How to Set Digital Media Budgets

Mark Renshaw, Leo Burnett/ARC Worldwide 

Whether I'm presenting at a conference, attending an industry event or speaking with a prospective client, I get the sense many people are unsure about their digital media allocation. Even those who believe they are progressive in their thinking wonder if they have got it right. 

According to Gunderson Partners, a management consulting and executive firm, 45 per cent of marketers spend less than 10 per cent of their budgets on new and emerging media. A little more of than half of marketers think they should be spending up to 30 per cent in these areas. For many people, this is a gut response to changing media habits. As consumers, we spend so much time on digital media, why aren't we as marketers spending the majority of our dollars on it too?

That is why Leo Burnett has developed guidelines to tackling digital media expenditure and the apprehension that often accompanies it. 

Reviewing Your Current Digital Budget

Let's assume that you have a digital marketing budget. Regardless of its size in absolute dollars, our general recommendation is that 70 per cent should go to emerged digital media (see figure). We define emerged digital media as areas such as broadband video, rich media/video-based ads and search marketing with a proven record of results. The idea is to throw your brand's weight behind activities which will generate results today and to which you can later apply sophisticated tactics that will optimize overall outcomes. 

Of the remaining 30 per cent, we recommend that you take 20 per cent and apply it to media that is going mainstream (see figure). Into this category, we put mobile marketing, online social networks and certain areas in gaming. These are increasingly on marketers' minds, but the numbers associated with these activities are not as tried-and-tested as emerged digital media. Instead, they provide a good intellectual growth opportunity to stretch and try new areas even within tactics you may already be running. 

These vehicles are great learning occasions that provide the chance to apply lessons quickly and build an on-going knowledge base. They may not drive huge outcomes this month, or even this quarter. But they will set up your future plans and keep you ahead of the competition.

A great example in this respect is adidas. According to Forrester, the research group, "When social networking site users incorporate a downloadable element - like an adidas wallpaper or badge - into profile pages, [those] brand elements take on a life of their own because users provide context and meaning for the brand. A user's friends see it, download it themselves, or tell others about it…In other words, once users become actively engaged with the brand, they become brand advocates…More than 70 per cent of the marketing value created by the social networking marketing campaigns resulted from the 'momentum effect' of these viral, pass-along elements spreading across the network." 

Had adidas not been playing in the social networking space early on, it would have completely missed this momentum (or, worse, been forced to play catch-up). Because its brand operates in permanent research and development mode, adidas was ready to ride the social networking wave when it hit.

What about opportunities that pop up frequently and quick attract media attention? Examples include virtual worlds and mobile gaming. 

With the last 10 per cent of your budget, we suggest taking the focus off return on investment or any real sense of outcomes that drive your business/brand forward today. Set the stage for future investments and marketing plans by testing digital areas that even consumers themselves aren't yet quite sure about. It's a learn-while-they-learn approach. Call it real time marketing opportunity assessment

If you invest in these types of technologies early on, you'll benefit from an increased flexibility if and when they rapidly emerge as "the next hot thing". Consider this 10 per cent a marketing insurance, if you will.

Leo Burnett's recommended allocations for digital media budgets

As an example, Joost ( emerged as a company with a different approach to TV and the way video is distributed and consumed on the Internet. Through the "10 per cent approach", Leo Burnett saw major opportunities to partner with Joost to test specific areas where video-based messaging meets addressable or direct marketing. 

Specifically, for Nestle Purina PetCare, we made TV content from the Purina Incredible Dog Channel (IDC) available on Joost as a branded channel. This was a great way to reuse existing professional content and it added to our test over the last two years where we placed video content into iTunes - Apple's online content store, and into mobile channels.

When Joost broadcast the Indy 500 motor race, for instance, an "overlay" with Purina content appeared onscreen. For example, this might read: "If you think those cars are fast, check out these dogs". A person who clicked on the overlay would be taken to the Purina content. There they could choose Purina shows that are relevant to what they love - pets. 

Creating a Digital Budget 

If you don't have a digital marketing budget, we generally recommend that you take your current marketing budget and divvy it up. Start by looking at your audience and understanding what they do and more importantly why they do it. Also look at when and why they consume particular media/content.

Second, understand what has been working for you in all media and the current changes that are affecting what you have done in the past.

Third, I would suggest that you look at competitive activity and spend. Can you establish a marketing mix allocation that not only taps into which media will deliver the results you need today, but one where you can use channels where you do not have to spend simply to counter the competition? Are there options to establish a clear advantage via a unique approach?

Fourth, and last, be aggressive and innovative. Take bold steps and don't just define digital marketing as the internet. Understand where digital creates new opportunities across all types of media that are being re-invented, made more "human", addressable and interactive. This is where the future of digital marketing is.

Enforcing a Digital Approach

To ensure your communications stay relevant, you need your teams to understand in what context your audiences use technology. To do this, you need to step into the worlds where your audience is and not just be a voyeur. It takes a deep dive into some of these areas to understand where your brand can and cannot have a connection. Moreover, it takes a really truthful assessment to ensure your brand is adding value to the exchange with digital consumers, that it is seen as appropriate, and to understand what will be accepted as real by your audience.

Keeping your finger on the pulses of these various tactics and channels is not a once a year activity. It will take ongoing reviews and a sustained approach. Lastly, I would suggest that you celebrate your success and make sure you benchmark all approaches, tests and trials. The knowledge that is gained under the various methods outlined above is invaluable and particular to your brand.

About the author:

Mark Renshaw is EVP/Digital Practice Lead at Leo Burnett/Arc Worldwide.