparison to established brands.

2. Market share and consumer base- High market share brands need less ad expenditure as a percentage of sales to maintain share

3. Competition and clutter- in a market with high competition, a brand must advertise heavily to get heard. Cluttering of advertisements confuse the customers and make them forget your brand easily.

4. Advertising frequency- the number of times the ad is displayed puts an impact on the advertising budget

5. Product substitutability- Brands belonging to less- differentiated or commodity-like product classes (like soft drinks, airlines, banks etc.) need heavy advertising to establish a unique image.

There are various methods used for Advertising Appropriation.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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