For decades, not much changed in advertising land. We didn’t realise it at the time, but things were pretty straight forward and we all knew our place.

Allocating budgets was easy – the rule of thumb that we all subscribed to was to spend around 80% of the budget on media (otherwise how would anyone know what we had to say) and around 20% on production.

Reach and frequency was the benchmark and if we were really lucky we would get to spend the production budget on one really slick TVC. Marketers controlled their brand’s perception and mass media was in its heyday.

Routinely popular shows like Friends, Sunday night movies and mini-series were watched by half of the Australian population.

Newspapers were at their peak and the Australian Women’s Weekly had a circulation of around 1,000,000 (compared to roughly half that today).

Of course the power of the Internet has irrevocably changed how brands engage with consumers and how advertising agencies operate.  Creative, media and strategy people now need to work together closely to identify the best idea about a brand that can be brought to life both online and offline.

One brand that has had enormous success harnessing the endless opportunities for engagement is Nike. The incredible success of Nike is an inspiration as it moves more and more of its budget into interactive, content and events.

Nike UK Marketing Director Simon Pestridge said recently:

“We don’t do advertising any more. We just do cool stuff. We need to become part of people’s lives and digital allows us to do that.”

Pestridge now allocates 80% of Nike’s budget to production and 20% to media. Producing TVCs is only a part of his production budget.

Events, interactive digital platforms and lots and lots of content from virals and webisodes to TV programs have driven deeper connections with Nike’s youth target.

The reality is that online, often the medium is the message. The interactive asset is both the engagement vehicle and the distribution platform.

Content like Nike’s Ronaldinho ‘Touch of Gold’ viral video has almost 30 million views. Platforms like YouTube are free – the challenge is to make the content shareable!

Now not every brand is Nike and this production to media ratio is rather extreme. However a recent study by the American Association of Advertising Agencies (AAAA) brought this shift to life by comparing where advertisers will likely split a total budget in the traditional model compared to those required in the interactive space. The production ratio shifts from 27% to 48% in this modelling.

One last consideration when thinking about production is this – technology greatly affects production costs in the interactive world. At the leading edge of innovation the costs are high, while trailing behind it makes the production much more affordable and much faster.

It is almost impossible to ballpark production costs when breaking new ground – but providing the interactive idea is consumer centric and adds value via engagement, entertainment or utility, the consumer will do their part to share it. Many to many – that’s what we aim for!

So what’s the point? Old dogs need to learn new tricks. The 80/20 media to production split is redundant.

If you followed that rule in the interactive space – your asset will be pretty lonely, with cooler, more engaging, more sharable content luring your best prospects away.

Jo Stone is Head of Channel Planning & Integration at BCM

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