GLOBAL: Better allocation of marketing spend could result in around $45bn more profit globally for brands each year, according to new research.
A study by Ebiquity, released yesterday in Cannes, analysed some 2,500 campaigns over three years, regionally weighted in order to build a global number, with the total media investment representing $375bn in global ad spend, or roughly 76% of the total global advertising market.
The focus was on channels where the profit impact at different spend levels could be assessed – so traditional media along with digital display and digital video but not search. Other factors that affect advertising effectiveness such as ad fraud, viewability and bot traffic were not considered.
Had that same spend been optimised based on the ROI contributions of each channel, it would have generated an extra $45bn in global profits for brands, Ebiquity reported.
At the same time, a reallocation of budgets in this way would lift overall marketing ROI by 4%; alternatively, brands could spend $15bn less and still generate the same profit they do now.
This research builds on recent work that the marketing analytic business has done in the UK, where it has shown in its Re-evaluating Media report, in partnership with Radiocentre, how advertisers undervalue traditional media and overrate the value of online video and paid social.
And in Profit Ability, a separate report for Thinkbox, it quantified the total profit generated by different forms of advertising in the UK and benchmarked all media’s profit generating performance.
“Brands could be delivering much more from their advertising investments,” declared Mike Campbell, Head of International Effectiveness at Ebiquity, whose team conducted the global research in-house.
“We’re highlighting that, with proper measurement and analytics, marketers can reevaluate their spend allocation to dramatically improve results.”
Sourced from Ebiquity, Marketing Week; additional content by WARC staff