Budgeting and selecting the digital media

Budgeting and selecting the digital media

Traditional approaches such as those  can be used to set overall communications budgets. For example: 

● Affordable method – the communications budget is set after subtracting fixed and variable costs from anticipated revenues. 

● Percentage-of-sales methods – the communications budget is set as a percentage of forecast sales revenues. 

● Competitive parity methods – expenditure is based on estimates of competitor expenditure. 

For example, e-marketing spend is typically 10–15 per cent of the marketing budget. 

● Objective and task method – this is a logical approach where budget is built up from all the tasks required to achieve the objectives in the communications plan. This is a bottom-up approach that is often based on a model of the effectiveness of different digital media channels based on the measures of campaign effectiveness described in the objective setting section at the start of this blogger.

Complete to understand how these models are created

Digital marketing campaign plans require three important decisions to be made about investment for the online promotion or the online communications mix. These are: 

1 Level of investment in digital media as opposed to traditional media. 

2 Mix of investment in digital media channels or e-communications tools. 

3 Level of investment in digital assets. 

1 Level of investment in digital media 

Techniques in comparison to offline promotion a balance must be struck between online and offline communications techniques based on the strengths and weaknesses of the different media options. A useful framework for considering the media characteristics which influence decisions on which to invest in has been developed by Mecri and Eric (2022).

Offline media are often superior in generating attention, stimulating attention and gaining credibility. Online media tend to be better at engagement due to personalisation, interaction and support of word-of-mouth. The offer can also often be fulfilled online for products that can be bought online. However, there are limits to the number of people that can be reached through online media (a limit to number searching on particular terms) and the cost is not necessarily always lower in competitive markets.

Focus on content marketing

We introduced the growing role of content marketing within digital marketing communications. 

We believe that content marketing should be at the heart of digital marketing for all types of brands, because content fuels all the main digital marketing channels we use to communicate with our audiences.
Search, social media, conversion rate optimisation and email marketing all require content which helps a brand increase its visibility, engage its audience and drives leads and sales. Within a campaign, content is vital as the method of engaging the audience and generating demand, whether this is educational content as part of a business-to-business campaign or video content as part of a consumer campaign.

The only case where the role of content is diminished is where the main campaign offer is a price cut, discount or sale.

Given the importance of content marketing, many businesses now look to develop a content marketing strategy as part of their digital marketing tactics. As with all strategies, this will involve review of the current approach, setting specific objectives and developing strategies to create and share content.

To review how content can best support digital marketing, Dave Chaffey developed the Content Marketing Matrix with Dan Bosomworth of Smart Insights.

The activity explains how this can be used to identify the right content types. outlines typical options that companies have during a campaign, quarterly or annually.

Which do you think would be the best option for an established company as compared to a dot-com ‘pureplay’ company? It seems that in both cases, offline promotion investment often exceeds that for online promotion investment. However, some pure plays do invest the majority of their budget in paid search and affiliate marketing, although they are likely to find there are limits to growth that this will impose. There are also increases to buying digital media, as suggested which need to be considered. 

For existing companies, traditional media such as print are used to advertise the sites, while print and TV will also be widely used by dot-com companies to drive traffic to their sites.

Econometric modelling

Econometrics or econometric modelling is an established approach to understanding the contribution of different media in influencing consumers and ultimately generating sales and profit.

It can also be used in a predictive way to plan for future campaigns. It is increasingly used in integrated campaigns to assess the appropriate media for further explanation. One of its main benefits is its ability to separate the effects of a range of influences such as offline or online media usage or other variables such as price or promotions used and to quantify these individual effects.

A simple example might be for the sales of a drinks brand:

Sales = 100 + 2.5 × own TVRs (television ratings)– 1.4 × own price + 1.6 × competitor price + 1.0 × distribution – 0.8 × temperature– 1.2 × competitor TVRs

These relationships are typically identified using multiple linear regression models where a single dependent variable (typically sales) is a function of one or more explanatory or independent variables such as price, temperature, level of promotion.

Econometric models are developed from historic time-series data which record fluctuations dependent on different variables including seasonal variables, but most importantly, variations in media spend levels and the mix of media. In econometrics, sales fluctuations are expressed in terms of the factors causing them.