Cost Benefit Analysis In Advertising
Investment Plan and Cost Benefit Analysis
Advertising companies are a service oriented setup. They require lesser capital investment than manufacturing setups as mainly, creative ideas drive growth, especially in the initial years of the formation of the company. Typically an investment plan is a function of the following variables:
1. The medium of advertisement: The medium of advertisement is an important consideration in the quantum of initial investment. For example, in billboards investment would be typically very high as the company would have to purchase the billboards which are costly. On the other hand, where the company opts for social media advertising i.e. advertising by using the favorable tweets the investment would be limited to just having a computer and basic design software which can be downloaded for free as well from the Internet.
2. Quality of advertisement desired: For a high quality ad film, a firm would require more sophisticated and advanced equipment and thus substantial investment whereas it may use second hand equipment where lower output quality is desired. Sophisticated equipment in turn would require a one-time training cost expense to familiarize employees with such equipment. This raises the initial investments required.
3. External dependencies: Any advertising company
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