Budgeting for the Net: True costs still hidden

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The days of ambiguously budgeted spending may be numbered. Budget Stories How does your company budget for your Web site? Tell us your experiences.: How does a company build a Web budget and what department pays for it? Businesses across the Internet are struggling with that dilemma, but so far, few have come up with solid answers.

Despite the millions of dollars being poured into corporate Web sites, companies are nonetheless having a difficult time determining how much they're actually spending on the Internet.


A key factor confusing the financial picture is that sites are often being "funded" by a variety of departments, including IT, marketing and corporate, and no one in the company is accountable yet.

"The budgeting of a Web site is across the board in a company. It is pretty arbitrary," said Scott Smith, senior analyst, electronic commerce, Jupiter Communications, New York. "Any budget director that tries to break it outgood luck to them."

Without any examples to follow, companies are discovering that they have to create a custom model for Web budgeting that fits their particular corporation.

At Oracle Corp., a corporate Web site serves as an umbrella for the company's 30 product groups, but each product group has its own webmaster and budget. Plus, each group supplies content for the corporate site.


"We are an overhead organization for Oraclethe groups come through us. The Web budget is mostly coming out of product groups," said David McCuchen, senior manager of Oracle's corporate Web site. Ameritech has a similar setup for its site.

"Corporate communications hosts and pays for the site, and each individual business unit pays to have their Web page created," said Richard Omanson, member of technical staff-human factors in Hoffman Estates, Ill., for the regional Bell company.


Still, the money being swept into a Web site is hard to track. "Budgeting is a real sticky issue. A lot of big companies are backing up, waiting to see return on investment. They want to have an idea of ROI from the marketing people," said Kristin Zhivago, a high-tech consultant based in Menlo Park, Calif., and a regular columnist in Advertising Age's Business Marketing.

While there is no Web budget model, there are some trends worth keeping an eye on. "The Web budget is usually driven by the marketing department or the new ventures department," said Mary Modahl, senior analyst, Forrester Research.

Since most companies leverage their Web site for marketing and communications, it makes sense that the marketing department controls the budget for the site. "A lot of companies have [the Web budget] come out of the marketing department -- they see it as a marketing function," said Mr. Smith of Jupiter.


Still, the days of ambiguously budgeted spending may be numbered. Greg Wester, research director for The Yankee Group,believes that within two years the Web slush fund will come to an end. Spending on sites will continue, but as those sites become profit centers, they will take on the responsibility of a traditional business unit, he said.

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