Each of the many ways in which to establish an advertising budget has its problems as well as its benefits. No method is perfect for all types of businesses, nor for that matter is any combination of methods. The following are the most usual methods in use today.

Percentage of sales or profits- The most widely used method of establishing an advertising budget is to base it on a percentage of sales. Advertising is a legitimate business expense and should be related to the quantity of goods sold. What percentage should you use? You can guide your choice of a percentage-of-sales figure by finding out what other firms in your line of business are doing. These percentages are fairly consistent within a given category of business.

Unit of sales- In the unit-of-sales method you set aside a fixed sum for each unit of product to be sold, based on your experience and trade knowledge of how much advertising it takes to sell each unit. Thus, if it takes two cents’ worth of advertising to sell a case of canned vegetables and you want to move 100,000 cases, you’ll probably plan to spend $2,000 on advertising them. You’re simply basing your budget on unit of sale rather than dollar amounts of sales.

Objective and task- The most difficult (and least used) method for determining an advertising budget is the objective-and-task approach. Yet, it’s the most accurate and best accomplishes what all budgets should- it relates the appropriation to the marketing task to be accomplished, and it relates the advertising appropriation under usual conditions and in the long run to the volume of sales, so that profits and reserves will not be drained.

Purchasing stream- The budget for advertising to attract new customers is often based on expected total income - called a purchasing stream - from your new customer. A purchasing stream is the total gross volume of new business you can realistically expect to generate from an advertising effort. For example a grocer might attract a new customer who will spend $125/week for six years. That’s a $39,000 customer. So, your budget would be derived as a percentage of that number.

Chrysler announced today that it plans to launch three electric vehicles by 2010. The real news here is that the vehicles will be 100% electric…AND, that they won’t look like shoeboxes. Chrysler plans a 100% electric version of the Town & Country mini-van, the 4-door Wrangler, and a new all-electric sport scar.

Chrysler has had its issues this year. Good for them for taking a huge step forward and responding to the market’s need for an economical solution. The real kicker in this story that impresses me, however, is the fact that Chrysler is adapting the new technology to time-honored body-styles. This is a stark contrast to the obviously preferred method of most auto-makers, who wrap a hybrid engine in a body that could’ve been built by Bart Simpson.

Chrysler gets real brownie points for realizing that what they’re selling is NOT the electric engine. Despite all of our bloviating about saving the environment, we still buy cars because we like the story they tell about our sense of style. To the great majority of us, the engine is some mysterious noisemaker that happens to reside under the hood…it’s a necessary evil…a perk, if you will. How else can you explain the dominance of 4-cylinder engines that do nothing but groan when you press the accelerator to the floor? Well…we don’t explain it…we simply smile because the outside of the car looks cool.

Most auto-makers to date have made the mistake of believing that people buy a hybrid engine because they really care about the planet. Hybrids have been all about the engine, with little attention paid to the packaging. The tragedy is- and, again, Chrysler gets credit for recognizing- that CONSUMERS BUY PACKAGING. This is why most hybrids have not done well compared to their gas-guzzling cousins.

The long-awaited Microsoft response the Mac/PC ads has arrived. I can see where Microsoft is coming from. This is a Bruce-Lee-Judo-esque parry that attempts to turn Apple’s momentum back onto itself. Accept the attacker’s momentum, and then release it back upon them.

Except…not.

Don’t get me wrong, it’s a valiant effort. It’s a good ad, well thought, well conceived, and entertaining. It’s very much old-school Microsoft…”where do you want to do today?” You can clearly see Microsoft’s passion for their product. They really believe in it. But, passion isn’t everything. And, in this case, I think Microsoft has missed the mark.

First of all, they play right into Apple’s hand. Further, do they really think that the Apple ads would have gained so much momentum and done so much damage if there weren’t some degree of truth to them? Apple didn’t create the problems…they just capitalized on them. The smart play would be to ADMIT the shortcomings! “Hello, I’m a PC and I really blew it with Windows Vista…” As consumers, we don’t respect excuses. But, we just might reward candor. Lastly, if I were on Mac’s marketing team, I would be salivating over this ad. I would be chomping at the bit to release a new Mac/PC ad that shows the Mac character encouraging PC to “keep on trying, buddy…we’re all pulling for you. You’re not all bad…you’re just a little…different.”

Brand theory might suggest that the smart play is for a company to focus all of its energy on a single brand. But there’s a time and place to branch…and a right way and wrong way. Industry brainiacs Al & Laura Ries even devote an entire chapter to this idea in their book “The 22 Immutable Laws of Branding.” They call it “The Law of Siblings.” There is rarely anything so absolute as an immutable law in the world of branding. But this one comes close.

The danger of launching a second brand is that if you handle it incorrectly, the second brand will dilute the first brand and waste your valuable resources. When Anheuser-Busch launched Bud Select, it grabbed a 1.3% market share. In the same period of time, all other Anheuser-Busch brands lost just over 1% market share, leading industry experts to suggest that Bud Select was eating its own.

It makes sense when you think about it. Does Bud Select not imply that regular Bud isn’t quite as good? Who wants regular when they can have Select? In the same manner, doesn’t Hellmann’s Light imply that regular Hellmann’s is fattening and unhealthy? Doesn’t Extra-Strength Tylenol suggest that regular Tylenol isn’t strong enough?

Years ago, Coca-Cola launched Tab to combat Diet Pepsi. Tab dominated the diet cola market, leading by nearly 1/3. Then Coke got greedy, dropped Tab, and launched Diet Coke to replace it. Diet Coke was soundly spanked by Diet Pepsi. Not only that, but Coca-Cola as a whole lost market share. This move took nearly two decades to correct.

Why did that happen? Because Diet Coke implied that Coke Classic wasn’t good for the figure. So Coke Classic drinkers switched to Diet Coke while Pepsi drinkers drank Diet Pepsi.

So, clearly, tapping into the success of one brand to launch a sibling is not a winning strategy. It rarely works.

How should a business launch a second brand? First and foremost, you should always make each sibling a unique and individual brand name. Resist the temptation to give the siblings a family look or identity. It won’t work. Instead, make them as unique and distinct as possible.

The key to success is to launch a sibling brand the right way, by sticking to a few practical points of strategy…

If advertising really boils down to storytelling- and I believe it does- then campaigning for travel and tourism destinations may just be its purest form in today’s ad-cynical culture.

Let’s face it, telling a moving and convincing story about deodorant or dog food or ice cream or cars or other consumables is a stretch. Sure, we can tell a story…but, more times than not, the consumer has already made up their mind about the product we’re selling. They’ve already experienced it, or some version of it, and have formed an opinion. So, the success of our story then becomes all about how close our story is to their experience. As marketers, we can only control so much of that. Best advice- tell an honest story. But I digress…

However, if we’re talking about a place- a vacation spot, a shopping district, a beach resort, a bar or nightclub, etc., then it becomes a story about more than just a product. It becomes a story about a human experience. And human experience is always relative.

It’s a common point in brand theory to NOT attack a word or concept that is owned by your competition. Instead, pick another word. Wrigley Chewing Gum is a great case study on this point. The company owns a variety of breath-freshening gums- Spearmint, Doublemint, Big Red, Juicy Fruit, Winterfresh, Extra, Freedent, Orbit, Eclipse, Altoids, and Airwaves, among others. So, they pretty much own the breath-freshening gum category. But how to prevent these child brands from competing with each other? Probably, you can’t. They’re going to compete. When you stop at a gas station and pick up a pack of gum, do you choose Winterfresh or Extra? The choice isn’t between a Wrigley gum and a competitor’s…it’s between Wrigley brands. So, inevitably, there will be competition and, inevitably, each will take market share from the other. But I digress…

The point is that it’s SOMETIMES ok to attack the same concept. For each of the Wrigley brands, the concept is “fresh breath.” It’s interesting to note that, over the years, the marketing message has become more and more extreme. Starting, of course, with the infamous Doublemint Twins. These ads, clearly, make the point that the Wrigley Doublemint brand offers twice the freshness. As new Wrigley brands are introduced, however, how do they compete with that? Offer triple the freshness? Nay, instead, we see a simple concept given over-the-top treatment that is clearly overstated and tongue-in-cheek. Another example is Orbit Gum. The message of these ads is that fresh breath can make any situation bearable.

So, by taking the idea of freshness to the extreme in a context that is obviously silly and unrealistic, the brands are actually able to differentiate themselves within their own category by attacking the same word or concept as their siblings.

It’s a rare exception, but one that can absolutely work in the right context.

Today, Fox News posted this story, titled “McCain, Obama Battle for Mantle of Change”, concerning the start of the final leg of the 2008 political race.

I noticed this theme beginning to emerge in Sarah Palin’s speech earlier in the week. So, McCain/Palin and Obama/Biden are going to suit up and do battle for the word “change.”

It’s an interesting strategic choice for McCain. Not to mention bold. But, again, this post isn’t about politics…it’s about branding. So let’s look at this through that lens…