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The 2012 Marketing Budget Guide

You need a boost. You need to bring people in. You need to create awareness. And the awareness campaign should be directed towards the channels where people can connect with you.

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Written by on November 3, 2011

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Thomas Baekdal

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Many companies are planning their 2012 budgets - you may be one of the them. The question, of course, is what should you spend your money on?

This guide will help you make the right decisions. We will look at where you should spend your money in 2012, and how you should spend it.

Where to spend your money

2012 is a big year in terms of trends. Not new trends (although there will be many of those too), but rather trends taking hold of the world around us. Ebooks will take over from paperbacks (already happened on Amazon), streaming will drastically change how we watch TV, and digital will totally dominate print.

The trends are not something that *will happen*, it is something that *has happened*, but many just haven't caught up yet. 2012 is the year where you have to do that.

One of the most important graphs illustrating this change is the one below. The data is from a study from March 2011 from eMarketer. It illustrates the difference between where people spend their time versus where you as a brand spend your marketing budget.

Note: Since this study came out, online has increased even more, while print has declined further.

There is a big problem here. With TV we have a great balance between budget spenditure and consumption. But when you look at newspapers and magazine, you find brands are spending far more money on those channels than is justified. At the same time, brands are under spending on digital channels.

There is a growing disconnect between where brands spend their budget, and where people spend their time.

Brands, on average, are spending 16% on newspaper advertisements, but people only spend 4% of their time reading it. While on mobile channels, people spend 8% of their time using it, but it only attracts 0.5% of the advertising budgets.

You are not spending your money in the places where people consume!!

Let me simplify the problem for you. The graph below illustrates what happens if we only look at print versus digital. We then find that people spend 80% of their time with digital and only 20% with print. But advertisers spend nearly 60% of their budgets on print.

And the 41% share to digital is extremely high. Many other studies have found that the print versus digital share is even more extreme. A study from Econsultacy, from January 2011, found that the "digital" marketing budgets accounted for less. Even when we look at the younger demographic, the "digital budget share" is minuscule in comparison to how important mobile and online is.

Let me give you another example. A few months ago, L'Oréal was praised by the media for their "shift in focus". Adage wrote "L'Oreal Hikes Digital Ad Spend Sharply as Focus Shifts". It sounds fantastic, but they still only spend 10% of the marketing budget on digital.

There is a gigantic disconnect between where people spend their time and where brands try to connect with them. And the result is obvious. You are not getting a good return on investment.

You are not where people are!

Brands come up with all kinds of excuses. The most prolific one is, "my customers do not use the internet to find my products." No, you are probably right. If you are only spending a small fraction of your budget on digital, then people wouldn't find you online. But they are online...where they find someone else's products instead of yours.

It's a terrible excuse, because we know that people are spending far more time online than with print.

Take look at this graph from PEW (December 2010). The line for print is sloping downwards and the line for digital is going up. And this from 2010, continue each line into 2011 and 2012.

The fact is that you have to be 65 years or older to still favor print (and that is not likely to change any time soon). All other age groups favor digital, and as you can see, that trend is accelerating.

If you want even more proof, read this article by Kevin Hillstrom about how he shut down Nordstrom's print catalog division because it wasn't producing a positive return on investment. And this was back in 2004-2006. Even back then, print catalogs were just a waste of money.

This was long before the social web.

I could give you many other examples, but the point is that most brands are not spending their money where people consume their time. There is a huge disconnect.

The reason is simple. While ordinary people have changed and adapted to the new world of media, most brands have not. They are still doing the same thing they have always done. They are using the same old channels, the same old tactics, and utilizing the same old campaigns.

It made sense 5 years ago, but now everything has changed. It's time to wake up.

When asking "where you should spend your marketing budget" the answer is simple. You need to balance your budget for each channel with how much time people spend there.

You obviously have to make an individual determination for your brand, in your market, with your demographic. But the average is now 80/20. Eighty percent on digital and only twenty percent on print.

You have to be digital first, print second.

How to spend your 2012 marketing budget

Finding out where you should spend your budget is easy. What isn't easy is how you should spend it.

Many brands think it is just a matter of moving the money they spend on print advertising to digital advertising. Simple right?

But that is not going to work. The sad truth about digital advertising is that there is way too much of it. In print, you can buy a full page ad, and have a clutter free environment for which to present your message.

Even though print magazines are overdoing ads in the extremes, here is an example from Vogue, each advert in a print magazine is very nice to look at. You also have the added benefit in print that you can target your message to the content in a much better way than online. You have a longer time to plan.

Online you have almost no control at all, and your ad will be placed on a page that contains other call-to-actions. One example is a page from the Huffington Post. There are 106 call-to-actions on just the part that you see below. Your advert is drowning in a sea of noise and clutter.

Most digital advertising campaigns are likely to produce a negative ROI. And if you just replace print with digital, you will lose all your money.

This might seem like a good excuse for not advertising online (and it is), but as you can see in the graphs on previous pages, just spending your money on print is not going to work either.

The problem is that the shift from print to digital is not about the format. It's not screen vs. paper. The real difference lies in how we consume content.

Note: read much more about this in my book "The Shift: From print to digital...and beyond".

With print, we are passive consumers. You sit down to read a magazine. You go into standby and let the world "present itself". Online we also spend a ton of time watching, but everything we do is done with a purpose. It's not passive.

When you move from print to digital, you have to change the concept of marketing. With print, marketing is about presenting what you do. In digital it is about making a difference in relation to what people do. That is what people connect with.

With print you present an advert for the mass market. In the digitally connected world, you give people a reason to connect.

Buying ad space on e.g. Huffington Post is not "a reason". You are not making a difference. You are just adding to the noise. It doesn't work. There are only two times when online advertising really works. One is search advertising. If people search for "online grammar checker" and you are selling such a tool, then putting a Google Adwords ad on those three keywords are very useful.

But it only works if you are specific. Putting an ad on the general keyword "spelling" is just a waste of money. You have to tie a specific action to a specific outcome.

The other is when you need to create awareness. If people don't know you exist, creating a Facebook page, a blog, or uploading a YouTube video is not going to make any difference (at least not in the short run).

You might try to create a viral campaign but as we all know, 99.98% of all viral campaigns never go viral.

Note: Never try to create a viral campaign unless you have a great idea. Mediocre ideas don't work.

What you need to do instead is to link a specific purpose to your brand. What is it that makes you better? What is it that you do? What is your purpose? And you need to target your campaign to the type of people who are looking for that purpose.

But the awareness campaign is not going to do anything on its own. That is just a cost you pay to make yourself known. One of the big problems in the digital world is that we have an extremely short attention span.

So in order for it to work, you have to combine it with a way for people continue to stay connected. You raise awareness to get people to connect.

But the big question is, of course, why would they do that? People don't connect with ads.

This is where the real cost of digital marketing comes in. You have to create that connection. When people realize that you exist, you have to give them a reason to stick around. A big part of that is to focus creating truly good products, but hopefully your product team is already doing that.

But then, from marketing, you have to help people. Help people use your products. Turn yourself into a guide.

Think of it like this. When people decide to connect with you, they are essentially inviting you into their lives. What can you then do to make their lives better? How can you guide them?

There are two parts to this. One is to inspire people through your actions and your passion. The other is to expand what people can do.

Take one example from print. Restoration Hardware, a great shop that makes some of the most impressive furniture in the world, is creating these "creator" ads, showing you how their creative artists work.

It is a beautiful page, with a wonderful story - and it works great in print. But it is useless in the digital world, because of the length of this article, combined with the short attention span. But more importantly, it doesn't create awareness (people who see this already know you exist) - nor can you connect with it.

In the digital world you need to give this guy a Tumblr blog. A place where people can follow his creative endeavors as he creates their amazing furniture.

Or more specifically, instead of buying ad space, you need to spend your budget on assigning one or more people in marketing to create your "creator blog". People from marketing, who visit your creative teams and document their work.

In digital marketing, you are not spending your money on ads. You are spending money on creating a "meaning". You are spending it on creating a connection. You are not presenting.

And it doesn't have to be Tumblr. Burberry's Instagram channel has more than 100,000 followers. They send out the people who used to be in charge of buying ads, to all the places where they are "doing something" ...and then they take a picture.

Your digital marketing budget is about "spending money on time". Time as in "the time your team needs to create valuable content". You cannot buy this from a magazine - that can only give you awareness.

What you buy is time for your team to make a difference. To take your product and extend it with purpose.

Another example is the famous cook, Jamie Oliver. One of Jamie Oliver's businesses (one of many) is selling wood fire ovens. He is advertising like everyone else, but when it comes to digital, his main focus is not to buy banner ads, but instead to expand what you can do with a wood fire oven.

Here is an example of one of his podcasts where he is using his own wood fire oven to make something as simple as a pizza. The podcast (and the message) is the pizza, but the tool is the oven.

And this is really the essence of marketing in the digital world. You use a fraction of your budget on advertising to create awareness. You spend the rest on time to create a world that people can follow. Time to make a difference. Time to give people a reason. And time to answer "why should I follow you?"

PR in the digital world

The third part of your budget is PR and it is very important, even in the digital world. But you need to look at PR in a much wider sense. Traditionally it is a one way "pitch". You hire a PR agency, they pitch to journalists, who print the story, and the readers read it. It's from you, to the middleman, to the reader - one way!

This, however, doesn't work well with bloggers. And let's face it, popular bloggers have far more traffic than what you have on your Facebook page - many even have more traffic than the print magazines. The bloggers are very important to you.

Bloggers, however, are not hired by a company to produce articles. And bloggers live in a fractured market. In the print world, you can choose the 5-8 magazines you think are important and just focus on them. But in the blogging world, you have the long tail effect. Sure, some are big an influence, but the real power lies in the quantity of blogs out there.

You can use your traditional PR tactics on the big bloggers (the ones who are making a living out of it), but to reach the thousands of smaller blogs you need to make a difference. You need to do something that is worth blogging about.

This is not print. You cannot just buy exposure or a relationship. Bloggers want to connect. They measure success in the number of meaningful connections they have.

You need to turn PR into a two-way street. It starts with you talking about them. If they post a great article, retweet it. It doesn't have to be about you. Of course, if they do blog about you, post an update about that too.

Bloggers want to feel like they have a connection, and the best way to do that is make them feel like you are following them.

Here is another idea: Let's say you want to do a competition. Why not do it on a blog that has previously written a great post about you? Help the bloggers create a stronger connection to their readers, through your products?

PR in the digital world is a two-way street. You have to be "a fan" of the people you want to influence. A real fan!

Budget Planning

We already know where you should spend your money (digital vs. print), now let's talk about what to spend it on.

Like everything else, it largely depends on your situation. You need to ask, "what is my real problem?" In print, everything was about creating exposure, because that was the only thing you could do in a one way advertising world. But in the digital world, we don't have that limitation.

You need to look at three things. Level of awareness, level of influence, and what people do when they connect with you.

If your level of awareness is low, if you are unknown, you need to advertise. There is no way around that. The social world is great for building up your business, but if nobody knows you, you are faced with the problem of having a Facebook page with just a couple of hundred "likes" for the first year.

You need a boost. You need to bring people in. You need to create awareness. And the awareness campaign should be directed towards the channels where people can connect with you. Don't create a fancy ad with a link to your website - it doesn't work.

If you, like Jamie Oliver, sell wood fire ovens and create podcast about cooking with it, create an advertising campaign that focuses on getting people to subscribe to that podcast on YouTube.

On the other hand, if people already know that you exist but they are not connecting with you, then you do not have an awareness problem. You cannot solve that by creating more ads. You do not have a lack of exposure. What you lack is influence.

If this is the case you need to look first at your product: Why is it not selling itself? Why are people not talking about it, or using it? Marketing can only go so far. Fix your product.

But when you have looked at your product, you need to crank up your social and PR efforts. You need to build up influence. You need to make yourself known as the "leader" in your industry. To do that, you need help from influencers - the bloggers, the press, and the individuals.

If, however, people already know you exist and also connect with you but you are still selling enough products, then you have a very different problem. You don't have a problem of awareness or exposure, and advertising cannot help you (it will just be a waste of money). Most of your PR cannot help either, because you are influential.

What you lack is meaning. You are not connecting your product with what you do. We often see this with brand blogs. They sell clothes, but blog about cafés, going to parties and visiting big cities. That may help create successful blogs, but it will do little to sell your product.

If this is your case, you need to focus on creating the right kind of "meaning" on your channels. Create that vital link between what you do and the product you do it with.

There you have it, the 2012 Marketing Budget Guide.

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Thomas Baekdal

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Thomas Baekdal

Thomas Baekdal

Founder of Baekdal, author, writer, strategic consultant, and new media advocate.

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Check out my book: THE SHIFT - from print to digital and beyond? Free for Baekdal Plus subscribers, $8.79 on Amazon.

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