There is a hierarchical approach that both SMBs and brands that market locally can use to guide ad and marketing budget allocation.
I am often asked, usually at cocktail parties, "How do you create the optimum allocation for local media?" and "How much should I put towards search, display, directories, promotion, etc.?"
Now, of course the answer varies for a number of reasons, including business category, competitor density, local ad cost, etc. But even with these wide variances, there is a hierarchical approach that both SMBs and brands that market locally can use to guide ad and marketing budget allocation.
First answer a few basic questions:
- How well is your category known?
- Do consumers or businesses purchase from you? Often or infrequently?
- How well is your business known?
Fundamentally, we use these questions to create two measures: Category Development Index (CDI) and Brand Development Index (BDI).
For example, most consumers only move a few times in their lives. At any given point in time, only about two percent of the US population is in the process of moving. In this case, movers would have a low CDI. As a result, media type selection would be focused on directional media first and perhaps some mix of branding media to capture greater market share.
Conversely, in a highly developed category like restaurants, the CDI is very high (after all, we eat at least three times a day). Here, promotional media is an effective means of growing trial and repeat usage for brands in this category.
Next we have to consider brand development. If a brand or business has a high awareness and preference, simply being available to consumers via directional media can often deliver a significant share of sales. Wal-Mart is a good example, with a very high BDI measure in most markets. That is not to say that Wal-Mart would not or does not benefit from branding & promotional media. It does, however, guide how much of each type is necessary.
Here is a pretty good description and calculator for CDI & BDI that becomes an important guidance factor in choosing between media types:
- Directional Media (Search & Directory)
- Promotional Media (Daily Deals, Promotions & Coupons)
- Branding Media (Display & Sponsorship)
Directional media is when consumers line up and ask for information on categories and brands in order to be directed to a purchase outlet. Google, YP.com, Yahoo, Bing, Yelp are all good examples of Directional Media.
Promotional media represents consumers looking for a deal or savings off a planned purchase. Groupon, Coupons.com and Facebook are examples of promotional media. Keep in mind websites can straddle multiple media types. For example, Facebook can be considered both promotional and branding media.
Branding media is media that is impressed on users to increase awareness and build preference for a particular brand or business. News sites, Yahoo, Facebook, AOL and a millions of blogs and local interest sites are good examples of branding media.
Formula Please
First and foremost, if you operate in a highly developed category (CDI greater than 100) but have low awareness and preference (BDI less than 199), a higher allocation of branding-type media coupled with directional is your primary focus. On the flip side, if you have high awareness and preference, again, directional coupled with promotional media can spur consumer trial and grab additional market share.
Categories that suffer from low development, infrequent or highly considered purchases require branding and media types that enable consumers to become educated on the category first and the brand second. This broad marketing category is known to many as "content marketing."
As you may have noticed, directional media is included in all of the scenarios outlined above. The reason is purely logical. We recommend that all marketers blanket search engine and on-line directories for consumers who signal buying intent by searching for a brand or a keyword and geography. To use a tired old phrase, they are "ready to buy." Let's face it: not too many consumers search or scan local listings on Yelp or Google without having a predisposition to buy vs. someone on Facebook, who may scan for many different reasons.
The challenge is that in most cases, if you relay solely on directional media, a brand can only perform up to and capture the percentage of opportunity that matches their brand awareness in the marketplace. To move the needle further, branding and or promotional media must be utilized to grow share.
What is the magic formula?
In most cases allocation should maximize directional media to act as a foundation to deliver consumers who are "searching for you" and catch consumers that are activated by branding, promotional and content marketing. The exact formula will require a brand or company to use multi-touch/click attribution to best understand which media type and venues provide the best-integrated return.
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