• by Amy Auerbach , Jason Krebs , February 3, 2011

Question from a digital media seller: "So all I hear about is how much digital advertising keeps growing. But I also hear that clients' overall spend isn't growing. So where is the digital money coming from?"

Amy says: In this recession, budgets overall are reported to be flat, or at least rebounding to pre-recession levels, from what I can tell.  This definitely makes it more difficult to increase digital budgets because the money has to come from other media.  

From the agency perspective, digital budgets are tough to grow in display media space right now because of many factors, such as: rise in importance of social media, paid search performing more efficiently than any other media, and the push by agency management to move display spend to DSPs.  

Overall, certain client categories that rely on digital media heavily -- like finance, auto and travel -- most likely have maxed out the percentage of their budgets that they can spend in digital.  I would guess that about 40% or more of total media budgets for those advertisers are spent across search and display.  The other categories may still be working out measurement models that truly uncover the impact of digital advertising on their bottom line.  Most are probably seeing some degree of efficiency and effectiveness across their display campaigns and still are experimenting with the right mix and allocations.

But to your question specifically, where is the digital money coming from?  It's very rare for a digital budget to exist on its own, outside of an overall media spend.  I don't think I've ever heard of an advertiser just allocating a digital media budget, but it probably has happened. 

The digital money comes from the media budget which is usually controlled mostly by a traditional planning team. Our situation in 2011 is similar to the situation in 1999 where digital teams are under scrutiny to prove the value of the digital spend and/or be grateful for the leftovers that the TV schedule didn't need. 

We also still have the problem of our budgets being overly flexible and cancelable.  When budgets cuts come down, digital spend is usually the first to go.  Print and radio budgets aren't really on my radar anymore, sad to say.  Only certain categories, like retail, still rely on newspapers, and radio is all about drivetime.  Plus the spending on those media is much lower than on TV, so there isn't much to take from those piles anyway.

I think what you are really asking is where can I find digital money for your property.  Other sites are your competition, but so is TV.  TV is always going to be here, or at least the act of sitting on our couches and watching a sight/sound/motion video experience. 

How can we make digital advertising into interactive advertising again?  Maybe all this talk about engagement will finally be what quickens the move of more significant dollar amounts.  We have to keep working towards the goal of digital spending becoming the lion's share of the media budget.  I'm confident it will happen eventually.  And I know from experience that it will, but just not when we want it to happen.  
 
Jason says: Does any of this really matter in a world where the Jets can come so close just to throw it all away?

Let me see if I can focus.

This topic is in the forefront of many media executives' minds these days. Everyone has an opinion, but that opinion is skewed entirely based on the position that person holds in the industry.

If you are at a magazine-based company, do you really think the budgets clients are allocating towards your print business are shrinking? (I know. I know. You now call yourself an Information Company and are agnostic as to how people read your content. I get it.) Well, readership is wavering for the industry, but some titles have shown gains. However, that doesn't tell the whole story since TV viewership has also been withering for decades on the primary channels (also known as broadcast), yet the money keeps flowing there, right? But not for long.

If you look at Mary Meeker's analysis of media time vs. ad spend, you can make the case that the dollars will flow away from the medium where consumers stop spending their time. That will certainly bode well for digital media, including Internet and wireless platforms that are all on the rise from a consumer usage perspective.

If you are a salesperson and you want to to close ad dollars, you have choices on whom to go after. If you are a TV seller, you go after TV dollars. If you sell magazines, you call on the print team. You get the point. But, if you are in digital, do you just call on digital buyers? In the 1920s, I imagine the new radio sellers called on the people who were buying billboards and newspapers. In the '50s, the TV salespeople  called on the radio buyers. In the '90s, the cable companies went after broadcast dollars. All of them went about proving that each medium was worthy of investment.

But did they really have to argue to transfer funds? Were dollars shifted from one medium to another like people are saying should happen now? Or were new budgets created? I am certain it was the latter. So why should it be different now? We shouldn't believe that spending now will stop at the top end and any money going to digital will have to come from traditional spending.

In any event, if you are a digital-only seller in a digital-only company, my suggestion is to call on anyone and everyone who has influence over a budget. State your case as to why your product deserves their attention. If you are a digital seller in a traditional organization, I hope you can go beyond that traditional revenue stream -- and that you and your traditional counterparts share in a target goal to build overall revenue, not just one over the other.

May this serve you well in your hunt for dollars, and may the Jets redeem themselves before I die.