Guesstimation is probably not the best way to establish your advertising budget. Setting an advertising budget let's you see how much money you have on hand to target customers. So if you're looking to forgo the guessing games, one resource to check out is The Birmingham News’s Advertising Budget Calculator.
It helps establish a budget based on a method known as percentage of sales. This approach applies a percentage of your anticipated sales for next year toward advertising. The percentage that's applied is based on the national averages that companies, within specific industries, spend on advertising. The Birmingham News claims that by using this calculator, which bases your advertising budget on your sales goals, you establish a budget that allows enough financial freedom to take advantage of opportunities or deal with competitive challenges.
However, many people have criticized this method because it bases your advertising budget on perspective sales. Often people are overly optimistic about the growth of their business and over-estimate their sales for the coming year, which can cause you to spend way too much on advertising your business. Therefore, we think it's best for businesses that are part of a stable market and have a realistic idea about their expected sales for the year.