Document Type

Journal Article

Department/Unit

Department of Marketing

Title

Advertising and promotions budgeting sophistication and the role of risk

Language

English

Abstract

Purpose - This study aims to look at the conventional wisdom with regards to budgeting methods, processes, and sophistication in light of recent macro work relating budgetary approaches to risk-taking. Design/methodology/approach - Based on a survey of UK advertisers and personal interviews, current advertising and promotions budgeting methods and processes are summarized. A series of hypotheses relating risk, process and experience to advertising and promotions budgeting sophistication were tested. Findings - UK advertisers were found to use a variety of budgeting methods (two methods on average per company). Judgmental methods dominate, especially the "what is affordable" method, but at the same time more sophisticated methods like objective and task and measurement techniques (in particular return on investment) were solidly represented. The relationship between budgeting sophistication and risk was investigated, the premise being that risk and budgeting sophistication are inversely related, as well as budgetary processes and marketing experience. Research limitations/implications - Considerable insight is provided into the methods and processes being used. It is concluded that the explanation as to why firms use sophisticated or unsophisticated methods for setting their advertising and promotion budgets is largely related to organizational culture. Originality/value - Just over 1.5 percent of the UK's gross domestic product is spent on advertising and promotions (£19 billion). The study suggested that the primary reason for the lack of consensus on budgetary sophistication is that stakeholders involved with budgeting are far less concerned with specific methods than dealing with cultural norms, personalities, access to supporting data and policies and practices. © Emerald Group Publishing Limited.

Keywords

Advertising, Budgets, Risk management, United Kingdom

Publication Date

2009

Source Publication Title

European Journal of Marketing

Volume

43

Issue

12-11

Start Page

1457

End Page

1476

Publisher

Emerald

DOI

10.1108/03090560910989984

Link to Publisher's Edition

http://dx.doi.org/10.1108/03090560910989984

ISSN (print)

03090566

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