It’s the most wonderful time of the year for broadcast executives who enjoy using their calculators! Budget season is upon us, and the maneuvers you make now will determine your level of success next year. This week in connected, I have five tips for you to consider as you build your 2012 digital budget.

1. Don’t pick a number out of thin air.
Many managers start with numbers that they “think are achievable,” and then build a plan to reach that number. Never back into a number. Have a plan first. Outline your inventory. Get a feel for the market, and be realistic about the amount of inventory you can move with your current team. Then, build out your revenue expectations based on your plan.

2. Be realistic.
In my experience, the first year of a broadcaster’s undertaking in digital will typically yield 3-5% of their broadcast billing.

• Year One: 3-5% of Broadcast Billing
• Year Two: 5-8% of Broadcast Billing
• Year Three: 8-10% of Broadcast Billing

Typically, year three will need to include properties beyond radiostation.com in order to grow top-line company revenue.

3. Outline your digital inventory in three categories: Base Billing, Promotional, and Custom Solutions.
Your base billing inventory is your display advertising, mobile marketing programs, streaming ads, video gateways, coupon programs, and other inventory that is renewable and available all year. You should be going into each month with 65-80% of your “base billing” budget filled.

Your promotional inventory is comprised of seasonal or special sponsorship opportunities such as Mother’s Day, a Christmas portal, a political/election oriented website, etc. These are short-term limited opportunity sponsorships.

Your custom solution category is built around special programs for clients. These are programs that color outside the lines of your typical base billing and promotional inventory.

This is one of the most simplest ways that you can recognize digital revenue for your operation. Then, in more granular planning / reports, you can determine the amount of each product sold in these categories.

Your team’s level of complexity, market conditions, and technical capabilities should determine what percentage of your monthly revenue comes from each of these categories. Most stations in the very beginning of their digital undertakings have the highest percentage (around 60-75%) of their billing in the base billing category. As time goes on, revenue gets diversified.

4. Be strategic about your compensation.
Compensate your team for the results you desire. If you are placing priority and importance on moving your digital plan forward, consider special commissions/bonuses on digital goals. As you prepare for 2012, give real thought to who will be executing your plan and how you can incentivize them to hit a home run.

5. Beware the upward-curve topline.
In new ventures or undertakings, it’s common to budget the majority of your revenue growth and momentum in Q3 and Q4. Often, managers who are just starting to build their digital “divisions” will start with a small number in the first few months of their fiscal, and that number will escalate dramatically by the last few months of the fiscal. Be conservative. Don’t assume that just because you have more time to sell that you’ll actually have sold more. Go back to your plan. Be cautious about over-promising on your future performance.