If a women’s clothing store forecasted $100 million in sales next year, what amount would you recommend it spend on advertising? How useful are the percentages found above for this business? How might the percent of sales figure be adjusted given this particular advertiser’s situation?

Using the percent of sales method, an advertiser sets its budget at a certain percentage of current or forecasted sales. However, determining what percentage to use is not always clear. Many marketers look at industry averages and competitor spending for comparisons. Trade publications, such as Advertising Age, publish data regarding industry averages as well as advertising-to-sales ratios for top advertisers. For more discussion of the financial and quantitative implications of marketing decisions, see Appendix 2, Marketing by the Numbers.