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MEASURING RETURN ON INVESTMENT

Nielsen finds that underspending on media plans hinders maximum ROI

By our News Team | 2022

ROI Report delivers insights and recommendations for advertisers, agencies and publishers to increase returns on investment in media plans.

Research company Nielsen has released its first ROI Report, which identified gaps in marketers’ budgets, channels and media strategies that are compromising returns on investment on media plans. 

The global study reveals data and delivers insights on what drives returns on ad spend, how to measure the returns, and how to improve on the metrics brands already have. Nielsen says the content is unique to advertiser, agency and publisher audiences.

Measuring Return on Investment

Photo by Pixabay via Pexels

According to the 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, the researchers found that spend often needs to be higher in order to break through and drive suitable 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 including:

Full funnel marketing

It is rare for channels to deliver above-average returns for both brand and sales outcomes, with only 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%.

Emerging media

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. Nielsen found that 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.

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% 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 capitalise on opportunity and drive impact, advertisers should prioritise measurement solutions that cover all platforms and devices, with near-real time insights.

“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 for Media & Advertiser Analytics at Nielsen. 

“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 maximise their ROI.” 

Download the report at: https://global.nielsen.com/insights/2022/roi-report/

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