Why Fear Online Spending Conversations?

Tuesday October 25, 2005

Ad:Tech, the annual conference for digital marketing, is over. It was the first one I have missed in a long time. Sounds like it was a good one. The panel of marketing executives was asked to reveal their percentage of annual corporate marketing and media budgets that are apportioned to online initiatives. For instance, of their overall marketing budget, what amount should be spent on Web design/development, online media and so on. For some reason, no one wanted to answer that question.

Well, guess what? Nothing has changed in the last 10 years. No one wants to talk about it. And it is not because these marketing chiefs are coy about talking budget. On the contrary. My experience has always been that they tend to brag about this — a lot. No, they’re apprehensive because “online budget” is still one hell of a charged topic and rarely are strategies in place to guide conversations like this. And yes, people find themselves jobless for revealing the wrong message about their company’s spending. I have seen it happen twice.

Now, I am not arguing arbitrarily here that it should be 10%, 20% or 90%. I think that the right mix depends on a sound strategy that marches in lock-step with a sound business model. And if you have both those working in your favor, you would likely feel more comfortable talking about it…I would guess.

In addition to not having the most iron-clad strategy, I believe there are two other reasons why most marketing executives aren’t as forthcoming with this information.

First, online is an industry that is still in its infancy. The precedents (or peer benchmarks) for the right mix of online and traditional just aren’t there. There is only 10 years of data to peer into, and the industry’s worst disaster happened right smack dab in the middle of that. So any data is scrutinized by many. I recall working with a recognizable office supply company whose marketing chief sat on a panel similar to Ad:Tech about four years ago. He was my day-to-day client contact and was asked that very question. He came right out and said that as a rule, his organization spends 40% of their marketing budget each year online. A month or two later, he was replaced with another marketing executive as tight-lipped as a White House press secretary. The issue is that the shareholders freaked out and he was kicked out. If anything, those words at that event set a precedent...of nervous silence.

The second reason is that most people “in the know” will claim that marketing is marketing and the notion of distinguishing between online and traditional marketing demonstrates your misunderstanding of marketing in general. Or rather that treating online as separate from any other communications initiatives is so, dare I say, 1998. There is a trend now, especially among my peers in online marketing strategy, to call banner advertising, “advertising”, and online media buys, “media buys” and Web design and development, “advertising.” I don’t altogether disagree with this. I do think that greater legitimacy ought to be given to online. Removing the online distinction lends that credibility for many.

As an online marketing strategist, I frequently hear this question from clients: What percentage of our total marketing budget ought to be earmarked for Web and online? I answer only after I know precisely what the overall marketing strategy is. Sometimes it is 40%, sometimes it is 20% and sometimes it is 0%. It depends. The key is to know the strategy, be comfortable with the strategy and answer that question with sound supporting statements.

I have helped a marketing executive at a national hosting franchise answer this question for the media before. Here was my advice. “Because we are an online portal serving the hosting needs of North America’s information officers and we know that almost all of our clients find us online, we feel comfortable measuring the efficacy of a 65% online mix with 35% in combined media which includes television, print and radio.” This statement tells us three important things.

Like everything in marketing, it’s a risk, but it is hedged. There is comprehensive strategy in their mix and it is not arbitrary. It’s stacked online because it is an online company serving the online needs of people who dwell primarily online. However, print, television and radio are still part of the overall strategy to increase the signal.

There is a measurement control in place. This statement says that they are trying it out and measuring it and will optimize based on results.

What C-level marketing executives really fear is not being prepared. They have nightmares about someone — either on their board, in their audience, a customer or critic — who will take issue with their strategy or lack of it and use it to hang them. Or that they will come off as less than luminous.

In many cases, I don’t blame them. If I were dropped into shark-infested waters without the proper protection, I would be nervous too. Then again, without a sound marketing strategy, I would make up an excuse good enough to keep off a panel like the one at Ad:Tech.