Marketing Budget Allocation: Follow the Money

  |  April 6, 2006   |  Comments

It’s time to realistically plan for the future by allocating appropriate dollars to e-mail and the Web.

It’s time to stop the charade of how many marketing dollars are focused on email and the Internet channel. For too long, this burgeoning channel has been accorded small piece of the marketing-budget pie. Why is it so problematic for some people to read the research reports that continue to document the massive shift from traditional media to interactive? This paradigm shift is happening and will continue to gain momentum with each passing year as the dinosaurs of the pre-Internet era become a smaller part of the consumer marketplace.

Each year in early January, we collectively gasp as e-commerce’s continuing rise is reported. Each year, e-commerce seems to multiply two or three times over the previous year. The message to marketers is pretty simple: follow the money.

As more consumers utilize email, marketers must budget more for this medium to establish a beachhead on one of the most important consumer channels. Instead, they continue to pump significant dollars into traditional media in the misguided belief these channels will return to the glory days of direct mail, TV, and radio as the broadcast channels of choice, an indelible entry in every "successful" media plan.

I began my media sales career selling billboard advertising. Today, that industry’s media proposition seems very old school. I can’t tell you the last time I took a commercial action based on what I saw on Interstate 95. There’s merit (as well as political correctness) in saying the past isn’t going away. Neither are vintage Mustangs, Beatles records, or comic books. However, it’s time we stop waxing nostalgic about the past and realistically plan for the future by allocating dollars appropriately.

Based on every metric I’ve seen, email continues to generate some of the most impressive and trackable ROI (define). Yet advertising and marketing teams are pressured to make email communications a budget whipping boy. I can’t tell you how many times I’ve heard "our budget for email is limited" or "I need to reduce costs around email." Is pressure on email pricing and budgets based on misinformation relative to email’s overall performance? Or is it an attempt to rationalize a misappropriated media allocation and budget?

It’s counterintuitive that a medium that continues to demonstrate an incredible knack for outperforming other media instruments in its ability to grow sales from your best customers cost-efficiently and -effectively (when applied properly) is treated as second -class citizen when it comes to budget allocations. The potential ROI for email campaigns are impressive, to say the least. I’ve never experienced anything close to this rate of return on any traditional medium. Is it possible the specialists managing companies’ email marketing campaigns aren’t getting the word out? Are they fighting the battle with the traditionalists and legacy players who adopt the "this is the way we’ve always done media; why change it" crowd? Or are folks trying to prove their worth by earning a negotiating merit badge that demonstrates to the corporate powers that they can buy email, one of the most powerful media in the industry, at the lowest cost?

I continue to see media dollars pumped into traditional media at the expense of credible investments in email. A cover story in a recent magazine displaying the smiling captains of Google raises the question, "Are these guys making too much money?" Indeed. It may be sacrilegious to question allocating dollars to search, but, though I understand the utility of the channel, I’m sad about what search engines and search engine marketers admit they spend. To think the marketing industry embraced a channel that posts "billboards" on the side of consumer inquiry sessions in the hope they’ll catch the consumer’s eye as she races through potentially 5 billion search results is something of a return to previous years and tactics.

I’m not saying search isn’t a valid investment. It must be a part of your marketing mix. But not at the expense of leveraging customer data and building deep, relevant retention-based email dialogues with your customers. Not a chance.

The possible profits generated by allocating a commensurate budget percentage to email pales in comparison to any income earned by an email service provider company (mine included). As the shift in consumer purchasing and informational patterns continues to move toward more relevant, meaningful Internet dialogues, the choice is yours and the budget makers in your company. Either put the emphasis and resources required to build a dominant, meaningful commitment to email communications strategies, technology, and deployment to work for your company, or be left behind in the next couple years.

Those of us who have worked in and around media for the last decade or so know the truth about this medium’s power. It’s time we gather the courage to fight for our fair share of the marketing budget and end misguided, misinformed efforts to relegate email communications to second-class status. Do you have chutzpah to make the move to change your media plan?

Until next time,

Al D.

Want more email marketing information? ClickZ E-Mail Reference is an archive of all our email columns, organized by topic.

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ABOUT THE AUTHOR

Al DiGuido

Long recognized as one of the direct response industry's premier innovators and a pioneer in e-mail communications, Al DiGuido brings over 20 years of marketing, sales, management, and operations expertise to his role as CEO of full-service digital marketing company Zeta Interactive. Formerly Epsilon Interactive's CEO, DiGuido also served as CEO of Bigfoot Interactive, CEO of Expression Engines, EVP at Ziff Davis, and publisher of Computer Shopper, where he launched ComputerShopper.com, a groundbreaking direct-to-consumer e-commerce engine. Prior to Ziff Davis, he was VP/advertising director for Sports Inc. DiGuido also serves on the Direct Marketing Association's Ethics Policy Committee.

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