The channels a company advertises in, and how much they spend in those channels, can make a huge difference in the impact they see from that advertising spend.
Advertising drives positive business results. Turn ads on at a spend high enough to matter, results go up. Turn ads off, results go down. If you’re a company that has a history of advertising, you know this to be true. However, that is far from the full story. The channels a company advertises in, and how much they spend in those channels, can make a huge difference in the impact they see from that advertising spend. In other words, the media mix matters.
How much? Well, on average, our data shows that simply making better decisions in media mix drives a 4% lift in business results (sales, traffic, leads, customers, etc.). That’s a pretty strong lift for simply allocating money differently, not spending more money.
We analyzed the “average” media mix for several different industries and compared that to the media mix that would drive the highest business results for that industry. The average mix came from Standard Media Index (and their robust ad spend database). The media mix data on business results comes from performance models we have built as an agency that has placed the ads and measured their impact across multiple Billions of dollars of ad spend.
We found that the average media mix for each category is pretty far off the best media mix to drive business results. Caveats listed later, but some topline findings:
- All industries in our analysis spend too much money on traditional Television advertising. Performance models don’t say turn it off. They just show a lower spend, with higher spend elsewhere, is the best thing to do for the business.
- Retailers also spend too much money on Paid Search and not enough on Streaming Video or Streaming Audio. They get the Social spend about right.
- Restaurants do well with their Streaming Video, but they under-invest in Paid Search and Audio (both Streaming and Radio).
- CPG & Manufacturing companies should be doing more Paid Search, Social, and Magazine advertising. Again, the TV spend is far too high, but Streaming Video spend looks good.
- Healthcare companies should spend more in Social, Streaming Audio, Print, and Outdoor media. They tend to be overly reliant on Paid Search.
- In Travel & Tourism, Streaming Video and the Audio channels (Streaming and Radio) should get more investment. The “average” mix here is far too heavy on Digital Display.
Overall, there is a lot of room for improvement. The main caveat here is that this analysis looked at the average spend. Of course there are advertisers that get their media mix exactly right. Probably not by chance, but instead by having their own performance analytics. The other caveats are that the “best” media mix to drive business performance depends on the size of the business and the size of the ad spend, along with the particular industry they serve.
The most important takeaway is that this is a decision that should not be made from the gut or “what we did in the past” or on some conversations with friends or peers. Getting the media mix right is an easy way to save the company from wasting money, and to get better results with every dollar of ad spend.
