Marketing budget: is online overtaking offline?

Michiel Destoop
July 20, 2017
⏱ 4 min. read

If you believe what trend watchers say, you would be crazy if you were still spending part of your marketing budget on offline marketing. Is this reality? And is it realistic?

An increasing marketing budget, primarily online

In a previous article about Determining your marketing budget I referred to the CMO Survey. This marketing research has been conducted on a six-monthly basis since 2008.

What is remarkable is that the budget for digital marketing has demonstrated annual growth figures of 8 to 15% in the past five years, but that the budget for offline marketing only diminished slightly in the same period. This translates into an increase in the total marketing budget.

Not only has B2C demonstrated a rise in digital marketing (15%), so – and this is remarkable – has offline marketing (3%).

Marketeers spend an average of one-third of their budget on social and digital marketing.

Source: Data & Marketing Association, the world's largest organization for data-driven marketeers with more than 100,000 members.

What we had anticipated has become reality: online marketing budgets are gradually being given precedence, but it is not going as quickly as predicted.

Here are the reasons why offline marketing has not been scrapped entirely:

  • Conservatism: what should you scrap (particularly if you're not sure about what it will yield)?
  • Experience: attending an event, feeling, smelling and cherishing a printed publication, the everyday use of a business gift… digital marketing can't even come close. With augmented and virtual reality becoming ever more commonplace this benefit is coming under pressure.
  • Marketing is never "OR-OR"; it is "AND-AND": even in digital marketing you can not trust any one particular tactic alone.

Here's why the increasing proportion of budget spent on online marketing is logical:

  • Changes in media consumption: more and more online
  • Personalization options: based on the history, interests or demographic data accumulated
  • Speed: creation, distribution, interaction
  • Measurability: which actions lead to success, and to what extent?

Changes in media consumption

Let's talk a little more about media consumption.

  1. Try to stand in your customer's shoes. Consumers spend more and more time online.
  2. So, go where your customers will be spending their time. Take a look at young people's media consumption.

I base these figures on Global Web Index which conducts a survey every year among some 350,000 internet users about their media consumption. The result is of course that this concerns only Internet users. The internet penetration rate in Belgium was 85% in 2015 and 93% in the Netherlands, so this is certainly the majority by far. And if you take into consideration that it is hardly likely that your customers are among the remaining non-internet users because they are less wealthy, you can consider these figures as representative for your target audiences.

Internet users spend an average of 6½ hours online, during which they make more and more frequent use of mobile devices (sometimes even 2½ hours)

The comparison between 2012 and 2016 shows that the consumption of digital media is rising, but that the offline consumption of media is not falling to the same extent. All of us are, therefore, consuming more media. Simultaneous media consumption is the standard: more than 85% of respondents also use a different device while, for example, watching TV. Mobile devices are primarily used for social media and chatting with friends.

The digital media share is larger among young people. We can assume that this will also apply to other age groups in the future.

Online advertising increasingly frequent

So, where is this online marketing budget going?

  • Email marketing
  • Social media
  • Content marketing
  • Online display advertisements
  • Mobile marketing
  • Affiliate marketing
  • Search (SEO/PPC)

Email marketing can still deliver the highest ROI. According to a study conducted by Adobe, this is $40 per dollar spent. Almost twice as good as SEO.

Let's look at yet another survey: the Gartner 2016-2017 CMO Spend Survey, a survey held among 300 leading companies in the US and the UK. Of course, the context is different in comparison to small and medium enterprises in Flanders and the Netherlands, but the trends are what's important. Marketeers spent 9% of their budget on websites, the biggest category of the 14 categories examined. Another 8% was eaten up by digital commerce. Online advertising often came in only third.

Online advertising is the most important growth factor in the marketing budget of about two thirds of all marketeers.

The most important reasons to allocate more budget to online advertising are:

  • The general trend to cut back on advertising in traditional media in response to the changes in how media is consumed
  • Less organic traffic via social media
  • A growing interest in video, which is more expensive to produce than other digital techniques 

Let's have a look at the future, Together with PwC. Further growth figures for online advertising are predicted for 2021. Regardless of ad blockers.

The marketing budget is being spent more and more frequently on digital tools for the creation, analysis and management of marketing data. Examples are CRM and market automation, but also project management tools like Husky. Learning to work with those tools – and learning the ropes of all these new digital possibilities, from a broader perspective – requires a lot from a budget. It should sharpen the skills and knowledge of marketing teams.

Online marketing budget swallows the offline budget

Really?

It is important to keep looking at the message. You can present the same figures in different ways. A digital agency will want to advertise widely that the ROI of digital marketing performs better and will want to stimulate people to quickly invest more in online marketing with a view to keeping ahead of the competition. However, this does not mean that offline marketing can be scrapped.

I have yet to find a company that can spend 100% of its budget on digital marketing alone. After all: what about branding, PR, events, etc.? Even the technology start-ups that offer purely digital products and services spend quite a bit of money on being present at all sorts of events to build up their network, get media attention and to find new clients.

As always: it's all in the mix. The marketing mix, which is unique for every company and every sector.

Take control of your marketing budget with Husky

Do you want to know why Husky can be an asset to your budget? 

Read more about marketing budget here or book an online demo.