“How much should I spend on Advertising?”
“You mean how much should you spend on Marketing?”
Budgeting is essential to a successful business. A good portion of your business budget will go towards Advertising and Marketing, but to budget correctly, you need to understand the difference between the two terms.
A lot of people use the terms “Marketing” and “Advertising” interchangeably, but these two terms describe two different processes for a product or service. There are 4 components under Marketing: Product, Price, Place, and Promotion. Advertising actually branches off the Promotion component of Marketing.
Marketing takes into perspective your company values, mission, and culture. Through Marketing, you establish the image you want consumers to see when they pick up your product, and think of your company. This is why it is important for any business to allocate a good budget to set up a proper marketing strategy, because the effects of Marketing are long lasting and should be carefully planned out.
Advertising is part of the promotion aspect of Marketing and involves promoting through television, prints, radio, the internet (social media), and much more. Advertising is usually short term; the ads you portion your budget for will disappear after some time. When you advertise, you are essentially buying a product to promote your existing product.
Let’s use donuts as an example to show the difference between Marketing and Advertising and explain where your budget goes towards.
Your Marketing budget will usually cover the 4 Marketing components: Product, Price, Place, and Promotion. An Advertising budget is usually incorporated in a Marketing budget, because it is part of the Promotion component of Marketing.
Your Product will be your gourmet donuts. The development of your donuts costs money, and that means a portion of your Marketing budget should go towards developing your donut recipe to make it the best it can be. Packaging for your donuts will also take a portion of your Marketing budget, because you don’t want just a regular pink box, you want a bright red box for your donuts to stand out.
Your Price will be what you deem fit. If you make a donut for 50 cents, you might sell it for $1. Pricing for your donuts is important, because it dictates if your business will make profit to balance your Marketing budget and any other costs you may have spent on your product.
Your Place is about picking the right location to target your ideal consumers. This can involve a store location or online website. Either one will require a portion of your budget to purchase and/or maintain.
Your Promotion will be how you introduce your donuts to your consumers. This component is where Advertising falls and where a portion of your Marketing budget will be spent. Spending your budget on Advertising means buying ads on television, radio, social media, and much more. Anything that will get your donuts into the eyes of the consumer is part of advertising and should be allocated a good budget to be successful.
Allocating budgets properly allows you to maximize the benefits of your business spending. Both Marketing and Advertising are important in getting your product or service into the hands of the consumer, but when businesses confuse Marketing and Advertising, they will not be able to allocate their budget properly. It is important to understand that setting an Advertising budget does not mean you have set a Marketing budget. A Marketing strategy is a holistic plan for your product that can include the four components of Marketing, the hiring of a Marketing team, and much more. Because Marketing overlooks various aspects, its budget will be larger in comparison to an Advertising budget. So next time you are thinking about budgeting for your business, remember the difference between Marketing and Advertising, because you should always know what you are spending money on.