Types of communication budget

Marketing starts with research, planning and strategic planning, all leading to the eventual communication of the company’s sales efforts. As small businesses grow, they often move from a single marketing department to creating separate advertising, public relations, and promotions functions. Creating budgets for your various marketing efforts will help ensure each gets the proper attention it deserves based on your available resources.

Research and Development

At the core of marketing is developing an understanding of what the marketplace wants. This helps you determine what product features to add, benefits to offer, proper price points and where you should sell. Budget money for research efforts that include buying industry reports, conducting surveys and focus groups, test-marketing variations of your product, visiting different retail stores and buying competitors’ products.


Advertising is a controlled method of delivering your message, paying others to use their media outlets so you can send the exact message you want. Options include print, broadcast, digital, direct mail and outdoor. An advertising budget should include the cost of creating ads, buying media and conducting post-buy research to evaluate its effectiveness. Some businesses pay an advertising agency a commission of 15 percent of the company’s media purchases, while others pay a set fee. You might plan your advertising internally, hiring contract copywriters and graphic designers to execute your plans.


Promotions target potential customers using something other than paid media. Common promotions include sales, free samples, contests, discounts or rebates, sponsorship of organizations or events, celebrity endorsements and in-store displays. Unlike advertising, promotions often simply motivate customers by offering a short-term incentive, rather than trying to educate consumers with a specific message. A promotions budget includes the cost of any product you give away, signage, printed materials, banners, T-shirts and fees for sponsorships or endorsements. If you reduce your prices or offer a rebate, include that in your budget to determine the true cost of each promotion.

Public Relations

Public relations involves trying to get others to discuss you by doing worthwhile deeds or presenting interesting information. A key cost of PR is maintaining relationships With members of the media using press releases, media days and free samples. Some public relations efforts include running promotions, such as creating a cause-marketing campaign. You might align yourself with a local or national charity to sponsor a fundraising 5K race or tennis tournament ‘or donate a portion of your sales to the organization. Using free and low-cost social media tools, you can stretch your PR budget, using site visitors to recommend you to their friends and business associates.