← back to all news Newsbrand underspend costs brands three billion pounds profit
By under-utilising newsbrands in both print and digital, brands are losing out on £3 billion of potential campaign profit, according to Newsworks' latest effectiveness research.
The new 'Planning for Profit' study, conducted by Benchmarketing, separates out digital newsbrands from general online display for the first time, giving a much clearer picture of the effectiveness of both print and digital newsbrands and the impact of context in the online environment.
Even at current modest levels of investment, digital newsbrands deliver strong profit returns but there is a much greater opportunity for advertisers to optimise spend. The results show that boosting investment in digital newsbrands would result in higher profit levels, up to as much as £300 million.
Looking at print, cuts to investment mean that almost all categories are currently operating at the lowest levels of short-term campaign profitability. The research shows that increasing print newsbrands' share of budget to the optimum level would more than double current campaign profit return on investment (PROI).
In a bid to move away from a widespread focus on sales as a key metric, this study concentrates on the primary indicator of marketing success, profitability. By taking into account the media investment and cost of goods or services, it provides a much clearer guide to advertising payback than simply looking at revenue.
Vanessa Clifford, CEO, Newsworks, said: "With a unique approach to measurement, the vast majority of UK advertisers will be able to use the results of this new study to see how individual categories are performing and how to rebalance ad budgets to achieve full profit potential across a range of media."
As well as conducting a meta-analysis of 684 econometric models across a number of different sectors, Benchmarketing also developed five 'super-categories' as distinct segments, including 'Everyday pickups' and 'Shiny new things'. The super-categories cover 86% of the total UK advertising market and over 90% of advertised brands. In addition, there is also in-depth category analysis for four individual categories - supermarkets, finance, motors and retail:
Supermarkets: Profits could be increased by 60% if spend in print newsbrands was raised by a minimum of four and up to 11 percentage points. For digital newsbrands, allocating a 2.1% share of budget is recommended to optimise PROI
Finance: Clients are missing out on £264 million potential profit by underinvesting in print and digital newsbrands. For maximum profit return, the average recommendation for print newsbrands' share is 11.9% of overall campaign spend (compared to the current 7.2%), while for digital newsbrands it stands at 5.6% (compared to the current 4.1%)
Motors: Clients are missing out on £56 million potential profit through underinvesting in newbrands, particularly print. With a current average spend of 4% of overall media budgets, print newsbrands' recommended minimum share is 6%
Retail: Boosting print's share of media spend to an average 21% of total campaign investment (from just under 14.4%) and digital newsbrands' to 3.7% (from 1.7%) is Benchmarketing's recommendation. Overall, the category is missing out on £1.34 billion potential profit.
Sally Dickerson, managing director of Benchmarketing, said: "With the instantaneous, limitless data generated by digital marketing, we're not short of highly detailed campaign reports on a site by site and second by second level. Yet these outputs aren’t business relevant, only 'response optimisation' relevant. By contrast, this project assesses newsbrands' role in overall campaign effectiveness, gives business effect estimates comparable with other channels and, significantly, isolates newsbrands' digital spend as a structural factor – an industry first."
Philippa Brown, chief executive, Omnicom Media Group, added: "Digital newsbrands are often singled out for the brand safe online environment they provide advertisers, and rightly so. What's so encouraging about this work is that it proves that these environments are also primed to deliver solid business returns for advertisers, if utilised at the right level. This should serve as compelling evidence for advertisers that are looking to both boost profits and safeguard their brands via relevant and appropriate placement."
Methodology: 'Planning for Profit' was conducted by Benchmarketing, part of Omnicom Media Group, led by the respected effectiveness expert Sally Dickerson. It comprised a meta-analysis of the data from 684 econometric models built between 2011 and 2017. The lost profit is calculated first by examining the current percentage of budget delivered to newsbrands and the resulting profit return on investment (PROI). We then calculate the optimum percentage of budget to be allocated to newsbrands in order to maximise profitability, and by comparing this with the actual budget delivered, we estimate the profit lost as a result of sub-optimal media allocation. You can find out more here.