50% of marketers impede ROI by underinvesting in media, Nielsen finds

Dive Brief:

About half of marketers are not spending enough in a channel to get maximum ROI, according to Nielsen's first-ever ROI Report. The report found that while about 50% of media plans are underinvested by a median of 50%, ROI can be improved 50% with an ideal budget, which Nielsen describes as the "50-50-50 Gap."
While social media delivers 1.7x the ROI of TV, social sees less than one-third the spend of TV. Meanwhile, podcast ads, influencer marketing and branded content can deliver over 70% in brand recall, with influencer marketing ROI comparable to that of mainstream media.
Only 36% of channels deliver for both revenue and brand metrics, with Nielsen finding that brands should balance both upper- and lower-funnel activities. Adding upper-funnel marketing to existing lower- and mid-funnel marketing can grow overall ROI by 13%-70%, per the report.

Dive Insight:

Nielsen's first-ever ROI Report demonstrates some of the gaps in marketers' budgets, channels and media strategies that are negatively affecting ROI while also illustrating some ways to optimize ad spends, measure returns and improve metrics brands already have.

"In a time when there are more channels than ever to reach desired audiences, it's critical that insights on ROI are attainable and easy to understand," said Imran Hirani, vice president of media and advertiser analytics at Nielsen, in the press release. "Brands can't afford to waste valuable ads on the wrong audiences. By investing wisely and having a balanced strategy of both upper-funnel and lower-funnel initiatives, brands can reach the right audiences and maximize their ROI."

The company's "50-50-50 Gap" finding shows that while many media plans are often underinvested, results can be improved with better budgets. Nielsen found that media spend should be between 1% and 9% of a company's revenue, with challengers spending more and larger brands spending less. The report also found that overspending isn't as problematic as underspending, which affects digital video (66% underinvested), display (60%), social (43%) and even TV (31%).

Along with channel underinvestment, Nielsen found that only 63% of ads on desktop and mobile are on-target for age and gender in the U.S., despite high levels of data coverage and quality in the channels. The company says advertisers should prioritize cross-platform and cross-device measurement solutions and near-real time insights to drive impact — likely already a priority for most advertisers already grappling with channel fragmentation and changes to the data privacy landscape.

The report highlights a paradox of emerging media: while brands can't spend big without proving that new media works, spending small amounts makes it difficult to get accurate test results. However, Nielsen found that channels like podcast ads, influencer marketing and branded contents over-performed in brand recall, making them targets for brands looking to experiment with newer channels. Similarly, even a long-established channel like social media is still underinvested, despite delivering better ROI than TV.

The ROI Report was produced by Nielsen using a wide range of methods, including Marketing Mix Models, Brand Impact studies, marketing plans and expenditure data, attribution studies, and Ad Ratings collected in recent years, per the press release.