Warc, 9 September 2014
LONDON: Brand size and creative execution have become
increasingly important factors in driving advertising profitability in recent
years, producing a profit multiplier of up to 18.
When Paul Dyson of Data2Decisions first looked at this area
in 2006, he argued that marketers were guilty of setting unrealistic targets
for brand RoI or of allocating budgets to smaller brands. This missed the point
that brand size could achieve a multiplier of 16 on advertising return, while
the comparable figure for creative execution was 10.
Revisiting the subject in the September issue of Admap, he
found that the profit multiplier effect had risen to 18 for brand size and
share and to 12 for creative.
This was largely a consequence of the greater
internationalisation of brands while a series of mergers and acquisitions had
produced larger brand portfolios, with an attendant halo effect surrounding
creative.
The intervening period also witnessed explosive growth in
digital advertising, which Dyson suggested had made the science of budget
allocation across channels and territories more important as well.
In fact, budget-setting across geographies appeared as a new
entry in his updated top ten drivers of advertising profitability, with an
average multiplier of around five.
"We believe the opportunity to impact return on global
budgets via allocation across geographies is significant and bigger than budget
setting within a country or within a brand alone," Dyson said.
While was the area where budget-setting could have the
greatest impact, doing the same across portfolios achieved a profit multiplier
of three and budget-setting across variants a multiplier of 1.7.
Further, the scale of change in the online world and the
fragmentation of media channels – Dyson reminded readers that, at the time of
his initial assessment, the iPhone had not been launched and Twitter was just
starting out – had resulted in major changes in how media agencies operated.
Media plans were no longer restricted to a handful of
channels as agencies adopted a 'connected planning' approach. Consequently,
Dyson had increased the multiplier for multimedia campaigns from 1.1 to 2.5.
Advertising might have become more complex, but Dyson argued
that marketers also had more opportunity for control and a greater
understanding of how to make a difference and so maximise their payback from
advertising.
Data sourced from Admap
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