GLOBAL: New analysis of the Warc case study database has shown that the average profit delivered by high-performing advertising is 1.8 times the advertising investment, or 180%, with even greater returns likely over the long term.
Warc has launched an ROI Benchmarker tool that allows users to see how their own campaigns compare with the case studies on Warc.com – the world's most comprehensive database of successful advertising.
To develop the tool, Warc catalogued all return on investment (ROI) data cited by advertising-based case studies since 2000.
The ROI Benchmarker focuses on two forms of returns: profit-based ROI (also known as Return on Marketing Investment), which is based on the net profit generated as a result of advertising; and incremental sales return, which is based only on additional sales generated by advertising. The latter is commonly used in case studies but is generally viewed as an incomplete way to calculate ROI.
Across the Warc.com database, the median profit-based ROI is 1.8:1. That means for every dollar spent on advertising, $1.80 is returned in the form of net profit.
The median incremental sales return is 3.8:1.
The long-term returns of advertising are likely to be significantly higher. Most ROI figures within the Warc database are calculated within a year of the campaign. But a number of papers within the Warc database conclude that the long-term payback is likely to be around twice as high as the short-term.
The ROI Benchmarker allows users to enter their own campaign details, calculate their ROI, then see how their advertising returns compare with the case studies in the Warc database. For example, a campaign with a profit ROI of 2.5:1 would have outperformed 62% of case studies in the Warc database.
Warc publishes effectiveness case studies from partner awards schemes such as the IPA Effectiveness Awards, Cannes Creative Effectiveness Lions, North America Effies and Euro Effies. It also runs its own case study awards, including the Warc Prize for Social Strategy and Warc Media Awards.
Data sourced from Warc