Money talks in advertising, but how much and where it goes matters more than the total. A budget is a plan for spending across channels, markets, and time periods. Set it too low and the campaign never reaches enough people to matter. Set it too high without a clear plan and you fund waste.

Most budgets start with a percentage of expected revenue, a fixed sum from leadership, or a competitive benchmark. Each method has weaknesses. Percentage-of-revenue ties spend to past results. Fixed sums ignore opportunity. Benchmarks assume your rivals know what they are doing.

Where budgets go

• Media placements and ad space
• Creative production and talent
• Agency fees and technology
• Research, testing, and measurement

Smart teams reserve a slice for experiments. Ten to twenty percent is common. Without it, you repeat the same playbook until it stops working and then scramble for answers.