What is the ROI of a billboard

Why digital advertising and if so, how?

By guest author Uwe Lehmann, Managing Director & Practice Lead DACH Marketing Performance Optimization at Ebiquity

In Germany and internationally, digital media are overtaking numerous offline media in terms of advertising investments and the trend seems unbroken. A recent survey of its members by the World Federation of Advertisers (WFA) shows that the majority of the companies surveyed plan to further increase investments in digital advertising, although only 34 percent believe that digital advertising has at least a satisfactory value for the the money invested. 72 percent of those surveyed, on the other hand, are of the opinion that advertisers invest too much in digital advertising. Are the increasing investments in digital advertising justified at least by a demonstrable advertising impact? What should advertisers pay attention to in order to make their investments as effective, efficient and secure as possible?

About the effect:

Ebiquity's Marketing Performance Optimization (MPO) practice carries out more than 100 marketing mix modeling projects for advertisers annually, analyzing the return on investment (ROI) of marketing investments and advising advertisers on optimizing their marketing mix. A consistent result of these analyzes across different countries and industries is, as shown in Fig. 1, that the ROI of online advertising is generally below the ROI of advertising in offline media.

ROI benchmarks by industry

That is not to say that digital advertising cannot be efficient as well. However, most analyzes show a below-average ROI from online advertising. The reasons for the lower ROI of digital advertising can be varied:

  • The value chain of programmatic advertising means that only part of the advertising investments of the brands are actually converted into advertising contacts, although the efficient target group reaching is one of the arguments in favor of programmatic, as can be seen in the following illustration.

Programmatic digital advertising: only a fraction of the advertising euro reaches the target group

 

  • Limited visibility of the advertising material: Eye tracking research e.g. B. from Lumen Research shows that only about 35 percent of online ad impressions are actually seen and only 9 percent for more than a second. The brand is only visible much later in most online video advertising media.
  • Small additional effect: For many companies, additional reach and thus additional effect is a main reason for investing in digital advertising. Often enough, however, it has been shown that the main sales effect of a campaign is achieved through offline advertising. Digital advertising parallel to high-reach offline advertising can only achieve a minimal additional effect. The marginal utility of further advertising investments decreases via additional media.
  • High costs: The ROI of advertising depends on the additional sales per reach point of the advertisement and the costs per reach point. However, some digital advertising media, such as video advertising for offline media, do relatively poorly in terms of costs.

What should advertisers look out for in order to increase the efficiency of the marketing mix, and especially digital investments?

  • Adapting the creation to the channel to get attention and visibility of the brand without disturbing users.
  • Establishing high standards of visibility for agencies and publishers and monitoring their compliance.
  • Test of the use of digital advertising to bridge TV breaks, especially in the TV high price phases.
  • Regular implementation of comprehensive econometric impact analyzes to ensure that the media and advertising media used are efficient and, if necessary, optimization of the strategy.
  • It is important that the impact analysis is independent of planning and purchasing in order to rule out the suspicion that the analysis only agrees to confirm the planning.

About the author

Dr. Uwe Lehmann has more than 16 years of research and consulting experience, mainly in the areas of marketing, advertising effectiveness, media and innovation research as well as marketing and media consulting. As Managing Director and Practice Lead Marketing Performance Optimization DACH, Dr. Uwe Lehmann at Ebiquity is responsible for advising advertisers on increasing the impact and ROI of their entire marketing mix.