Media Strategies Editor Jim Meskauskas talks about how much of your advertising budget should go online.

Recently, I read a brief column online from the August, 2005 issue of Media Magazine by Chris Schroeder titled "The Ship at the Bottom of the Sea."

In it, he raises the specter, without outright calling it out, of how the percentage of an advertising budget allocated to online media appears to be dramatically out of sync with the value of the medium. Online offers large, engaged audiences and "progressively better and more sophisticated targeting." One senior marketer he spoke with said that while 75-perecent of his audience was online, only five percent of his budget was allocated to the medium.

While Schroeder went on to make the usual claims of the internet's uniqueness as an advertising vehicle, what struck me was the notion that somehow the percentage of an advertising budget allocated to a medium should be commensurate with the percentage of the audience to be found in that medium.

This is not a new idea. For years those with a vested interest in the online advertising industry have made similar assertions. It was during the throes of the dotcom bust and the subsequent market collapse that online marketing executives started talking regularly of how online budget allocations should be made in line with the sizes of the target audiences being found through the medium.

It was also during this time that the IAB's XMOS studies first started appearing, each of them concluding with spending models that demonstrated the uplift in reach and traditional branding metrics achieved if the dollars spent against online media were 15 percent of the examined advertising budget.

You spend where the people are

Before deciding how much of a budget is going to be spent against which medium, you've got to first figure out which media you are going to use.

For you agency people out there, this isn't always an easy thing to do because advertisers so often come with a pie chart in their minds about which pile of money should go where. This is unfortunate, but a common reality in the ad business. It is illogical and can make for weak media planning.

Your ad budget needs to go where the people are. Which media do your audiences use? Which are they more engaged with in comparison with others?

I was lucky when I started my career in media. That was at a time when the sun was just setting on the old, rigorous, math-laden methods of traditional media planning. I was doubly lucky to have as my teacher one of the best, most creative media data nerds in the business. From him I learned all manner of evaluating research data, how to model it in ways to extract a story that was otherwise hidden behind the stoic faces of numbers.

Among the practices I learned was to determine a) just where the target audiences were spending their time, and b) how interested they were in the media with which they were spending their time.

By finding where the target audience spends most of its time (through media quintile analyses and subsequent vehicle analyses) and what their level of engagement was with that medium (attention levels, time spent) a picture of what media should be used, and to what degree, starts to emerge.

Perhaps half my audience can be found on TV and the other half online. However, what if those using television are only half as engaged as those using the Internet? If so, then which medium is most effective and therefore deserving of my dollars?

Well, TV is only half as effective, which means that I'd have to run twice as much media weight to equal the media run online. If the inventory for both media costs the same, TV needs to have twice as much money in order to be one time as effective as online.

Are you beginning to see how a percentage of spend is dictated? Is it becoming clear how it could be misleading?

How much is enough?

The question of how to parse an advertising budget is asked at the beginning of the planning process by nearly every advertiser I've ever worked with. Brand managers and marketing directors have for so many generations thought about their budgets in terms of which slice of the money pie goes to which medium, they don't know a different way of thinking about their media plans.

Those selling online are often interested in pointing out that percentages of spending should be higher than they are for the medium, and those in the online media department regularly share this view.

Every time this theme comes around, the discussion becomes mired in distractions involving perceived value, the power of the internet, comparisons of online to television, and the internet's claim of superior accountability. All of these are interesting, important, and valuable components of any discussion about the use of online as an advertising medium.

The question about how an advertising budget is broken out by medium is a good one to ask, but asking it at the beginning of the planning process is the wrong time to ask it. And the answer is not going to tell you anything about the quality of the advertising or the effectiveness of the communication, both of which should be the paramount concern.

People working in online think their medium should get more than it does. It turns out that people working in outdoor think that outdoor should get a larger piece of the pie. And folks in print think that magazines should get more. And folks in radio think they should get more. And, strange as it might seem, TV people think they should get more.

The reason a particular medium is used in the marketing mix is its ability to deliver on a communication delivery objective against a target audience. That objective is based on the estimated reach and frequency that the planning process has uncovered as being the optimal minimum for getting the advertiser's message into the mind of the intended audience and opening the possibility for that reached individual to take action.

To use an old model for television:

If I think that I have to "speak" to at least 50-percent of an audience at least three times using the same message, then my communication delivery goal is a fifty reach and a three-time frequency.

 In order to reach 50 percent of my audience three times, I have to buy 150 GRPs/TRPs (gross rating points/targeted rating points). There are other considerations to be made, of course, such as size of audience (50 percent of 100 or 50 percent of 1 million?) and level of continuity necessary to maintain a share of mind, but simply put, this is how it works.

Once I know the level of advertising I need, then I put costs against that inventory and see what my spend level has to be.

Each media has a particular strength that another does not, and when putting together a media plan, it is essential to know which medium does what, and how much of whatever that is does it need to do.

This means that the real question to ask is how much media weight do I need to run in a particular medium?

Cost and opportunity are what dictates percentage of spend, not a given medium's share of an audience in relation to the rest of the media mix.

Let's say I've put together a media plan of TV, print, and online. Let's assume that the communication delivery necessary for maximizing my campaign's effectiveness is to split the media weight evenly for each media.

TV, print, and online each need to run one million impressions each.

Let us say that TV is a $10 CPM, print is a $20 CPM, and online is a $5 CPM.

I end up with 29 percent of my budget going to TV, 57 percent going to print, and 14 percent going to online.

Cost and availability are the drivers of how the budget is segmented.

Money makes the world go 'round. Those who don't have it want to get it. Those who do have it want to keep it and get more of it.

However, to spend time and energy at the beginning of the planning process is to become distracted from what the media planning process should really be all about. The concern every time needs to be -- first and foremost -- how can I most effectively and efficiently accomplish the advertiser's goal?

Jim Meskauskas is media strategies editor for iMedia Connection.