Budget Woes? Money Worries? A Few Handy Tips for Improving Your Ad Buys

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Is your budget an afterthought or a well constructed recommendation? In the scheme of traditional media, online budgets are increasing tremendously, but how much is enough? When a client asks you how much they should spend online it sometimes feels like a shady exchange with a redneck mechanic asking, “How much you got?”

For too many years we were used to getting the scraps from the table and simply planning to the funds left over in the marketing mix. Now that the medium has grown up, its time to explore the ways to build a budget recommendation that is well constructed and can speak in terms that CMOs will relate to.

But I’ve always been handed my budgets from the marketing manager…
According to Nielsen Media Research for 2005 US online advertising spending was up 23% and is projected to reach an enormous spend level of $15.6 Billion in 2006. Upfront planning for ’07 is around the corner and now is the time to be proactive with budget recommendations.

Will you be giving the standard “15 — 20 percent of your budget” answer for your client or performing the due diligence for 2007? In an effort to ensure that you are recommending the most effective use of your clients valuable marketing dollars, here are 4 critical factors to consider when setting an online budget.

1. Know your target audience and their expectations
Looking at time spent by medium, it is important to see how your target audience indexes and adjust accordingly. Of course, this is not a 1 to1 correlation, but it can help to argue against the 50% newspaper allocation when your audience spends 2% of their time reading them. Also, research what percent of your target is online compared to general market.

More important than time spent is the role of the medium as it relates to your clients products or services. Understanding what the importance of the internet is in terms of research, evaluation and purchasing will heavily influence the “need to be there.” Determining the number of searches in your product category and the opportunity for search is a great starting point.

In addition to time spend and role of the medium, the third audience consideration is “expectations to be seen.” This is a less tangible concept that relates more to the ethos and role of your brand. Monitoring blogs and determining buzz index is one way to get closer to this expectation. For an innovative brand such as a game console it is endemic to the category as opposed to certain CPG products such as toilet paper. For a good example of a digitally pioneering brand that often lets their audience down in this department, think Apple.

2. Plan against communication goals
Matching offline goals for communication is a great place to start. If your client typically looks to reach 60% of their target audience, determine what it would cost to effectively reach the same percentage online. Working with the rest of the mix, see where online can hit the lower TV quintiles for example and deliver additional reach.

1 COMMENT

  1. I hate when people ask me what the budget is.

    People should ask what the CPA is. Then the budget doesn’t matter as long as the CPA is met.

    If you want to set aside money for branding then that’s different issue. It’s like setting aside money you want to send down the toilet because you believe that’s what it takes to get noticed.

    Frankly I’m not one for getting noticed but getting results.

    Down with Budget’s let’s work out the CPA and take it from there. It’s amazing how many people don’t actually understand their own cpa.

    John

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