Advertising budgeting methods in Canada, the UK and the USA

C.L. Hung and Douglas C. West

This article reviews the extent to which advertising budgeting methods can be related to company size, company performance and nationality. New findings are presented from a survey of the top 100 advertisers in Canada, the UK and the US. The conclusion is that being large has a greater impact on budgeting sophistication than performance. Furthermore, there is significant harmonization of budgeting practice among top advertisers operating within these similar socio-economic and political systems.

Advertisers' budgeting strategies have received substantial academic and practitioner attention since Neil Borden's pioneering work (1942) indicated that advertisers' budgeting methods were generally unrefined. The high degree of attention devoted to the subject is evident from the large number of papers published on it (well over 2,000 over the last 30 years). The diligent analysis of the theory and practice of appropriation methods has significantly improved our understanding of the problems and issues involved. There are three main areas of investigation in these studies: prescriptive writings on 'how to' set the advertising budget (eg, Lake, 1979; Zufryden, 1989); analyses of the methods used related to one or two main explanatory variables; and analyses of the budgeting process (Piercy, 1986 and 1987 a, b; Mitchell, 1988). This paper will focus on the second theme, in particular on how the advertising budgeting methods selected by top advertisers in Canada, the UK and the US are related to size, performance and nationality.