Insights into allocating digital dollars

The penultimate question:
How do brands determine how much to spend on digital?

Why the question? Because throughout the course of my digital media career, no two clients I have worked on have allocated digital budgets in the same way.

Why does this matter? Individual marketing and advertising programs can live or die depending on the process of how budgets are allocated, approved, and modified over the course of the year. The subtleties of how a particular company allocates budgets ultimately have tremendous influence over strategies, tactics, and roles for particular marketing partners.

Unless you're a part of the budget allocation process, seeing what gets approved and what gets cut can seem strange or even schizophrenic. Digital programs can be funded from several budget areas within a marketing organization, some with their own predetermined roles for digital media and marketing. Where the money is coming from can be quite influential over the objectives, strategies, and tactics of a proposed program.

1. Some companies have a tough time putting a stake in the ground with respect to dollar amounts, so they first develop placeholder budgets by performing basic calculations that many of us might consider to be "back of the napkin." For instance, if a marketer wants to acquire a million new customers via digital channels over the course of a year, he'll try to get to an "all in" cost-per-acquisition number that includes all media costs, productions costs, agency fees and anything else he can think of. It will provide a starting point for the process.
2. Other companies will ask their agency partners for help in order to get to a starting point. However, some of the people I talked to expressed concern that agency numbers have to be taken down significantly, owing to any built-in biases they might have (commission-based compensation, discipline bias, etc.)
3. The most dreaded part of the process for most marketers involves taking the numbers to finance for approval. I heard a lot about difficulties communicating the subtleties of the marketing side of the business to people within finance or procurement.
4. Another problematic part of the process involved specific tactics coming up in the mainstream media, which may cause finance or executive management to question tactics without having a clear view of the objectives and strategies specific to digital. We spent some time talking about the dreaded "GMOOT Syndrome." (Get Me One Of Those) There was some frustration expressed around the notion that the best tactics aren't always the uber-trends discussed on the front page of The Wall Street Journal.
5. Several departments or marketing disciplines may be contributing to the overall digital budget, depending on how many roles digital can fulfill. Thus, money might be coming from direct marketing, brand advertising, ecommerce, or even IT. Sometimes that money comes with specific baggage, like preferred strategies and tactics. This can influence what the specific programs look like in the end.

Old school, yeah!

A recent study in the states found that 80% of marketers ranked email as their best performing channel. Whilst 57% said search, 33% said TV and 32% Direct Mail.  

Whilst the marketing world is being whipped into a frenzy about mobile, social media, widgets and emerging channels we'd all do well to remember how successful the digital 'old timer' email can be.

Whether it is buying cold email data or contacting your customers and prospects it shouldn't be overlooked. A recent acquisition email we created for Visit London got 25,000 clicks (forecast 3,000). I've seen emails payback 30x over through actual sales.

As a channel it is also valuable in terms of 'keep warm', Sainsbury's in the UK wish you a happy birthday via email, and even follow it up in the post with a bar of chocolate. Cold Stone Ice Creamery in the US email people on their birthday with a coupon for some free ice-cream - how good is that?!

There has been a significant increase in email use in the US in the last 6 months, partly because email is so cheap to create and send. Brands need to be careful not to over use though, don't bombard people... 

It can also be used to drive a conversation across other social media platforms, more on that here.

One of the common complaints I get is the inability to be that creative. True it can't work like a website and there are multiple email platforms to be wary of, but things are starting to change.

We've recently trialled video in email for the western force, as a teaser to view the rest of the video content online. Open rates were excellent and we'll continue to push this new technology forward.

If you've got any clients out there sitting on an email database, let's start thinking about how we can speak to them in a relevant and targeted manner and make the most of a chance to contact our customers/prospects.

Because there’s nothing wrong with old school.

Nic

Social Media where is it all going?

I got the chance to go a social media conference/showcase last week.

It was sponsored by Adknowledge, it was quite a stellar turn out and I wasn't sure what to expect but I was excited by the prospect of hearing discussion around the topic nonetheless.

It was refreshing to see a wholesome level of people from publishers to agencies turning up to spend the afternoon together listening to speakers discuss the power and future of social media. I really enjoy witnessing the change in the media landscape and that is pretty much what Brett Brewer from Adknowledge had emphasised the importance of utilising this social media space because that is where people are going when they are online and interacting with each other.

I don't disagree with this unavoidable trend however, after hearing a few presentations including the case study of V-raw, I can't help but wonder where will the future of social media go? Sure things are social and the web technologies are by nature social.... the metaphor of a network is made up of people, just like cavemen but now gone virtual. The question remains, how do you really monetarise on the social relationships without annoying or bombarding users with branded messages? Can advertisers really do content for free in the hope that it will go viral or even be consumed by social groups....

More interestingly, the recent changes of Facebook's terms of use.... basically you are never really gone once you leave the social sphere on the web.... There are lots of new signs on the social movement on the web and how will this affect advertisers who have so openly embraced this new trend?

Any thoughts..... 

-Jeff

full list of social networking sites globally

http://traffikd.com/social-media-websites/

Useful list, thanks Michelle M

Nic

Digital Touchdown?

We saw one of the most thrilling finishes in Super Bowl history but how was it from a marketing perspective?

The us ad agencies as ever, delved deep in to their creative heart for this years superbowl ads - the most expensive media spot in the world. 3m dollars for 30 seconds sounds even more expensive during the GEC doesn't it? 

What interests us the most this Superbowl is the channel extension into digital that brands are pushing. In such uncertain times, a 30 second tv ad for 3m seems hard to justify, but if you build in a mobile element, social marketing, search, user generated content and datacapture then it somehow seeems a little more palatable. 

Whilst many media observers review the ads on creativity, we have looked at those campaigns that have stretched the dollar value online.

E-Trade (share trading and investing) released outtakes of its SuperBowl ads online before the game to drive interest, and they unified the campaign through search, social media and the TV spots. Frosted Flakes, whilst not the most creative spot got the most from the campaign driving people online to nominate a sports playing area that needed renovation courtesy of Kellogs. 

And the loser? Denny's ran a free breakfast promotion but failed to put a URL on the TV ad... shame. 

One frustration we have in digital is spending so much money on TV spots but not backing the campaign up with something as simple as search. Brands must make it as easy as possible for consumers to find their campaign online in the days following the TV - even if brands spend money on campaign terms alone (for the Fujitsu guys out there, this means buying "Economatch" terms in search), more on that issue for Superbowl brands here

As for our favourite TV ad? Doritos Snowglobe user content ad wins it (again) for us. Incidentally, you can watch them all on the Ad Blitz on You Tube: http://www.youtube.com/adblitz

Tell us your favourite.

Cheers

Nic