Big advertising budget doesn't mean more sales. Why is that?

Advertising is not always for increasing sales, it is neccessary for retaining market share also or fighting competition. Therefore more competitive products need big advertising budgets for the sustainance of business. When there is no decline in sales by virtue of advertising then it can also be considered as growth for a highly competitive product.

Advertising is only one of the way to increase the coverage and maximise reach to have an introductory impact on the audience / potential buyers.

This does not complete all stages of selling cycle and therefore what you said is correct. 

Advertising is not about budget only but strategy and plan.  If you don't have a clear strategy and a clear marketing plan then even the biggest of budgets will go down the  drain. Maybe you are not positioning yourself correctly in the market or you are not choosing an appropriate way of advertising or you are targetting the wrong people or you are not delivering the right message.  Also the quality of the product or service you are delivering is an important factor.  If the advertising budget is huge but the quality of service is poor it will be known and spread in the market stronger than your advertising and decrease sales.  Also the after sales service and customer support is very important. as a matter of fact I always say that customer service has more impact on the company's sales than the sales department itself.  If your customer support is delivering bad service it will back fire and reduce sales. So actually the formula  has several ingredients and they all have to be right for sales to increase.  if any of the factors is not right it will have its negative effect.

Relative, propotion, suitable ADs elemints and media with clear message are parts we should consider, In addition to the needed budget .

The previous mix should be directed to the specified targeted audience, as result we can garantee the promising sales ...

 I agree with Ms.Doha "Advertising is not about budget only but strategy and plan" and if you allow me to add good division of the budget among diffrent kind of advertisment (billboards,TV&radio ads,online ads, social media...)

 and if you aimed from this campaign increasing sales and you didnt achieve this increase, its because you didn't reach the target audience or market, or maybe you didnt deliever the right message, another reason, maybe your campaign didnt grab the audience attention wasn't attractive enough. 

Perhaps your advertising campaign is not strategically positioned, not hitting the right market, or poorly designed.  You should go back to the drawing table and assess where the problem lies.

advertising is like knocking at peoples doors trying to sell them your merchandise,instead you knock at all the doors at the same time (media,newspapres,signs,etc...) however ,most of the adds focus on the wrong thing which is ,finance affordability (cheap prices) long hours and so on , what they should focus on is who you are in the market and whay you are diffferent and why customers should come to you, you are advertising your comapny therefore it is you who you should advertise, the other thing is what happens when the custopmer comes to you how good is your sales team and how good is your service dept. in theory everyone has about20 people as aquaintences ,simple math 20x20x20x20..in no time about over100,000 people will know who you are!! maybe twice as much as the flyers that you mailed out???

case study 

Galaxy Samsung

"

Seoul: Samsung Electronics Co is expected to spend around $14 billion – more than Iceland’s GDP – on advertising and marketing this year, but it doesn’t always get value for money.

 

The outlay buys the South Korean technology giant publicity in TV and cinema ads, on billboards, and at sports and arts events from the Sydney Opera House to New York’s Radio City Music Hall. Google Inc spent less on buying Motorola’s handset business.

 

And Samsung, which has a market value of $227 billion, has made no secret of keeping up its aggressive marketing and promotion splurge as it seeks to make its brand as aspirational as Apple Inc’s . But the money it’s spending doesn’t always bring the desired result.

 

An advertisement promoting Samsung Electronics’ Galaxy Note3. Samsung Electronics Co is expected to spend around $14 billion – more than Iceland’s GDP – on advertising and marketing this year. Reuters

 

Last month, a Samsung-sponsored short-film contest finale at the Sydney Opera House received poor reviews for blatant product placement in a series of ‘behind the scenes’ videos. In Britain, viewers panned a product placement deal with ITV’s popular X-Factor talent show. “Is this a singing competition or an extended Samsung advert?” asked Twitter user Ryan Browne.

 

Earlier this year, Samsung’s New York launch of its latest top-of-the-range Galaxy smartphone came under fire for being sexist, portraying giggling women chatting about jewelery and nail polish while the men discussed the new phone, and the company’s new fridge and washing machine launch in South Africa drew similar complaints as it featured swim-suit dancers.

 

“Samsung’s marketing is too much focused on projecting an image they aspire to: being innovative and ahead of the pack,” said Oh Jung-suk, associate professor at the business school of Seoul National University. “They are failing to efficiently bridge the gap between the aspiration and how consumers actually respond to the campaign. It’s got to be more aligned.”

 

Samsung spends a bigger chunk of its annual revenue on advertising and promotion than any other of the world’s top-20 companies by sales –5.4 percent, according to Thomson Reuters data. Apple spends just0.6 percent, and General Motors3.5 percent.

 

“When your brand doesn’t have a clear identity, as is the case with Samsung, to keep spending is probably the best strategy,” said Moon Ji-hun, head of brand consultant Interbrand’s Korean operation. “But maintaining marketing spend at that level in the longer term wouldn’t bring much more benefit. No one can beat Samsung in terms of (ad) presence, and I doubt whether keeping investing at this level is effective.”

 

In a statement to Reuters, Samsung said it will “continue to leverage our brand power to maintain growth momentum, while focusing on optimizing the efficiency of our marketing activities,” reiterating recent comments by its co-CEO.

 

“Our product innovation and marketing strategy have made Samsung the world’s most preferred smartphone brand,” J.K. Shin, who also heads the group’s mobile business, told investors recently. “Now we’ll move from the most preferred brand to become one of the world’s leading aspirational brands.”

 

INNOVATING, NOT FOLLOWING

 

Samsung’s ‘Next Big Thing,’ and ‘It’s Time to Change’ marketing campaigns stress that its products are cutting-edge, and even trumpet its technology ‘world firsts’ before they’re ready for prime time, such as curved smartphones, available only in South Korea, and curved TVs that cost nearly $10,000.

 

For a company long seen as a follower, this is now a big sell on it being an innovator.

 

But, while Samsung has become the world’s biggest advertiser, spending $4.3 billion on ads alone last year, its global brand value of $39.6 billion is less than half that of Apple, which spent only $1 billion on advertising, according to Interbrand and ad researcher Ad Age.

 

To be sure, Samsung has a more diverse range of mobile products, which along with its chips and household appliance businesses need more marketing across different target audiences. But the heavy marketing spend suggests a need to convince consumers that it belongs at the top. Apple can afford to spend less as it already has that brand recognition, and cachet.

 

“The stronger, more differentiated the product, the less it needs to be propped up by advertising,” said Horace Dediu, founder of independent research firm Asymco and a former Nokia business development manager, referring to Apple’s ad spend.

 

Defending its marketing budget, Samsung can point to its lead in the global smartphone market – it sells one in every three smartphones and has more than double Apple’s market share. The Korean group’s savvy adverts mocking Apple devotees, and heavy investment in distribution channels have strengthened its Galaxy mobile brand.

 

“The Galaxy brand has established itself, and the Samsung brand is now much stronger than Android or any of the other OEM brands, except Apple,” said Benedict Evans, an independent technology and media consultant in London. “The underlying problem is that Samsung has established itself as a dependable quality brand, not a differentiated or premium quality product, so it does best where it’s not competing directly with Apple.”

 

Samsung works with a number of advertising agencies, including Publicis Groupe , Interpublic Group , and MDC Partners .

 

IN LOW GEAR

 

Samsung’s latest marketing splash has been on its Galaxy Gear smartwatch, which has been almost universally panned by reviewers. The device has been aggressively marketed through adverts and collaboration with fashion shows – yet only800,000 Gears have been shipped since its launch two months ago. Compare that to the more than5 million Note3 smartphones that have been shipped since its late-September launch, and it suggests fewer than a fifth of the Note buyers are also buying the accessory device.

 

Undeterred, Samsung has vowed more Gear promotions for the crucial year-end holiday season as it seeks to lead the wearable computer market and prove its innovation credentials.

 

“Probably Samsung knows better than anyone that Gear will not become a mainstream product. Still, they are trying to convey the message that ‘we are first with such technology,’ which they hope will help build their brand as an advanced technology firm,” said Interbrand’s Moon.

 

A deep-pocketed Samsung – it earned operating profit of $9.6 billion in the third quarter alone – is still pushing the envelope to win over consumers.

 

This month, the big-spending official sponsor of the past eight Winter and Summer Olympics launched a fantasy-inspired soccer marketing campaign ahead of the mid-2014 World Cup in Brazil – selecting11 of the world’s top players, including Argentine striker Lionel Messi, for a virtual match to save Earth from aliens – with the help of Galaxy devices.""

Big budget movies don't always become blockbuster movies, either. While "big budget" is mostly associated with excellence, expensive expertise, top notch technology and mind-blowing expected result, this is not always the case and this applies to advertising too. It simply depends on other factors related to proper marketing research, good preparation and due execution. If these are not done properly advertising, big budget or not will miss its goal and be just like "aiming on a floating target with blind-folded eyes, using a golden arrow to enjoy the few seconds of audience's gasps of suspense before they leave the theatre and request a refund, after the whole show fails". Having said this, while the final goal is mostly to drive sales, advertising is not always about short-term sales. Actually, big budget advertising is mostly associated with big brand "image building" or "image consolidation" goals, when sales are almost a non-declining factor for years and a product has reached maturity, big market share or big brand awareness. I believe that Coca Cola makes multi-million Disney-like TV ads for a different reason. It simply affords it, even if it had no effect whatsoever on global sales this or next year. It will, however, always be remembered as that mighty, affluent, undisputed number one soft-drinks manufacturer, by "envious" Pepsi loyalists, like myself. It'll be my second choice after Pepsi, even though I really, absolutely, definitely not like its taste that much!

thats true,,it may creat lot of demand in the market but full filling that demand is sales.

Advertising is just a tool to create awareness.

There can be one time increase in sales but to have continuous growth it is the product and related services which talk for themselves.