The measured digital spend – investing internally

Interesting article in the business section of the Sunday New York Times (10.14.07) about the acceleration in advertising budgets away from traditional advertising — TV, radio, print — and even away from “traditional” interactive — banners, skyscrapers, search and viral to more experiential and immersible experiences which the writer, Louise Story, extends to social networking.

“Last year, Nike spent just 33 percent of its $678 million United States advertising budget on ads with television networks and other traditional media companies. That’s down from 55 percent 10 years ago, according to the trade publication Advertising Age.

“We’re not in the business of keeping the media companies alive,” Mr. Edwards says he tells many media executives. “We’re in the business of connecting with consumers.”

Mr. Edwards may be more blunt than most. But many large marketers are taking huge chunks of money out of their budgets for traditional media and using the funds to develop new, more direct interactions with consumers — not only on the Internet, but also through in-person events.”

Fine, this is not news. Money is moving from mass media to new media and accelerating. I get that. Digital should be at the heart of every marketing campaign, etc. etc. What is interesting and underscored in the Times piece is the shift not from traditional to digital, but from media to non-media.

“True, Nike increased its spending on traditional media in the United States by 3 percent from 2003 to 2006, to $220.5 million. But in the same period, it increased its nonmedia ad spending 33 percent, to $457.9 million, according to the Advertising Age data.

Behind the shift is a fundamental change in Nike’s view of the role of advertising. No longer are ads primarily meant to grab a person’s attention while they’re trying to do something else — like reading an article. Nike executives say that much of the company’s future advertising spending will take the form of services for consumers, like workout advice, online communities and local sports competitions.”

Here’s the payoff from the piece. The shift is not from traditional to digital, it’s from public media to “internal” media. In essence, marketers, particularly consumer packaged goods, are plowing their dollars into themselves. BudTV. Nike’s exercise tools. Their own communities, their own social networks. Their SecondLife islands.

“Digital media spending is doubling every year at many big companies, industry data indicate. But the research firm Outsell found this year that 58 percent of marketers’ online spending went to their own Web sites, rather than to paid ads. More than two million people visited Nike-owned Web sites in July, according to Nielsen//NetRatings.”

Repeat that number — 58% — that’s right, way more than half of the digital spend is being invested internally, not via agencies, not via media planners, not being behaviorally targetted, but on internal plays. As someone accustomed to regarding a corporate strategy as little more than an IT investment managed by some designers, that blows me away.

Author: David Churbuck

Cape Codder with an itch to write

0 thoughts on “The measured digital spend – investing internally”

  1. Or it’s a manic internal grab for resources by certain corporate departments…

    I run the marketing department and, like all good marketing heads, want and need more money. There’s very little measurable ROI on media spends so I make a play for the media budget…

    “Let’s spend this on US!”

    Is it effective? Is it more effective? How do the ad agencies cope or are they playing along, “consulting” to the internal departments in an effort to stay engaged in any way possible.

    The cynic in me doesn’t consider this to be a thoughtful, ROI-based shift of assets based on a well laid strategy. It’s a land-grab for more cash by the marketing and tech departments.

  2. Fester:
    I suspect the agencies are fully complicit in the internal investment — microsites, landing pages, massive redesigns. Remember, for most corporate marketing departments there is no ecommerce to drive traffic to — P&G doesn’t sell Tide online.

    So, you get big smoking holes in the ground like Bud.TV or write the big check to the interactive shops to dress up the

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