How are your peers splitting their media budget between traditional and digital channels?

It’s been a favorite question among marketing pundits, and the consensus today is that advertisers need brand building and performance marketing to work in unison to make the most of every touchpoint and engage their target audiences at every step of the consumer journey. Long-term success, after all, is built one transaction at a time. But what’s the right channel mix to get the job done?

As it turns out, how a company allocates its media dollars between traditional and digital channels has a lot to do with the size of its media budget. We’re going to illustrate that relationship in this blog by reviewing some new auto and retail insights, but first, let’s get a few misconceptions out of the way.

There’s no shortcut in media planning

We often associate traditional channels like TV with brand building, and digital channels like social media with performance marketing, but it’s a terrible shortcut. TV commercials can be very effective closers, especially when they’re timed with special events or holidays, and display or video ads on social and retail media can be very effective at building a brand’s familiarity, sentiment or relevance. It’s high time for the advertising industry to start thinking of all channels more holistically—or as P&G alum Jim Stengel and others put it in a recent HBR paper, make brand building more ‘performance-accountable,’ and performance marketing more ‘brand-accountable.’

The second widespread misconception is that digital channels are easier to measure. This deserves a bigger conversation because it ultimately depends on what advertisers are trying to achieve with their campaigns, but measurement solutions for traditional channels have come a long way in recent years. More importantly, with the release of cross-media solutions like our own Nielsen ONE platform, cross-media measurement isn’t a distant dream anymore, and advertisers can now get a deduplicated view of audience engagement across all the channels in their media plan.

Finally, many advertisers today believe that digital channels are more effective than traditional channels. We debunked that myth in our 2024 Annual Marketing Report and showed that there was a wide gap between perceived performance and actual performance, especially when we consider full-funnel effectiveness. We demonstrated that cross-media strategies could yield a 5X improvement in on-target reach (from 17% for campaigns concentrated on a single media type to 90% for well-balanced campaigns), but too many advertisers remain set in their ways—out of habit, lack of experience, or out of fear of spreading their budgets too thin.

Can industry benchmarks help? Let’s take a look at how advertisers in two key industries, retail and automotive, are spreading their media dollars today based on how much budget they have to work with.

Budget size affects budget allocations

We used Nielsen Ad Intel data from more than 100,000 retail and auto brands to understand how much each of them spent on advertising in the U.S. during the 12 months ending in November 2024, and we grouped them by the size of their media budget. Figure 1 shows what share retail brands allocated to traditional and digital channels during that time compared to that of automotive brands.

Retailers that spent over $100 million last year invested 46% of their budget in traditional channels like TV and radio. This is an average of course—some top advertisers like Lowe’s and Macy’s allocated much more, while others like Amazon or Shein much less—but it shows that retail brands with big budgets still rely on traditional channels to tell their story and reach their target customers at scale. It’s even more pronounced for auto companies, where the top car manufacturers (like Toyota, GM or Hyundai) collectively spent 70% of their media budget on traditional channels.

At the other end of the spectrum, advertisers with small budgets (like local independent retailers and car dealerships) are more likely to rely on less expensive local TV and radio ads instead of national spots, but they tend to split their budgets like the top brands: 45-55% to traditional channels among retailers, and 60-70% among automotive brands—unless they’re really small and don’t have access to many traditional options to begin with.

What’s most striking in both industries is what’s happening for medium-sized advertisers—retailers like Guitar Center and Back Market, or auto brands like Polaris and Bridgestone that spend anywhere between $5 million and $50 million in advertising each year. Those companies spend a much greater share of their media budget on digital channels than their counterparts with bigger and smaller budgets. This could be for entirely valid strategic reasons, but it’s also possible that some advertisers in that budget range turned away from TV in the past because they found the ad-buying process too complex. But the rise of lower-cost programmatic options through connected TV (CTV) may open up more small- and medium-sized businesses (SMBs) to TV advertising in the near future.

For additional insights, figure 2 provides a breakdown of traditional channels for each budget range. We can see that for top advertisers, traditional essentially means TV (especially for auto brands), but radio is definitely a big part of the channel mix for medium-sized companies, as is outdoor advertising for small businesses. Print too remains an important channel for medium-sized retailers.

Know what your peers are doing

What can we take away from these analyses?

• First off, there’s really no such thing as an optimal channel mix for every brand in every situation. Media planners need to do their homework and determine what channels work best for them.
• With robust cross-media measurement solutions now available, advertisers can spread their media budgets across a variety of channels with confidence to cast a wide net and take advantage of crucial cross-media synergies.
• Traditional media remains highly relevant. These channels remain a very big part of the media mix for companies of all sizes, and may start playing an even bigger role for SMBs now that the TV ecosystem is more addressable and ad buying is becoming more accessible.
• Competitive advertising intelligence is key. In today’s dynamic marketplace, brands that understand what their peers are doing with their media dollars—companies in the same industry, operating in the same markets, with the same media budget, and targeting similar consumers—will be much better equipped to compete.