$0.70 return for every 1 dollar invested on marketing, finds research

With the advancements in big data, advertisers know more about consumers than ever before. And yet, they’re still challenged with how to drive the greatest return for their marketing budgets.

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According to a Nielsen report titled ‘Perspectives: The easier way to drive higher marketing ROI’, authored by Tsvetan T Tsvetkov, SVP Marketing Effectiveness, Nielsen’s database of more than 40,000 marketing activities (ranging across vehicles such as TV, print, digital, radio, outdoor and trade spend) across more than 30 countries shows that the average return on investment is just under $0.70 for every $1 spent — meaning many marketing budgets are delivering less incremental profit than it costs to run them.

And we all know what happens when executives don’t see the ROI they’re expecting — they cut budgets.

Increasing ROI isn’t easy, and most levers aren’t even squarely in the marketer’s control, says the report. For example, reducing media cost per impression is one way to improve ROI. That’s easy to say, but try to find a media company that will simply offer a lower rate without sacrificing placement quality.

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Making better ads that resonate more with your target audiences to drive purchase is another way, but that’s already Job 1 for marketers, and it’s almost impossible to do that reliably.

Another way is to leverage the power of bigger brands that are already household names. Ads for well-known brands will generate more sales than ads for lesser-known ones simply because consumers are already familiar with them. But unfortunately, there isn’t a way to magically make your brands suddenly bigger.

But there’s another way marketers can drive more profitable marketing budget decisions without changing their media costs, creative or brand size: Use simulation and optimization tools, which help marketers better allocate their marketing dollars based on existing brand size, media costs and ad copy effectiveness, the report adds.

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