About half of marketers are not spending enough in a channel to get maximum ROI.
That’s the big takeaway in the first-ever “return on investment” report from Nielsen, which identifies gaps in marketers’ budgets, channels and media strategies that it says are compromising ROI on media plans.
The global report reveals data and delivers insights on what drives returns on ad spends, how to measure the returns, and how to improve on the metrics brands already have, with content unique to advertiser, agency and publisher audiences, Nielsen says.
While a poor ROI might cause brands to pull back on spending, Nielsen found that spend often needs to be higher to break through and drive returns.
Nielsen’s “50-50-50 Gap” states that while 50% of media plans are underinvested by a median of 50%, ROI can be improved 50% with the ideal budget.
Beyond budgeting, the ROI Report delivers key insights and recommendations to deliver higher ROI across multiple marketing areas.
With regard to “full funnel marketing,” Nielsen says, “It is rare for channels to deliver above-average returns for both brand and sales outcomes, with 36% of media channels faring above average on both revenue and brand metrics.” To grow ROI, brands should pursue a balanced strategy for both upper and lower funnel initiatives. Nielsen found that adding upper-funnel marketing to existing lower- and mid-funnel marketing can grow overall ROI by 13-70%.
Then, there is emerging media, to which Nielsen finds, “It is difficult for brands to spend big amounts without proof that the new media works, but spending small amounts can make it hard to see if the media is working.” Podcast ads, influencer marketing and branded content can deliver over 70% in aided brand recall, and that influencer marketing ROI is comparable to ROI from mainstream media.
Discussing an ad sales growth strategy, Nielsen says, “Ultimately, ROI will inform publisher pricing power. Publishers are not just competing against others in their channel, but also against other channels, so comparing channel ROIs can help set pricing strategy. The ROI Report uncovered that social media delivers 1.7x the ROI of TV, yet social gets less than one-third of TV ad budgets.”
Lastly, with respect to audience measurement, Nielsen concludes that campaigns with strong on-target reach deliver better sales outcomes. However, it says, just 63% of ads across desktop and mobile are on-target for age and gender in the U.S. “On the channels with the most exhaustive data coverage and quality, over one-third of ad spend is off-target,” Nielsen says. “To capitalize on opportunity and drive impact, advertisers should prioritize measurement solutions that cover all platforms and devices, with near-real time insights.”
Imran Hirani, Vice President of Media & Advertiser Analytics at Nielsen, concurs. “Brands can’t afford to waste valuable ads on the wrong audiences,” he says. “By investing wisely and having a balanced strategy of both upper-funnel and lower-funnel initiatives, brands can reach the right audiences and maximize their ROI.”
The ROI Report findings were generated by Nielsen using a wide range of measurement methods including Marketing Mix Models, Brand Impact studies, marketing plans and expenditure data, attribution studies, and Ad Ratings collected in recent years. In most cases, Nielsen’s findings were organized into normative databases or meta-analyses across a sample of studies to produce insights that are representative of Nielsen’s experience, providing marketers, agencies and media sellers a more complete view of media effectiveness compared to a single company drawing from its own experience.
Download the report here: https://global.nielsen.com/insights/2022/roi-report/
