Advertising can be a big commitment. However, it can also prove costly. And while we know that brands are prioritizing their brand awareness efforts in the coming year, there isn’t a marketer on the planet who’s not focused on the tangible returns that their spend delivers. And given that focus, it’s not uncommon for brands to pull back when the returns aren’t there. Somewhat counterintuitively, however, that’s usually not a good strategy. 

It is natural to react with a knee-jerk response and reduce spending when the returns are poor. Why continue—or even increase—spending if it’s not generating positive results? As odd as it might sound, the answer is because you’re likely not spending enough to get the returns you want. In fact, there’s a spending threshold to generate the best returns, and if you don’t hit that, the returns will likely be underwhelming. The problem can get worse if you back off.

In a recent deep dive into an array of cross-channel media plans, we found that 50% of marketers’ media investments are actually too low to drive maximum payback. And in terms of amount, they’re 50% below what they should be to generate the best possible results. When marketers embrace the premise of spending more to earn more—by committing to the ideal amount—they could boost their return on investment (ROI) by as much as 50%.

Marketing professionals will be able to determine what the optimal spending amount after they understand that maximum ROI relies on certain levels of spending. To put it another way, to achieve the highest ROI brands must know what amount they should spend in order to succeed.

Here’s an example: In a recent analysis, we found that when a brand spent too little, the vast majority of the audience (87%) were exposed to the campaign less than three times. These impressions accounted for 68%. It means that 70% of impressions were not as successful as they might have been.

A separate study showed that 40% of the audience saw an ad at least three times. Only 8% of the audience, or 42%, were exposed to the advertisement eight times per week. This suggests potential wasteful advertising. If a brand spends a lot of money, 75% of impressions can be attributed to those who view the advertisement more than 8 times. However, in the above example 32% of campaign audiences saw the ads only one or two times.

In addition to looking at a few specific cases, we wanted to better understand—at a global level—how frequently brands underspend and in which channels. Through our analysis of ROI observations, we focused on three key questions to understand what spending and ROI looks like—as well as what opportunity is being left on the table:

• Is it necessary to spend a lot in order to stay competitive?
• Which geography is this different?
• How do brands’ planned spend levels compare to the optimal spend …read more

  Source:: Social Media Explorer

        

  

  Author: Aaron