Research Shows Better Allocation of Marketing Spend Could Lead to $45 Billion More in Profits

Ebiquity released the results of at Cannes

Optimal allocations would involve increased spending on TV, digital video and radio, according to Ebiquity. Getty Images
Headshot of Erik Oster

Advertisers are probably missing out on a whole lot of money by not optimizing their advertising budgets.

According to new research revealed at the Cannes Lions International Festival of Creativity Wednesday by independent marketing and media consultancy Ebiquity, advertisers could gain $45 billion more in profits from such optimization.

“This research shows that brands could be delivering much more from their advertising investments,” Ebiquity head of international effectiveness Mike Campbell said in a statement. “We’re highlighting that with proper measurement and analytics, marketers can reevaluate their spend allocation to dramatically improve results.”

Of course, as a provider of consulting services that help clients achieve optimization, Ebiquity has a vested interested in promoting the benefits of brands optimizing their marketing budgets.

Ebiquity used its Advanced Analytics to conduct the research, utilizing a database of around 2,500 campaigns over three years and across TV, digital video, digital display, print, out of home and radio. The campaigns were mostly from Western European advertisers, with Ebiquity adjusting for different spending distributions across other regions to arrive at a global estimate.

So what would an optimized advertising budget look like?

According to Ebiquity’s research, optimal media allocations at current spending levels would involve increased spending on TV, digital video and radio. The research contends such changes could lead to an ROI increase of over 4 percent, from 2.83x to 2.95x, or around $45 billion in increased profits.

The research further shows that brands could save $15 billion in overall spending and maintain current levels of profit. Such optimization would involve reallocation of funds from press, digital display and out of home into TV, digital video and radio.  

“As media, content and customer experience options proliferate, brands fundamentally need to know what works well for them and what doesn’t,” Ebiquity CEO Michael Karg said in a statement. “This study is an important reminder that marketing spend still has a positive bottom-line impact and should be treated as an investment, not as a cost.”

@ErikDOster Erik Oster is an agencies reporter for Adweek.