Jun 16, 2015

Your Digital Budget: How Much Interactive Do I Need? – A G/L Executive Brief

Eric Kroupa Branding, Digital, G/L Approach, Integrated Marketing, Planning

An advertisement should tenaciously follow the eyes (or ears) of its target. It’s up to the advertiser and agency to decide which combination of media will catch the most glances. First, there were pamphlets; later newspapers and magazines; then radio and eventually television. These traditional advertising platforms once comprised an entire advertising budget—those days are behind us.

Now consumer eyes are fixated on computer screens and mobile devices. We are undoubtedly living in a digital age, so, naturally our advertising budget should reflect that, right?

Last year, Goo Technologies found that millennials aged 18-34 were significantly more likely to ignore digital advertisements such as banners and social media promotions than those of traditional media.

Conversely, a polling conducted by Adroit Digital revealed the following information:

  • 36% (plurality) of millennial smartphone users believe digital ads to be more effective than those of traditional media.
  • 28% believe the two to be equally effective.
  • 19% believe traditional ads to be more effective
  • 17% believe they’re most effective when used together.

Wait a second. Are millennials implying that while digital ads have the capability of being supremely effective, they’re also most susceptible to being ignored? What can we take away from this glaring contradiction?

Digital advertisements need to be home runs.

Unless digital ads utilize valuable information and a killer creative strategy, they’re likely to be lost in the clutter of a dauntingly massive digital world. Watch Dove’s Evolution—a digital spot that initiated major buzz in 2006.

Let’s talk specifics. Currently, digital advertising is the fastest growing of any category. In fact, it now comprises 28% (or $52.8 billion) of all advertising expenditures in the U.S. That’s second only to television. Assuming an advertiser has solid information and a sound creative strategy, just what proportion of an advertising budget should be spent on digital?

According to our research, at least 30%.

Procter & Gamble, the world’s largest advertiser, is investing nearly a third of its media spend in their digital budget.

PG_infographic

“We continue to drive marketing productivity through an optimized mix, driven by new, more efficient digital media. We have quietly strengthened and invested in all of our digital capabilities, including mobile, search and social, with a wide range of partners.”

– Jon Moeller, CFO, Procter & Gamble

Comparatively, a study by BrightLocal and ChamberofCommerce.com found that small to mid-sized businesses spent, on average, 46% of their advertising budgets on digital media.

For example, according to Liz Schnell, VP of brand strategy at Henry Ford Health System, the Detroit-based hospital’s digital spend rose from 9% in 2011 to 40% in 2015—that’s a hell of a spread.

HFHS_infographic

Social media is a chief contributor to digital expenditures. In fact, research firm BIA/Kelsey found social media alone comprises 21.4% of small businesses’ advertising budgets. Why? Because it’s less expensive and more personal than television. Small businesses rightfully jump at the opportunity to connect with consumers at a low cost.

“Social has been on a tear for about five years now, and it has gotten to the point where it is now the most-used category in terms of reach, and it also now commands the largest share of budget of all categories. Social is No. 1 in both reach and spend [for small businesses]—that is a first.”

-Steve Marshall, Director of Research, BIA/Kelsey

The social connectedness of the consumer world offers marketers an unparalleled opportunity to reach markets through the Internet. Just remember—your digital advertising needs to be distinguished enough to roar through the preexisting myriad of digital noise.

Planning for next year? G/L is a brand-driven, strategic marketing agency prepared to launch your business’s fully integrated ad campaign—including digital media. Contact our President Tim Leon at 314-727-5850 or tim@geileon.com