About half of marketers aren’t spending enough in a channel to get maximum return on investment (ROI), according to Nielsen’s inaugural ROI Report. The report identifies the factors that influence a brand’s ROI, how to measure these metrics with precision, as well as strategies for improving them so that campaigns are set up to secure as much value as possible.
If marketing teams committed the ideal amount of resources, their ROI could surge 50 percent, the report says. To understand how advertisers should allocate budgets, Nielsen analyzed its database of nearly 150,000 observations of marketing ROI and database of client-supplied media plans. Here’s what it found:
- Media spend needs to be between 1 percent and 9 percent of revenue to stay competitive
- The median brand reinvests 3.8 percent of revenues into media
- Overspending isn’t as problematic as underspending
- Over half of global display and digital video campaigns are underspending
To take the guesswork out of understanding the impact of new media, Nielsen conducted over 1,000 studies on podcast advertising, branded content and influencer marketing. The study found:
- New media can drive over 70 percent aided brand recall after ad exposure
- Podcast ads drive familiarity and affinity gains
- Influencer and brand marketing also drive big familiarity and affinity gains
Nielsen’s 2022 study of 15 brands and 82 digital campaigns in the US showed there’s a very strong relationship between target reach and campaign ROI. For the analysis, Nielsen sourced in-flight target reach metrics from its Digital Ad Ratings and its outcome metrics from Nielsen Attribution, which determines ROI at the impression level. When combining these measurements on a consistent set of campaigns, one clear takeaway emerged: Campaigns with strong target reach delivered better sales outcomes.
The firm’s research also revealed that only 63 percent of ads across desktop and mobile are on-target for age and gender in the US–which means that in the channels with the most exhaustive data coverage and quality, about 40 percent of ad spend doesn’t hit the mark.
View the full report here.