Media budget is eight times more preponderant than campaign ROI when it comes to delivering growth, according to data that will be presented at today’s (8 October) IPA Effectiveness Conference.
Effectiveness expert Les Binet and Medialab’s chief data officer, Will Davis, analysed case studies that had won IPA Effectiveness Awards and saw that, while ROI accounted for 11% of the variation between the payback of campaigns, budget accounted for 89%.
Given that ROI is a measure of efficiency not effectiveness, marketers really shouldn’t have their belief systems upended by the news of the discrepancy. Although, when Medialab polled 500 senior marketing decision makers, 65% said ROI was the most important contributor to effectiveness, compared with just 35% who said the same about budget.
‘Our research reveals a paradox,’ said Binet, ‘the more we focus on efficiency, the less money advertisers and agencies make. We believe that the only way out is to rediscover advertising’s super-power: to deliver creativity at scale.’
Binet and Davis’ data also shows that 56% of marketers are narrowing their targeting to sub-sets of consumers, rather than trying to reach all potential buyers, as a way to save money. Older consumers seem to be viewed as the most expendable cohort, with 62% of marketers saying they don’t target over 45s.
According to the IPA’s Databank, the average ROI of campaigns has increased since the pandemic. It was £3.07 between 2018 and 2020, and £3.15 between 2022 and 2024. But over the same period, the average incremental profit generated by campaigns has declined, from £33m to £29m.
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