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Overall Media Spend Must Be Between 1% To 9% Of Revenue To Stay Competitive: Nielsen Report

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Nielsen released its first-ever ROI Report, which identified gaps in marketers’ budgets, channels and media strategies that are compromising returns on investment (ROI) on media plans. The global report found that media spends vary by region, with brands in Asia-Pacific reinvesting a higher percentage than other regions, while brands in North America reinvest slightly less but enjoys a much stronger payback than the rest of the world.

The report also found that media spending often needs to be higher to break through and drive returns. Nielsen’s “50-50-50 Gap” states that while 50% of media plans are underinvested by a median of 50%, ROI can be improved by 50% with the ideal budget.

Beyond budgeting, the ROI Report delivers key insights and recommendations to deliver higher ROI across multiple marketing areas, including:

  • Full funnel marketing: It is rare for channels to deliver above-average returns for both brand and sales outcomes, with 36% of media channels faring above average on both revenue and brand metrics. To grow ROI, brands should pursue a balanced strategy for both upper and lower funnel initiatives. Nielsen found that adding upper-funnel marketing to existing lower- and mid-funnel marketing can grow overall ROI by 13-70%.
  • Ad sales growth strategy: Ultimately, ROI will inform publisher pricing power. Publishers are not just competing against others in their channel, but also against other channels, so comparing channel ROIs can help set pricing strategy. The ROI Report uncovered that social media delivers 1.7x the ROI of TV, yet social gets less than one-third of TV ad budgets.
  • Audience measurement: Campaigns with strong on-target reach deliver better sales outcomes. However, only 63% of ads across desktop and mobile are on-target for age and gender in the U.S., meaning that on the channels with the most exhaustive data coverage and quality, over one-third of ad spend is off-target. To capitalize on opportunity and drive impact, advertisers should prioritize measurement solutions that cover all platforms and devices with near-real-time insights.

“Nielsen’s 2022 ROI Report serves as a guide for brands, agencies and publishers. 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, Media & Advertiser Analytics, Nielsen. “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.” 

This is the first ROI Report produced by Nielsen. The report reveals data and delivers insights on what drives returns on ad spends, how to measure the returns, and how to improve on the metrics brands already have, with content unique to advertiser, agency and publisher audiences. The findings were generated by Nielsen using a wide range of measurement methods, including Marketing Mix Models, Brand Impact studies, marketing plans and expenditure data, attribution studies, and Ad Ratings collected in recent years. In most cases, Nielsen’s findings were organized into normative databases or meta-analyses across a sample of studies to produce insights that are representative of Nielsen’s experience, providing marketers, agencies and media sellers a more complete view of media effectiveness compared to a single company drawing from its own experience.

Download the report here

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