Forecasting Your 2005 Interactive Budgets
By Cory Treffiletti
How are you budgeting for your 2005 interactive ad spending?

Over the coming weeks and months, most companies will finalize their
ad budget allocations for next year. As a result, this is a very
important period for the interactive ad industry. All signs point to
a continued increase in online spending, but how are individual
companies allocating these dollars?

One typical way that companies address the budgeting is to analyze
the performance of the past 12 months then determine if they were
successful at achieving their metrics, then increasing or
reallocating their budgets according to the response they saw. This
model is certainly one way to go about the process, but I would like
to suggest a slightly different method.

Do some research into your target audience and gather the details on
their media consumption patterns prior to allocating your budgets.
The data that I see on many clients, and that I've heard from my
colleagues, continues to point to the increased usage of the
Internet and the decreased usage of other, offline vehicles.
Television and magazine consumption continue to decline in favor of
interactive media. As more people are spending more time online,
doesn't this suggest that a larger portion of the budgets should be
allocated to this medium?

Of further interest is the capability of the interactive medium to
support your offline spending. As more people spend their time
online during the workday and later into the evening, are we seeing
a primetime emerge? Is it possible that the primetime for
interactive is lunchtime and late evening, as more people are
working from home and working slightly longer hours?

What about the purchase decisions for most of the U.S. audience?
Beyond basic media consumption, one must think about the ways in
which online is being used. Are the hours that a person is online
more influential to the purchase decision cycle than they are within
other forms of media? Are the influences from interactive more
important than the influences from outdoor, print, or television? My
guess is yes in many cases, based on the information-gathering and
community-oriented aspects of the online audience versus those of
other vehicles considered.

All of these arguments speak to the increased role of interactive in
the media mix. All of these elements point to the need to increase
the slice of the pie dedicated to interactive, though the relative
percentage certainly differs from category to category and target to
target. I have heard/seen that some companies spend up to 25 percent
of their budgets in interactive, and I have heard/seen that many
obviously spend less, but the question is answered by factoring in
the questions above. If your target spends 15 percent of their time
online, should you spend a 15 percent minimum in the medium? If you
factor in the influential nature of the medium into a weighted
average, does it make the case to spend slightly more?

You obviously need to run these analyses for yourself and measure
the data against internal opinion, but I'm sure you will come to the
same conclusion: interactive is more important now than it ever was
before.

Don't you agree?
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