U.S. advertisers are underspending $31 billion annually and shortchanging return on investment by failing to diversify their budgets across media platforms, according to a recent study by the Advertising Research Foundation (ARF).
The study found that 29% of advertising campaigns relied on just one medium, and 60% relied on two or fewer. However, ARF determined that brands can increase return on investment by 19% by incorporating more than one media platform. Reaching a maximum of five platforms can improve ROI by 35%.
Because of that, says Jasper Snyder, ARF executive vice president of research and innovation for cross-platform, the $196 billion that ARF estimates U.S. advertisers will spend this year should be more like $227 billion.
The study found that the ideal advertising spending ratio for audiences as a whole included 78% spending on traditional media to 22% on digital. For people ages 18-34, the split was only a slightly different, 71% to 29%. Sales decline for brands when a person sees the same digital banner 40 times or more in a month. The study also found that 57% of digital ads aren’t viewed by humans and 10% are rendered useless by frequency overkill.
Advertising is more likely to be encoded in long-term memory if people encounter it in multiple media, according to Manuel Garcia-Garcia, ARF senior vice president for research and innovation in global ad effectiveness.
Pranav Yadav, CEO of research firm Neuro-Insight, calls this mental linkage process “priming.” “When similar aspects are taken from one platform to another, it increases memorability on the second platform,” he said in a statement to Ad Age. TV and print have a strong cross-priming effect because they both tend to be viewed in a relaxed setting, Yadav said. Mobile and digital outdoor often work together because both are viewed “on the go.”
When showing ads on Facebook before TV in Neuro-Insights tests, the ads performed more than 33% better in terms of creating long-term memories. People scrolled through the Facebook ad quickly, which prepared the ad for long-term memory when they saw it again on TV, Yadav said.
ARF found that redistributing TV ads for mobile video doesn’t work as well. Eye-tracking heat maps showed focus on key brand elements for an ad on TV, but showed less focus for the same ad on a smartphone.
In what ARF CEO Gayle Fuguitt called the most extensive industry study in more than a quarter century, “How Advertising Works Today” spanned 5,000 campaigns for 1,000 brands in 41 countries and a total of $375 billion in global ad spending.