UK business must relocate their marketing spend away from the likes of cinema, out of home and press to claw back £550m of lost profit in 2020 or face a 30% decline in return on marketing investment.
So says a new study by independent marketing and media consultancy Ebiquity, which ran a series of simulations based on “the typical advertiser”, looking at the impact of changing costs, reach and economic conditions and the potential impact on advertising profitability in 2020.
While re-optimisation will not have an impact in the short-term, the simulations showed that by adjusting the topline budget, rephasing and changing the media mix, industry could collectively recover almost £550m of lost profit contribution in the UK.
The study suggested steps to protect profit could include reducing overall ad spend and reducing share of cinema, out of home and press, while increasing share of investment in TV, search, digital media and possibly radio.
And with unprecedented levels of TV deflation across all markets, the study suggests that while some advertisers should increase investment, for many, the best strategy would be to maintain or reduce TV investment in order to benefit from reduced cost and over-delivery.
This latest insight builds on Ebiquity’s global study published in 2018 which analysed 2,500 campaigns over a period of three years, and claimed that if marketing spend had been optimised based on the ROI contributions of each channel, it would have generated an extra $45bn (£36bn) in global profits for brands.
Ebiquity business director Nic Pietersma said: “Strategic thinking is more important now than ever. Our study shows that there is no one size fits all as each business and sector faces unique challenges and brands need to fundamentally know what works for them and what doesn’t and act accordingly.
“But two things are clear. Firstly, inaction is not an option. Your marketing plan may have been perfectly optimised at the start of the year, but it will not be now. Rapid reoptimisation and reallocation of funds will put you in the best place to maximise profits.
“Second, well allocated marketing spend has a direct and positive impact on the bottom line and should continue to be seen as an investment and not a cost.”
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