UK PLC is facing a huge financial blow from the effects of the coronavirus pandemic and the subsequent lockdown - but a new study from Ebiquity claims that simply by reallocating marketing spending, British businesses could rescue over half a billion pounds in otherwise lost profits.
Without this “rapid reoptimisation”, Ebiquity, a marketing and media consultancy, says, business will see the return on marketing spend fall by 30%.
The consultancy ran a number of simulations based on “the typical advertiser”, which examined the effects of changing costs, reach and economic conditions caused by the pandemic, and their potential impact on advertising profitability.
The researchers’ conclusion was that, while reallocating spending might not have an immediate effect, changing the media mix, changing the timing of campaigns and adjusting budgets could collectively recover almost £550 million of otherwise lost profit.
The study suggests protecting profits by cutting overall ad spend and reducing the share of cinema, out of home and print. At the same time, the share of investment in TV, search, digital media and possibly radio, would increase.
While increasing TV spend might be suitable for some brands, for many, the study suggests, the best strategy may be to maintain current spend, or even reduce it, while still commanding the same amount of advertising space because TV ad costs are falling.
This latest research follows Ebiquity’s global study published two years ago, which analysed 2,500 campaigns over three years. It found that if marketing spending had been optimised according to the ROI of each channel, it would have generated an extra $45 billion in profits for brands.
Business Director of Ebiquity Nic Pietersma said: “Strategic thinking is more important now than ever.
“Our study shows that there is no one size fits all as each business and sector faces unique challenges and brands need to fundamentally know what works for them and what doesn’t and act accordingly,” he added.
“But two things are clear. Firstly, inaction is not an option. Your marketing plan may have been perfectly optimised at the start of the year, but it will not be now. Rapid reoptimisation and reallocation of funds will put you in the best place to maximise profits.
“Second, well allocated marketing spend has a direct and positive impact on the bottom line and should continue to be seen as an investment and not a cost,” he said.
Sourced from Ebiquity; additional content by WARC staff