Seven in ten ad campaigns fail to generate meaningful ROI

Seventy percent of ad campaigns generate a return on investment (ROI) that calls their profitability into question, according to research presented at the Cannes Lions International Festival of Creativity 2022.

That finding came from a study incorporating 343 campaigns, accounting for £5bn in adspend, in the Advertising Research Community (ARC) database, an effectiveness resource developed by Dr. Grace Kite, the founder of UK-based analytics consultancy Magic Numbers.

About the research

• All the featured campaigns have been subject to econometric modeling to assess the drivers of their ROI, whether good or bad.
• The ARC database also mixes award-winning programs with initiatives which have not received such honours.
• As such, it represents “everyday” work alongside the best-in-class output that is put forward to compete for industry-level recognition.

A “concerning” trend

• In all, seven in ten of the ARC campaigns returned less than £2 in revenue for every £1 spent. (WARC subscribers can read more here.)
• This is a “concerning” figure, reported Stuart Heppenstall, principal consultant at marketing effectiveness consultancy Data2Decisions, who presented the findings.
• “Marketing often is paid for out [of] profits, and has to show that it can pay for itself,” Heppenstall said in a session held by WARC, entitled “Creative Commitment: New Learning from the ARC Database”, at Cannes Lions.