Our recent survey conducted with Econsultancy on effective marketing mix allocation has revealed marketers are spending their budgets on channels with low consumption by their audience.
Getting the right balance for your marketing mix is an increasingly hot topic for marketing departments and their partner agencies. With an increase in tracking capabilities, marketers can now utilise more data points to inform budgetary decision-making, although that doesn’t necessarily mean this is happening, or at least happening effectively.
The world of marketing and brand messaging is fast becoming customer-centric and the media budgets set by brands need to start reflecting customer behaviour and media consumption habits.
To better understand how marketers are allocating and tracking their spend, we partnered with Econsultancy to almost 1000 marketing executives across the globe. The output of this research was the Media Budgets Index: Comparing Media Budget Allocation to Media Consumption whitepaper. We used the disparity between the channels marketers are spending on compared to where consumers are actually spending their time as a proxy for gauging the accuracy of media investment.
Many marketers are struggling to get the balance right between online and offline spend. Although the problems are varied in each market, there is a huge waste of advertising dollars across the globe with many underspending in digital channels. In addition, budgets are still largely allocated on the basis of historical performance rather than customer behaviour or external insights.
In the table below we are looking where consumers are spending their time vs where marketers are allocating their budget with a clear trend of digital underspend.
The news is not all bad. Most marketers recognise that more of their budget needs to shift towards digital. Across all markets surveyed, executives are expecting to increase spend (51%-62%) in mobile channels as well as increasing or maintaining investment in websites. Email continues to perform strongly overall but varies in value to executives. Providing this is aligned with shifts in consumer behaviour, these are sound strategic decisions.
The other constant component is TV advertising as it continues to dominate budgets. Between 50-60% of marketers are planning to keep their TV commitments the same over the next year. In some regions (ANZ in particular), TV still has a high rate of consumption and suggests there is still value for marketers in maintaining investment in this channel. Radio, direct mail and print continue to experience declining fortunes, largely showing the greatest propensity to suffer budget cuts and minimal growth in investment.
Performance breakdown across regions
In Australia and New Zealand, the total online and offline advertising spend is $11bn in 2016 and of that at least 7% or approximately $770m is potentially allocated incorrectly. In Asia the results are even worse with 42c in every dollar being spent in channels are consumers aren’t necessarily spending time in.
If we dig a little deeper TV is still used heavily in Australia and New Zealand, however, marketers are spending 43% of budgets on digital channels. These are the only markets where online spend outweighs time spent in online channels. In comparison, Asian executives are spending 39% of budgets on digital. Whilst this is a 6% increase from 2015, it’s nowhere near balanced against the 48% of time consumers are spending online.
In the US marketing execs are the closest to balancing their budgets with a 3% discrepancy between time spent and budget spent in online and offline. TV remains a hugely popular channel for marketers in the US who admit that it is possibly overpriced for what it can achieve. The UK have a bigger job ahead of them with an 11% disparity between time spent and budget spent, even though 38% of all budgets are spent online.
Why the discrepancy?
One of the main reasons marketers are failing to get their mix right is they have a strong belief on what channels are effective for marketing, which doesn’t translate into accurate budget forecasting. This is made obvious when a majority of marketing executives don’t know if their media mix is balanced, despite them having a strong belief that they know which channels are effective. This confidence often leads to marketers ignoring or failing to analyse the data and using regular insights to inform decision-making and these marketers are less likely to invest in accurate measurement techniques. This gives marketers who are utilising data-driven marketing techniques a genuine competitive advantage.
The other barriers listed by marketing execs were budgets sitting in channel silos, a lack of resources and outdated operating models. Those who are investing in these areas and working to break down departmental silos are best placed to move forward with an effective and balanced budget.
To read the full report, download the Media Budgets Index: Comparing Media Budget Allocation to Media Consumption from Datalicious and Econsultancy.