Is your ad budget going to waste?

This newsletter comes from the hosts of The Marketing Architects, a research-first show answering your biggest marketing questions. Find us on Apple Podcasts or wherever you listen to podcasts!

 

This week, we're diving into conversation with Richard Kirk, Chief Strategy Officer at Essence MediaCom UK. Richard shares research that challenges conventional wisdom about media spending—and could have you rethinking your marketing mix. 

—Elena  

 

Brands could be spending 3X too much on social.        

Analysis shows brands may be overspending on paid social, potentially allocating three times more budget than optimal for growth. This means wasted ad spend and missed opportunities to invest in more effective media. 

 

Time to rethink your marketing mix?         

Richard Kirk's analysis of Thinkbox’s Profit Ability 2 report data reveals some surprising insights about media spend allocation. 

1. Social media is overvalued. The study suggests that social media spend should be reduced from an average of 13% of a media mix to as low as 4%.
   
2. But linear TV is underutilized. Despite narratives of decline, linear TV continues to deliver strong returns and is often undervalued in media plans.
   
3. Long-term payoff matters. Nearly 60% of advertising ROI occurs between the end of the first quarter and the end of the year. So it pays to be patient when evaluating campaign performance.
   
4. Optimizing for profit requires a balanced mix. When media spend is optimized for max profit, significant shifts occur for most brands. Besides TV, search and online video should also see increased spend allocation. 

The key takeaway? Challenge assumptions and continually evaluate your media mix. Base decisions on robust data and effectiveness metrics and don’t get caught up in short-term metrics alone. 

Listen in on our discussion.

 

“Profit Ability 2”        

This econometric meta-analysis from Thinkbox provides a post-Covid perspective on advertising's financial impact. It shows how and why advertising is a profitable driver of business growth—and what types of advertising have the greatest impact. Read the report.

 

 

Find the waste. And stop it.                       

“Half the money I spend on advertising is wasted; the trouble is, I don't know which half." 

— John Wanamaker