Question:How much should be spent on advertising versus promotion?

Answer:Magic formulas really don't exist in marketing (even though lots of people may try to get you to believe such magic, tricks, or tips may exist). Having said that, the question you ask is interesting. First, advertising is meant to establish awareness, build interest in the market, educate, change brand attitudes, and influence perceptions of customer consistent with a chosen positioning (assuming you have a clear position in mind). Promotion (and I assume you're not talking about public relations here) is typically of a short term nature that is typically meant to encourage trial. Marketing encompasses both of these activities, and more, so I could really say anything about budget allocation to marketing since it's too broad a term.

But focusing on advertising versus promotion, you need to first think about what is the objectives of the marketing campaign. If it's heavy on getting people to just try your product or service (or web site), then promotion should be heavily weighted. Give stuff away, special deals, etc. These are short term objectives and often just produce short term effects. That makes sense since they are designed to get people to try out something.

Advertising is more designed for longer term objectives, such as establishing awareness or interest as mentioned above. If you really are interested in getting people aware of your offering, then advertising should also be a critical part. The same is true if you want to change customer's perceptions.

Since often companies want to get both awareness, interest, and trial (especially with brand new companies), you have to think about a combination of advertising and promotion. Should it be 50/50, or some other number? That really depends on your best analysis of the market. For example, if you potential market would not be motivated by promotions and gimmicks, or discounted prices, then it makes less sense to put a heavy weight on promotions. If, on the other hand, your customers are an easily defined market such that building awareness could readily be done via certain advertising vehicles (such as magazines, afflilate web sites, etc.), then this suggests putting a higher weight on advertising.

In short, as in all things in marketing, the more you know about the customers you will be targeting, the clearer your objectives are for the marketing campaign, the easier it is to know what type of mix between promotions and advertising you should have.

You can read more about this in our tutorial on advertising versus promotion.