Planning the Budget: Traditional vs. Internet Media

Traditional media may not be winning any popularity contests these days, but as online marketers it’s one of our best friends. To us, traditional media is not the enemy to online media or vice-versa. They’re close relatives that support one another. Organizations often have the misconception that Internet media is the most cost-effective standalone marketing tactic. Common perceptions about Internet media is that it’s:

• Easier to plan
• Easier to buy
• Easier to place
• Easier to cancel
• Easier to target
• Easier to optimize
• More trackable
• More accountable
• More engaging

While all of the above may be true, the correct answer is “all of the above but not all of the time.” The Internet is indeed a very effective way to market, but rarely can new media be 100% effective as a standalone marketing vehicle because it often does not tell the whole story behind all the touch points that lead a customer to convert.

The Big Shift

A recent report by the Interactive Advertising Bureau (IAB) reveals that Internet media grew 10.6% in 2008; and the trend seems to be continuing. Meanwhile, TNS Media Intelligence reports that total U.S. advertising expenditures declined 4.1% in 2008. Taking a closer look, the report shows traditional media plummeting whereas Internet media spending continues to grow. In view of these significant budget shifts toward online marketing, our hope is that organizations are carefully weighing the decision to make such drastic changes to their budgets—and yes, you’re hearing this from an online marketing company!

How are companies measuring data to justify and propel these changes? Planning is just a pro forma projection for a possible future—but without thorough testing and revenue evaluations that support such changes, too much of a shift away from traditional media to rely primarily on Internet media could actually result in higher customer acquisition costs than projected. Before jumping the gun, consider testing and evaluating slight changes in mixes of media formulas over at least 6-12 months to find how different media and budget changes affect each other. Then plan the budget accordingly, based upon a due and diligent review of the results.

Quick question: Suppose your company is analyzing its year-to-date ROI for next year’s marketing budget. The numbers revealed that 33% of customers were generated from traditional media: PR, events, TV, print, radio, direct mail. And 67% of your new customers were attributed to Internet marketing: PPC, display ads, video, social media. Would you then follow suite and directly allocate 67% of your budget to Internet media spends? We hope not!

Test, Track, Analyze, Optimize, then Budget!

When given the opportunity to help clients at the strategy and budget planning stages, you should be asking questions such as:

• Why is Internet media earning more budget dollars?
• What is the basis and historical data for the sudden change?
• Upon what expectations is more budget being allocated to Internet media?
• What are the new goals, and how do they differ from the past year’s accomplishments?

When allocating budgets, consider compartmentalizing the current data-based ROI per channel and evaluate total cross-media support and assists that lead to online conversions. It is always prudent to test and evaluate how traditional media and Internet media affect and nurture one another in terms of both immediate and longer term CPA. In our experience, a drastic change in budget allocations can be a grave mistake without any due diligence.

Finding the right blend of traditional and Internet media that results in the most cost-effective and successful ROI-driven campaigns is the timeless and ever-evolving challenge for budget and strategy teams. There are the cumbersome tasks of tracking and evaluating analytics, the cost-per-metrics, per channel, ROI-per-channel, and so on. Knowing that customer acquisition campaigns require multiple touch points and measuring benchmarks over time, metrics also need to be viewed as part of the whole pie: How many slices of each media format will deliver the winning recipe for next year’s campaigns?

Early best wishes to you on your 2010 budget planning. Please give us a call if we can be of assistance!

Related posts:

1. Do Traditional Agencies Still Snub Search?
2. AdBid Self Serve Internet Advertising
3. A ‘Net Junkie’s Plea To Traditional Retailers:
4. U.S. Women and the Internet, Part 2

3 Comments »

1. That is a very nice concept. I really think it will work out to be a good thing.

     Comment by credit data leads — February 17, 2010 @ 3:42 pm

2. 2010 is starting out to be our biggest yet. Our Internet budgets will eclipse all previous years.
   .-= ChrisW´s last blog ..Non-relevant Search Engine Updates (and other fun) =-.

     Comment by ChrisW — March 28, 2010 @ 12:36 am

3. People are definitely coming around to the fact that the phone book doesn’t cut it anymore.

     Comment by Ross — May 24, 2011 @ 12:51 am

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