Marketers can't ignore SEM and online media any longer and therefore budgets are shifting. Here are six patterns that emerge prior to large budget shifts.
Before we delve into my column, I want to welcome my new co-columnist in the Paid Search Strategies category, Andrew Goodman, who has been doing paid search almost as long as I have and is also a fellow author, having written "Winning Results with Google AdWords." Those of you that get the ClickZ e-mail newsletters on search marketing will get columns from each of us on alternate weeks.
Now, on to the topic at hand: CMOs and their crazy, often unscientific marketing budgeting process, particularly as it relates to online marketing and SEM (define). Marketing budget allocations between media channels are totally screwy at nearly every company I've had an opportunity to talk with. There's little or no science or math applied to the task of determining where to spend the first, last, or next dollar. I've been waiting for this to change ever since getting into traditional advertising out of grad school in 1992. I'm still waiting, but at least there's been some movement in allocating budgets more effectively between online options. But that's a discussion for another column. The bigger problem is that the large offline budgets in traditional media (television, radio, print, outdoor, etc.) for the most part have not migrated online to follow the consumer's attention.
What's the "right" online ad budget as a percentage of overall media and within online, and what percentage should be search advertising? It's a question I've heard expressed a dozen ways in the last month or two. Sometimes the question is more along the lines of: "Why haven't marketing budgets followed the consumers online given time spent consuming online vs. offline media?" I'll talk about some of the reasons that budgets haven't followed the eyeballs and ears online below.
What's truly interesting is that no CMOs have been fired for not moving high percentages of the media plan budget online. CMOs have a short tenure on average as it is and so most don't have the strength of will to simultaneously shake up the vendor landscape (CMOs are notorious for firing agencies or at least conducting agency reviews), and also make seismic shifts to media allocations. Once CMOs can get fired for not pumping sufficient media dollars into online marketing (and SEM for that matter) we'll see a much more pronounced shift of budgets online.
The inertia of advertising budget allocation by channel is amazingly strong and it takes a strong CMO or a major event or change to create the imperative to change allocations between media types. It's often the case that even making major shifts within a specific channel can take intestinal fortitude at the agency or client-side. So, I thought I'd look at instances where dramatic budget shifts have actually taken place. These instances were derived from discussions with my client base, prospects I've had the honor of chatting with on an in-depth basis, or large advertisers that have publically explained these shifts.
Certain patterns do emerge prior to large budget shifts into search, including the following:
There's no way we'll see a doubling of interactive budgets this year. But I've seen some signs that marketers can't ignore SEM and online media any longer and therefore budgets are shifting.
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Kevin Lee, Didit cofounder and executive chairman, has been an acknowledged search engine marketing expert since 1995. His years of SEM expertise provide the foundation for Didit's proprietary Maestro search campaign technology. The company's unparalleled results, custom strategies, and client growth have earned it recognition not only among marketers but also as part of the 2007 Inc 500 (No. 137) as well as three-time Deloitte's Fast 500 placement. Kevin's latest book, "Search Engine Advertising" has been widely praised.
Industry leadership includes being a founding board member of SEMPO and its first elected chairman. "The Wall St. Journal," "BusinessWeek," "The New York Times," Bloomberg, CNET, "USA Today," "San Jose Mercury News," and other press quote Kevin regularly. Kevin lectures at leading industry conferences, plus New York, Columbia, Fordham, and Pace universities. Kevin earned his MBA from the Yale School of Management in 1992 and lives in Manhattan with his wife, a New York psychologist and children.
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