Allocating Advertising Dollars for Advertising Research

Allocating Advertising Dollars for Advertising Research

One of the challenges facing marketers is how to afford to test advertising. It is human nature that, given a finite advertising budget, all advertising dollars should be spent producing and placing/airing an ad or commercial. Unfortunately, by definition, half of all advertisements produced are below average. Many ads do nothing positive either in terms of selling product or boosting corporate image. A large company can easily rack up production costs in the hundreds of thousands of dollars and media costs in the millions. The numbers are smaller for small and mid-size businesses, but still large enough to be scary when one considers that all this money has potentially been thrown away. If you fail to test an ad and it turns out to be one of the many sub-par ads in existence today, how much money was saved by not testing?

A good rule of thumb is to spend 10% to 15% of your advertising dollars in ad testing. This percentage should be somewhat smaller for large ad budgets, and somewhat greater for small ones. It also is wise to keep some funds in reserve for additional production costs, just in case testing shows an ad to be a dog. If the ad passes with flying colors, you can spend the money on additional GRPs.