With Black Friday behind us, Cyber Monday upon us and Christmas coming fast, we wanted to share more details from our recent effectiveness study ‘The Bottom Line’, looking specifically at the retail category.
Retailers are set to benefit from an extra £268 million in profit from their advertising investment in news brands from 2017 to 2025, we look at how advertisers in this category should optimise spend to maximise ROI.
£93m profit ROI and rising:
From 2017 to 2020, brands in the retail category have benefitted from an additional £93 million profit return on investment (ROI) by optimising their ad spend in news brands. This is a positive swing of 7% over the past three years.
When Newsworks started looking at the effectiveness of advertising in news brands in 2017, we found that advertisers in the retail category were missing out on £1.34 billion of potential profit ROI through underinvestment in news brands. However, by the end of last year, the profit gap had reduced to around £1.24 billion, as a result of increased investment. And this is in spite of the pandemic.
Indeed our forecast shows that the profit gap will reduce further to approximately £1 billion by 2025. This means that between 2017 and 2025, retailers are set to see an extra £268 million of campaign profit derived from their advertising investments in news brands.
Increasing news brand investment improves retailer profitability
Missing profit is calculated by examining the percentage that is currently spent in news brands as part of an overall budget and the resulting profit return on investment for the whole campaign. We then calculate the optimum percentage of budget to be allocated to news brands so that advertisers can maximise their overall campaign profitability.
Current levels of average investment in digital news brands are low, just 1.7%, but even at this level they contribute to the overall campaign, which returns £2.31 for every £1 of spend. However, according to the data, increasing digital news brand investment to 3.7% of the total ad budget would deliver £2.43 for every £1 spent.
The average proportion of total investment in print news brands for this category is just over 14%. But because of sub-optimal media allocation across the campaign returns are just £0.55 for every £1 invested. However, if news brand spend was increased by at least three percentage points to 17%, profitability would increase to £2.17 for every £1 spent.
In summary, retail brands that increase their advertising campaign investment in news brands – across online and print – will improve their campaign profitability significantly, and will see the biggest returns to their bottom line.
Retail: key takeaways
- Retailers benefited by £93 million profit ROI 2017-2020
- Positive swing of 7% in three years
- Profit gap now £1.24 billion and will reduce to £1 billion by 2025
- News brands forecast to provide and extra £268 million of profit to retailers by 2025
The Bottom Line study
Three years ago, in partnership with Benchmarketing, we launched the biggest news brands effectiveness project to date. We did this to understand the proportion of campaign spend that should be allocated to news brands in order to maximise profit to advertisers.
We discovered that advertisers were missing out on a potential £3 billion of profit from advertising investment across all categories. With ‘The Bottom Line’ we wanted to see if some of that missing profit had been found and to assess the potential future profit.
If you would like to know more please contact [email protected].
You can view the full research project here. The Bottom Line »
Use our Profit Calculator to see the opitmised investment in news brands for your ad campaign.