The affordability method is an approach to determining the advertising budget in which a company allocates only the level of money that management considers acceptable or that it can afford to spend on advertising after covering all operating expenses. This method is common among small businesses or start-ups with limited financial resources.
Conceptually, this method is heavily focused on finance rather than marketing objectives. It ignores the direct relationship between advertising costs, market opportunities, and return on investment. Although simple to implement, it can lead to underfunding the campaign at critical times or missing important market opportunities because the budget is determined by the availability of funds rather than by the needs of the market to achieve specific objectives.
