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1 120 Broadus Ave, Greenville, SC The Composition of a Digital Ad Budget: How much to spend and where to spend it

2 There is no doubt about it, digital ad budgets are on the move upward and Digital will account for more than 75% of all marketing budgets 37% Mobile specifically will account for more than 50% of marketing budgets 35% Earned media will be more important than paid and owned media 27% there s no looking back. With more and more options to diversify your digital ad dollars, one must be wary of diluting results but still savvy enough to put your dollars in the right places. This paper takes aim at this very question. With hundreds of active clients, DOM360 not only has the knowledge but the proven track record of results to speak with authority on this very subject. Marketing campaigns will begin unfolding in real time 32% Analytics skills will become a core competence in marketing 42% If you ve been slow to adopt an online marketing strategy, the time has come to move forward with it now. A recent survey of CMOs shows the vast majority of them expect digital to account for more than 75% of their marketing budget in the next five years. (1) The same survey revealed search engines and display ads ranked highest in effectiveness among digital channels. There are a number of reasons companies of all sizes are increasing the amount of dollars they dedicate to their digital message: It s where the world lives. The average adult American will spend The average adult American will spend 23% of their time on a mobile device in % of their time on a mobile device this year. (2) It gives the little guy a chance. Unlike traditional media, where the company with the biggest budget usually wins, strategic digital marketing campaigns allow for small, nimble companies with limited budgets to give larger, slower-moving businesses a run for their money. It s easily trackable. Unlike traditional media, digital allows you to easily see how many consumers have interacted with your message and how they got there. It has greater focus. Instead of the blanket one-size-fits-all philosophy used in television advertising, digital campaigns allow you to target consumers who have already expressed an interest in your product. It also allows you to engage and interact with them unlike any other traditional medium. 2

3 How to Determine Your Ad Budget Forecasting is the cornerstone of any advertising budget. Forecasting allows you to look over past years results, month by month, and know beyond the shadow of a doubt what to expect in the future. From there, you can determine your future growth plans by adding your percentage of growth to that ad budget. Say, for instance, over the last three years your average January sales are 100 units. This January, you want to do better. Ten percent better. You would take 100 and multiply it by 1.1 and arrive at your goal of 110 units. You would then take that 110 and multiply it by your advertising cost per unit, arriving at your advertising budget for the month of January. Completing this exercise for each Forecasting is the cornerstone of any advertising budget. Forecasting allows you to look over past years results, month by month, and know beyond the shadow of a doubt what to expect in the future. month of the next year will then give you your advertising budget for the entire year. It is at that point that you must decide how to spend those dollars and how spending those dollars will best help you achieve your goals. Splitting Your Ad Budget: Digital vs Traditional Dividing your ad budget between digital and traditional is probably one of the most commonly asked questions these days. How much should be traditional? How much should be digital? If you are not sure, then a good starting point is to do 50% traditional, 50% digital. This allows you to lay in a plan and feel good about it. If you are heavily skewed on the traditional side and don t have a comfort level with going 50/50 yet, then a minimum starting spot would be to go 65% traditional and 35% digital. Coincidentally, Proctor & Gamble, the world s largest advertiser, is currently committing about 35% of their annual marketing budget (an estimated $1.5 billion) to digital. (3) Once your budget percentages have been decided, then, over time you can shift dollars one way or the other. The key is staying disciplined about the cost per unit. By shifting the dollars back and forth, you can achieve the desired mix of digital and traditional while staying on budget. So that seems to answer the eternal struggle between digital and traditional, but what about the actual composition of that digital spend? 3

4 How to Diversify-Not Dilute-Your Digital Budget This can be one of the hardest decisions to make, regardless of your budget size. You know you need to be spending money on digital, but just how much? What percentage should go to search/ppc? How much for display/ remarketing? How much for other high quality sites like Facebook, Twitter and YouTube? Here s how we suggest you spend your money for maximum impact. Keep in mind, you should always study your results and adjust ratios as needed. For simplicity of demonstration, let s say your budget is $20,000 per month. Here s a good way to spend it: You should always study your results and adjust ratios as needed. That $10,000 you re splitting between Google and the Yahoo!/Bing Network (YBN) should be divvied up based on the refering site proportions shown in your site s analytics platform. We ll discuss that further in the next section. 4

5 Google Microsoft Yahoo Ask AOL Market Share 67.4% 19.4% 10.0% 2.0% 1.3% Dividing Your Pay Per Click (PPC) Spend Among Search Engines So, where should you spend your search PPC money? Considering the fact that Google, Yahoo! and Bing have the search market cornered it is safe to say that we need not look beyond those search engines to decide where we spend our PPC budget. A quick glance at your referring search engines in your analytics platform will tell you how to best diversify your budget. For example, if 1000 total unique visitors came to your site, six hundred of them through Google, 400 of them through YBN, then those would be the exact proportions in which you would compose a $1000 search pay-per-click budget: spending $600 on Google A quick glance at your referring search engines in your analytics platform will tell you how to best diversify your budget. search, $400 on YBN. If you re looking to be where the people are and have a robust budget, Google AdWords is far and away the most popular PPC site, with 67 percent market share on PC and 83 percent in mobile (4). That popularity, however, means the cost can be prohibitive for some. AdWords also requires a level of experience and expertise to avoid accidental overspending. At DOM360, we have a dedicated SEM team which we have spent years building and training to manage your dollars effectively. Yahoo! Bing Network can be a great fit for a limited budget. The CPCs are considerably lower than AdWords. The lower price, however, is with good reason; the YBN offers you a much smaller audience. YBN can be a good test market for a keyword or campaign before moving to the higher dollar Google AdWords. It is also a valuable opportunity for businesses with lower SEM/PPC budgets to compete with larger companies. 5

6 How To Properly Do Display Advertising Freshness is key in display advertising. In the days when traditional media was the only game in town, you would change your weekly ad for the Sunday paper to make sure it had the very latest information about your in-stock vehicles. That concept holds true and is even more important when it comes to display ads. In the digital era where changes can be done in a matter of minutes, there is really no excuse to have an out of date or stale display ad. Someone Visits Your Website A Cookie Gets Dropped The Life Cycle Of Remarketing Visitor Returns And Converts Your Ad Displays On Their Device In the digital era where changes can be done in a matter of minutes, there is really no excuse to have an out of date or stale display ad. How To Use Remarketing To Close a Sale Remarketing targets those customers who visited your site but left before taking a sales-based action. They browsed your site, maybe even studied one particular vehicle for a while, but left before seeking more information or contacting you. You know they re interested. How do you get them back and convert that potential buyer into a closed deal? Remarketing. When that buyer leaves your site, remarketing acts as a visual reminder of what they left behind. As they surf around to other sites, a remarketing campaign can show your display ad, or even the page for a specific vehicle, to that consumer. Think of it this way, when a potential buyer stops into your dealership and leaves without making a purchase, one of your sellers is likely to follow up with that person via a phone call. Remarketing is the digital equivalent of that phone call but it can actually be much more effective because it follows the potential buyer to other sites. 6

7 You can base your remarketing efforts on a specific page the user visited or SEO vs SEM vs SMO SEO even a page they didn t visit. For example, you could choose to target all visitors who went to Page A or you could target all visitors who went to Page A but didn t make the jump to Page B. SEM SOCIAL To make your remarketing campaign successful, be sure to include images. Ads with an image have proven much more effective than those that are text-only. Make sure you are keeping your remarketing ads and campaigns up to date. Some cookies can follow users for up to three months. During that time, your inventory may change significantly. You should consider updating your remarketing ads a minimum of every 30 days to make sure the information is as fresh as possible. (5) We recommend utilizing your existing :30 TV spot you cut for the month as your preroll ad as well. Making the Most of Pre-Roll Video Pre-roll is a short ad which plays before the YouTube video you intended to watch plays. The great thing about these pre-roll ads (as of the time of publication of this paper) is that you only pay for the pre-roll ad if entire ad plays. That is to say, if your :30 second ad runs for just :20 seconds, then you do not have to pay for that ad, but still get the benefit of the impression. Here at DOM360 we recommend utilizing your existing :30 TV spot you cut for the month as your pre-roll ad as well. 7

8 Where Social Media ADVERTISING Fits in Your Digital Plans Facebook and Twitter give your company a chance to advertise on these platforms which boast over 1.25 billion users. While an audience that large may make social seem like a no-brainer for your marketing dollars, there are some positives and negatives to consider. On the upside, both Facebook and Twitter let you target ads at specific age/gender/geographical area and/or interest. That means you aren t paying to reach the 99.8% of users who have no interest in your products. Those ads, however, have a relatively low click thru rate, regardless of how well targeted they are. Still, social mediums are here to stay and these two are no brainers at the moment. For the mad scientist/early adopter bunch there are bunches of other digital advertising mediums, some which we have found to yield great results. Advertising on Amazon, ebay, Hulu and LinkedIn are additional good places to start should you want to push the envelope of your digital budget and still get results. In short, digital advertising is here to stay. If you are not in the game or just skimming the surface on your digital spend it is time to power up. Power up your awareness and education level on the matter and in turn feel good about powering up your digital ad budget. Education is key to understanding and feeling good about spending digital dollars. Once you feel the power of this advertising you will begin to see results and embrace it. One way to see it work is having unexplained weekday spurts of business. When you have a 15 unit Wednesday and you can not explain why, blame the Internet and your digital ad spend and just know that it is working: because it is. 8

9 To learn more about DOM360, contact us today at or visit us online at DOM360.com Sources 1* CMOs Are Preparing for Digital to Grow to 75% of Marketing Budgets, Ad Week, July 1, * Why All Your Campaigns Should Be Optimized for Mobile, pathtopurchase.com, May 27, * Does P&G Really Really Drop 35% of Its Marketing Dollars on Digital?, Advertising Age, August 20, * Google Market Share: 67 Percent on PC, 83 Percent in Mobile, searchengineland.com, September 22, * 5 Google Dynamic Remarketing Best Practices, searchenginewatch.com, July 19,

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