U.S. advertisers underspending by 16%: ARF study
- At its Re!Think 2016 conference, Ad Age reports the Advertising Research Foundation (ARF) released a study that found U.S. advertisers are underspending by 16%, or $31 billion each year.
- The study suggests that marketers are shifting budgets among different media channels rather than spreading those budgets across more media, hence the underspending.
- Further, the underspending and moving budgets among different media channels is costing marketers return on investment.
According to the research, on average advertisers can increase ROI by 19% by spending on two media platforms rather than one. Continuing to add media platforms increases ROI up to five platforms, which boosted ROI 35% over using just one platform. At the same time the research found 29% of campaigns were conducted on just one media platform, and 60% on just one or two.
Manuel Garcia-Garcia, senior VP for research and innovation in global ad effectiveness at the ARF, told Ad Age, "When similar aspects are taken from one platform to another, it increases memorability on the second platform.”
He described that process as “priming” and explained that different channels such as radio, TV, digital and print can “prime” each other. Garcia-Garcia explained TV and print have a strong cross-priming effect due to both being seen in relaxed settings, and mobile and outdoor ads have a similar cross-priming effect.
ARF CEO Gayle Fuguitt described the research as the most extensive industry study in over 25 years, looking at 5,000 campaigns for brands worldwide and $375 billion in global ad spending.
The research comes at a time when agencies and marketers are making plans to increase their digital ad spending, per eMarketer data.