Nielsen report finds underspending in 50 percent of media plans jeopardising maximum ROI

Identifying the gaps in marketers’ budgets, channels and media strategies that are compromising returns on investment (ROI) on media plans, Nielsen has recently released its first-ever ROI Report that reveals data and delivers insights on what drives returns on ad spends. It focuses on how to measure the returns, and how to improve on the metrics brands already have, with content unique to advertiser, agency, and publishers.

According to the new Nielsen report, about half of marketers are not spending enough in a channel to get maximum ROI. 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 percent of media plans are underinvested by a median of 50 percent, ROI can be improved 50 percent with the ideal budget.

Beyond budgeting, the ROI Report delivers key insights and recommendations to deliver higher ROI across multiple marketing areas including the following parameters.

Full funnel marketing: It’s rare for channels to deliver above average returns for both brand and sales outcomes, with 36 percent 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 percent.

Emerging media: It’s 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. Nielsen found that podcast ads, influencer marketing and branded content can deliver over 70 percent in aided brand recall, and that influencer marketing ROI is comparable to ROI from mainstream media.

Ad sales growth strategy: 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.

Audience measurement: Campaigns with strong on-target reach deliver better sales outcomes. However, only 63 percent of ads across desktop and mobile are on-target for age and gender in the US, meaning that on the channels with the most exhaustive data coverage and quality, over one third of ad spend is off-target. To capitalize on opportunity and drive impact, advertisers should prioritize measurement solutions that cover all platforms and devices, with near-real time insights.

“Nielsen’s 2022 ROI Report serves as a guide for all parties involved in ad spending—the brands, agencies and publishers. In a time when there are more channels than ever to reach desired audiences, it’s critical that insights on ROI are attainable and easy to understand,” said Imran Hirani, Vice President, Media & Advertiser Analytics, Nielsen. He adds, “Brands can’t afford to waste valuable ads on the wrong audiences. 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.”

This is the first ROI Report produced by Nielsen. The ROI Report findings were generated by Nielsen’s experience in a wide range of measurement methods including Marketing Mix Models, Brand Impact studies, client-sourced marketing plans and expenditure data, attribution studies, and Ad Ratings. In most cases, data were organised into normative databases or meta-analyses across a sample of studies to produce insights that are representative of Nielsen’s entire experience, providing marketers, agencies and media sellers a more complete view of media effectiveness compared to a single company drawing from its own experience.

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