What drives advertising profitability?
Back in 2014, Dyson, founder of the econometric consultancy Data2Decisions, conducted an analysis which revealed the advertising drivers of profitability (itself an update of work done in 2006). The data showed that brand size was the biggest driver. Second came creative execution, which was by far the single most important element of advertising under a marketer’s direct control when it comes to delivering return on investment.
Since the media landscape has changed dramatically since 2014, we wanted to see whether the list had changed. As a result, we approached accelero to do just this.
This month’s Chart of the Month identifies and ranks the ROI multiplier effects of different advertising levers. This time, rather than using a databank from just one modelling agency, the updated analysis used a range of sources – all available in the public domain – to unpick the variables that most influence advertising profitability. Analysis shows that factors such as target audience and laydown or phasing will deliver multiplier gains of 1.1 and 1.2 respectively whilst budget setting by geography has a multiplier of 5.
Source: ThinkboxHowever, just like 2014, brand size comes in at number one – the biggest single factor influencing the potential advertising driven return. However, we have little short-term control over the size of the brand we’re working for. This makes the role of creative, still the second biggest driver of advertising profitability, even more important. It’s an element that marketers very much do have control over and has huge potential to supercharge advertising driven profitability with a multiplier of 12.
Source: thinkbox.cz
