Skip to main content

Budgeting for advertising


The news

Executives at most of the countries independent television companies are bracing themselves for difficult times. With the economy suffering in the recession, advertisers are cutting their budgets and focusing on the more successful programmes. This is a major concern for commercial channels as advertising is their main source of income. As revenue flows decline, schedulers are looking for ways to boost income or cut costs. Programmes, such as The Wire and Glee, can bring financial success in the short-run attracting extra viewers and generating more advertising opportunities. If these viewers remain loyal over several series, more can be charged for the advertising slots available before, during and after the show. However, when successful series end, finding the next blockbuster becomes a priority; however this does not come cheap. Other more established programmes may struggle and producers and executives will have to look at their budgets to see if it worthwhile keeping these going. The result may be cheaper television, such as reality programmes, or ever more repeats.

The theory

Obviously, we are talking budgets and other related topics. In this topic we will be looking at cost centres, profit centres and the use of variances. So, let's start with an analysis of what we mean by the term 'budget'. Follow the links below to see information on related theoretical topics.


Variance analysis



  1. Explain what you understand by the terms:
    1. variance
    2. zero budget
  2. Outline the reasons why budgets may be inaccurate.
  3. Examine how managers use variance analysis to monitor the performance of their business.
  4. Analyse how producers may react at independent television companies as their advertising revenues fall.

Suggested answers