by: Alain Thys

For a publishing project at one of my clients I've currently been given the joyous task of rereading all the marketing classics. While this is fun at first, I can assure you that after the combined works of Kotler and his colleagues you're craving for some War & Peace as light reading.

Anyway as I kept running into the concepts of above-the-line and below-the-line advertising, I decided to do a little research of myself and answer a question which has ben bugging me since I was a student. WHAT "LINE"??? Over the years I have asked many people that question, and while sometimes highly entertaining, I never got a satisfactory answer. So thanks to Google and a good 10 minutes of perseverence, I came across this one on a site by the European Union of all places:

Traditionally, the term "above-the-line" is used for classical forms of broadcast/print/outdoor advertising. The "line" referred to is an accounting term. Initially "above the line" referred to investments (since advertising may eventually lead to a sale) whereas below the line referred to expenditures such as an on-pack promotion. "Below-the-line" is now more generally used to indicate all forms of commercial communications such as sales promotions, direct marketing and sponsorship other than advertising. Due to various factors, such as the increased integrated use of all forms of commercial communications for the development of the branding strategy and the increase in the use and planning of "below-the-line" activities, this distinction between the two is fading rapidly.

With one question answered, that however immediately lead me to the next one. In an age where we talk about "integrated marketing" why do we still budget this way? I can actually understand the logic for the above/below division in a day and age that we were still hoping to get away with capitalising our advertising investments on the balance sheet. Yet in these days of Sarbanes-Oxley the financial reasons for this have gone away. Still, we insist on having all the traditional budget lines in there and when the moment of budget cuts comes about we go into a discussion about whether to cut a DM campaign or reduce our print advertising spend in a specific region. I would like to make the - probably controversial - case that if we really want to be "customer centric", we need to go back to our CFO's and make a case to change the accounting rules and organise our budgets in a customer-focused way. In stead of talking about "above", "DM", "Sales Promotion", etcetera, budgets should be allocated to 25-30 year old young professional women living in urban areas or 45-60 year old men worried about their sex-appeal. Just think of the dynamics which this simple act would cause. Suddenly you're freed of the theoretical straightjacket which the advertising industry is trying to impose on you which makes it "bon ton" to spend most of your money "above". Suddenly budget conversations become much more focused, as the question isn't "let's cut 10% in print". The conversation then becomes "lets cut 10% of our efforts to reach out to our second largest target audience". And what's more, at a C-level it actually is a step forward to start seeing the relationship between what marketeers are spending and the money coming in. I'm not pretending it's a "pure thought" and it will need work before it actually becomes implementable (and the guys who run your SAP or Hyperion systems will probably want to kill you), yet give it some thought. It's not that illogical when you think about it.

In an age where we talk about "integrated marketing" why do we still budget this way? I can actually understand the logic for the above/below division in a day and age that we were still hoping to get away with capitalising our advertising investments on the balance sheet. Yet in these days of Sarbanes-Oxley the financial reasons for this have gone away. Still, we insist on having all the traditional budget lines in there and when the moment of budget cuts comes about we go into a discussion about whether to cut a DM campaign or reduce our print advertising spend in a specific region. I would like to make the - probably controversial - case that if we really want to be "customer centric", we need to go back to our CFO's and make a case to change the accounting rules and organise our budgets in a customer-focused way. In stead of talking about "above", "DM", "Sales Promotion", etcetera, budgets should be allocated to or . Just think of the dynamics which this simple act would cause. Suddenly you're freed of the theoretical straightjacket which the advertising industry is trying to impose on you which makes it "bon ton" to spend most of your money "above". Suddenly budget conversations become much more focused, as the question isn't "let's cut 10% in print". The conversation then becomes "lets cut 10% of our efforts to reach out to our second largest target audience". And what's more, at a C-level it actually is a step forward to start seeing the relationship between what marketeers are spending and the money coming in. I'm not pretending it's a "pure thought" and it will need work before it actually becomes implementable (and the guys who run your SAP or Hyperion systems will probably want to kill you), yet give it some thought. It's not that illogical when you think about it.

Original Post: http://alainthys.blogging.com/blog/_archives/2005/6/26/974286.html

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