The Spending Allocation Question

When starting the planning process, there is a litany of questions that always need to be answered. Most of those questions remain consistent from campaign to campaign: What are the objectives? What are the performance goals? What's the target? Is there a specific geography? Does the product or service have seasonality? What's the budget?

This last question is the one that seems to most often be fraught with fear and uncertainty. When it comes to the money, clients tend to be skittish and most in need of something objective upon which to base their decision about how dollars should be allocated to each medium being considering for an advertising campaign.

There is nothing unreasonable about this, of course. We are talking about businesses, after all; and business, when all is said and done, is about making the right decisions about investments based on an assessment of risks and rewards.

But when making the call about the allocation of funds for each medium on the table, the question always comes up: how much is enough?



The online advertising industry, in particular, focuses on this question and historically has always answered it in terms of percentages of spend.

"Online should get 13% of a budget," or "the percent of spend should be based on what percentage of a target audience is spending its time with the given medium."

The reason for this is, in large part, because that is how clients pose the query. Brand managers and marketing managers frequently refer to their allocations in terms of percentages of a total budget.

But looking at this from the perspective of a media purist, I think this is a mistake.

When putting together a comprehensive communications package, it is the communication delivery goals that dictate which media are to be used and how much each medium should be used. These communication delivery goals are based on historical, or projective, cause-and-effect relationships between the amount of inventory that runs in a given medium and the results that medium can yield. Basically, a certain level of media weight results in some X satisfaction of a business goal. The basis for a TRP (targeted rating point) goal is an estimate of some number of TRPs resulting in some quantifiable movement towards the achievement of a predetermined business goal.

But this quantifiable movement is based on how much communication is necessary, which in turn is relatable to media weight. The dollars allocated towards a given medium to purchase the necessary amount of inventory to make this happen is what becomes the spend per medium, and, thus, some percentage of the total budget.

When putting together a media plan for a client, the best way to go about it is to figure out which media are most effective given the client's objectives and the size of the role of each of those media (media "weight"). Once that is known, then the percentage of spend becomes a factor of how much the media being deployed costs.

Have I confused you enough?

Look at it like this.

If as the media planner on a campaign I've decided that TV, Print, and online are the media being used, and upon further examination, have found that the weight levels necessary for each medium in order to accomplish my client's goals are 1/3, 1/3, and 1/3, then my media weight distribution - in this instance, let us call them impressions - is even among each media. This means TV gets 33% of media weight; Print gets 33%, and online gets 33%. But if TV costs are twice as great as Print, and Print costs are twice as much as online, then my budget allocations are 57% for TV, 29% for Print, and 14% for online.

Like I said before, it is often the case that when clients dole out budgets, they do so in terms of percentages of available dollars on a per medium basis. But it is important that as the experts, we do what we can to keep the conversation focused on value and effectiveness as they pertain to the client's business and away from simply dithering about money and who gets how much. The battle over percentages is ultimately disingenuous and to fight it distracts everyone from what media is really supposed to be about. Otherwise, the online segment of the industry ends up looking like a bunch of whiny children complaining to their parents that it isn't fair the older sibling gets a bigger allowance.

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