Advertising can be a big commitment. However, it can also prove costly. And while we know that brands are prioritizing their brand awareness efforts in the coming year, there isn’t a marketer on the planet who’s not focused on the tangible returns that their spend delivers. And given that focus, it’s not uncommon for brands to pull back when the returns aren’t there. Somewhat counterintuitively, however, that’s usually not a good strategy. 

It is natural to react with a knee-jerk response and reduce spending when the returns are poor. Why continue—or even increase—spending if it’s not generating positive results? As odd as it might sound, the answer is because you’re likely not spending enough to get the returns you want. In fact, there’s a spending threshold to generate the best returns, and if you don’t hit that, the returns will likely be underwhelming. The problem can get worse if you back off.

In a recent deep dive into an array of cross-channel media plans, we found that 50% of marketers’ media investments are actually too low to drive maximum payback. And in terms of amount, they’re 50% below what they should be to generate the best possible results. When marketers embrace the premise of spending more to earn more—by committing to the ideal amount—they could boost their return on investment (ROI) by as much as 50%.

Marketing professionals will be able to determine what the optimal spending amount after they understand that maximum ROI relies on certain levels of spending. To put it another way, to achieve the highest ROI brands must know what amount they should spend in order to succeed.

Here’s an example: In a recent analysis, we found that when a brand spent too little, the vast majority of the audience (87%) were exposed to the campaign less than three times. These impressions accounted for 68%. It means that 70% of impressions were not as successful as they might have been.

A separate study showed that 40% of the audience saw an ad at least three times. Only 8% of the audience, or 42%, were exposed to the advertisement eight times per week. This suggests potential wasteful advertising. If a brand spends a lot of money, 75% of impressions can be attributed to those who view the advertisement more than 8 times. However, in the above example 32% of campaign audiences saw the ads only one or two times.

In addition to looking at a few specific cases, we wanted to better understand—at a global level—how frequently brands underspend and in which channels. Through our analysis of ROI observations, we focused on three key questions to understand what spending and ROI looks like—as well as what opportunity is being left on the table:

• Is it necessary to spend a lot in order to stay competitive?
• Which geography is this different?
• How do brands’ planned spend levels compare to the optimal spend levels for the media channel?

We found that advertising accounts account for 3.8% of brand revenue.¹. Advertising is a key component of a company’s competitiveness. We recommend that it spends between 1%-9% of its revenues on advertising. Our study found that brands typically spent anywhere from 1.4% to 9.2%. One-fourth of brands spend less than 3.8%, while the other quarter spends over 3.8%.

It’s also worth noting that to compete, a newcomer will need to spend proportionally more than an established player. An established brand might be able to move toward the lower range in order to remain competitive.

For agencies and advertisers looking to maximize their ROI, it is important to model the relationship between spend and ROI. There are risks to spending too little or too much, but underspending can be even more dangerous.

A study of media plan data from clients of different sizes was conducted to determine if 25% of investments at channel level were sufficient to increase ROI. The spend in this category was 32% higher than the recommended level. Channel ROI would be improved by decreasing spend, though it is only 4%. This would however result in significant sales volume reductions, as reducing spend also means fewer ads-driven sales.

The solve here isn’t to slash the budget. Brands should optimise their channel mix. The right balance will ensure that spend is correctly allocated to reach, efficiency, and frequency. A recent example of this is an auto manufacturer that increased its reach by 26 per cent and improved its impressions significantly by optimizing its media distribution. To accommodate radio, the brand lowered its media allocations across digital, linear and CTV. 

It is a bigger challenge to spend too much. Average brands are underspending by 52%. That’s likely too big a gap for many brands to close in a single planning cycle. For those who can do it, there are significant upsides: an increase in ROI of 50%.

Worldwide, there is a lot of underspending. Although most companies allocate the majority of their budgets for TV, many cases show that these allocations are too small to achieve maximum ROI. Outside of television spending, almost half of media plans SME examined showed inadequate investment across video and display.

ROI is just one of the many factors that advertisers and agencies consider when they’re planning their media budgets. However, campaign effectiveness can be driven by budget. Right now, half of all global media investment are not sufficient, meaning that a substantial amount of return on investment is missing.

Get more information here Download our most recent ROI Report. 

Take Note

1. SME Compass Database 2020-2021

The U.S. military flies 70,000 lbs of baby formula to America every month in late May to alleviate the country’s current shortage. 

It was another troubling development in what has become a national supply-chain crisis that’s still affecting everything from cars to semiconductors to lumber. And that’s a problem for marketers focused on lower-funnel initiatives when products may not be available anytime soon. Should they continue executing conversion-oriented tactics when supply is low, they risk losing trust when consumers realize the brand can’t deliver on what’s been advertised. 

This issue is likely to end. However, it offers a lesson that’s applicable no matter what the global supply chain looks like: Focusing on long-term brand building is just as important as short-term sales.

In difficult economic times it is tempting to double-down on revenue gains immediately. It may not seem intuitive, but now is the right time to invest in top-of-funnel advertising. 

Just as the Ehrenberg-Bass Institute has long argued, awareness (or “mental availability”) is the best path to customer acquisition. After all, who’s going to purchase your product when they’ve never heard about it in the first place? And with more people shopping online, and with the virtual shelf being infinitely longer than the one at your local grocery store, there’s more competition to beat out. 

The importance of brand awareness is vital. On average, a 1-point gain in brand metrics such as awareness and consideration drives a 1% increase in future sales, according to SME’s research. 

Americans are open to new products, which is a plus. U.S. consumers say that 12.1% of their online purchases involve a brand they hadn’t purchased before. And, even if you don’t have any inventory to sell at the moment, you can slightly tweak your lower-funnel activities to further strengthen your brand awareness and consideration.

For example, consider replacing a “Buy Now” call to action button with one that says “Sign Up for the Waitlist.” By adding customers to an email database, marketers can automatically provide updates when sought-after products are back in stock, as well as target them with other brand-building messages or even pique their interest in another set of products. 

In this way, you shouldn’t see the two parts of your funnel as at odds. Even when you’re focusing on the long-term health of your brand, both approaches work together to ultimately drive revenue.

Of course, building a strategy that effectively tackles both objectives isn’t always straightforward. Some channels are ideal for building brand equity, while others can drive sales. For marketers to achieve the best balance, they must assess the effects of both goals.

Of course, building a strategy that effectively tackles both objectives isn’t always straightforward. Some channels are ideal for building brand equity, while others can drive sales. For marketers to achieve the best balance, they must assess the effects of both goals.

For more insights on how to grow brand and sales together, visit SME’s Full Funnel Hub.

In the last few years social media platforms have seen a remarkable user and engagement increase. Many brands are now spending big on this platform and turning to influencers for more intimate (and potentially profitable) relationships with their customers. Global marketers plan to spend 53% more on social media in the coming year than they do any other channels.

Although social media influencers have a presence on every platform, they are gaining traction quickly on TikTok. According to SME InfluenceScope, which measures social media influencers, the video-sharing platform has overtaken social media veteran Instagram in popularity for Micro (10K-50K followers), Mid (50K-100K), Macro (100K-1M) and Mega (>1M) influencer representation. 

And, given the shift toward shorter videos and vertical formats, TikTok influencers have an enviable engagement rate: 10.25% of the platform’s creators have an engagement rate of more than 20%, compared with 6.15% for Instagram and 3% for YouTube.

Brands can reap the benefits of all this engagement if they choose the right influencer. According to the Q1 2022 norms data from SME’s Brand Impact research, influencer ads in the U.S. drove a nine-point increase in both brand affinity and purchase intent relative to consumers who did not see the influencer ads. Marketers are now tracking hashtags to identify the ideal audience for their influencer ads.

One of TikTok’s most well-known hashtags is #BookTok. It has been viewed 59 million times. BookTok features a variety of content for readers and writers, but its most popular—and influential—videos are book reviews. Popular BookTok reviewer @thecalvinbooks, for example, has over 500,000 followers and an engagement rate of 10%—three times higher than the average influencers with a similar follower base on TikTok. 

Readers are flocking to BookTok to get recommendations from their favorite influencers, and these influencers can have a big impact on book sales for brands who tap into their highly-engaged—and younger—followers. Nearly two-thirds of BookTok’s audience are between 18 and 24 years. 

And when it comes to maximizing the impact of influencers, age isn’t just a number for these young readers. Brands want meaningful interactions with influencers that appeal to Gen Z.

In April, Disney partnered with TikTok creators to promote “Bravely,” a written sequel to its hit movie Brave. Disney partnered with younger influencers to engage its Gen Z audience. Melissa Becraft has over 1.1million followers, which makes her one of most prominent creators. The video she created to promote the book received approximately 18K views, more than 1.5K interactions and 55% reached the targeted Gen Z audience. 

Marketers often struggle to find a person who resonates with their audience because of the number of social media influencers. But, by combining platform data, influencer insights and audience behavior, marketers can take a data-driven approach to their influencer marketing strategies that drives engagement—and ROI. 

Download Building Better Connections: How to Use Influencers to Grow Your Brand for more insights

Global attitudes about the LGBTQ+ community have evolved dramatically over the past decade or so, and with more choices for content than ever before, LGBTQ+ audiences are flocking to content providers—and advertisers—offering authenticity and inclusion.

Our international LGBTQ+ inclusive media perceptions survey found that emerging media channels have the highest advertising inclusion. Influencers and social media are leading the charge in inclusiveness perceptions, while LGBTQ+ view radio and newspapers as less inclusive.

Because they allow LGBTQ+ communities to connect with other members of their community, social media and influencers have a particular appeal. This is because authenticity is key for meaningful inclusion. Our respondents ranked stereotyping as the number one issue. More authenticity and realism are the next steps to improving content inclusion. 

The authentic connections influencers make with their audiences can have a big impact on consumer behavior—influencer ads drove a 9-point increase in both brand affinity and purchase intent relative to consumers who did not see the influencer ads¹. 

This consumer influence can be seen in surprising places: bookstores. For authors as well as publishers, the #BookTok group has been a huge asset. According to LGBTQ+ BookTokker Kevin Norman, “BookTok can reach a wider audience than any other social media platform, and it’s amazing at separating us into niches.” Garnering over 59 billion views on TikTok, BookTok features a variety of content for readers and writers, but its most popular and influential videos are book reviews. All of this is translating into huge sales for bookellers.

In addition to NPD Bookscan reporting a 740% increase in sales of the LGBTQ+ genre over the last five years, SME Scarborough data highlights that LGBTQ+ adults aren’t just more likely to have shopped in a bookstore; they’re 43% more likely to have made a recent purchase in the past three months.

And books aren’t the only traditional media channel seeing an inclusion lift from social media influencers. Magazines were perceived as less inclusive by 58% respondents in our survey. However, major magazines are being influenced more than ever and influencers have turned their celebrity social media into capital to help brands show genuine representation.

Model, vlogger, makeup artist, writer and actress Victoria Volkova is Mexico’s top LGBTQ+ influencer, according to SME InfluenceScope. For her advocacy for LGBTQ+ rights, she identified as transgender and was named to the Forbes Most Powerful Women list in 2018. In 2020, Volkova was the first transwoman to be featured on the cover for the magazine. Playboy Mexico. The cover was shared by her on Instagram. She also wrote a story about how the milestone marked her journey towards self-acceptance. Several global brands like Motorola, Levi’s, Avon and Elle have embraced her influence to market their brands in Mexico.

Linn Da Quebrada from Brazil is a prominent LGBTQ+ advocate. Vogue Brazil’sFirst LGBTQ cover story in June 2021. She is a transgender rapper and uses her unique music, a mixture of hip-hop and funk carioca, to increase her advocacy for the Brazilian queer community. Da Quebrada recently partnered with Absolut Vodka for an outdoor marketing campaign. 

All audiences are increasingly interested in content celebrating diversity, and this is evident by the increase of interest in LGBTQ+ content. In fact, last year’s SME identity and representation study found that 87% of respondents are interested in content featuring people from outside their own identity group. And brands that work to better understand the nuances within the LGBTQ+ experience and partner with LGBTQ+ influencers to create authentic engagements with consumers can increase inclusivity—and ROI. 

Download the full report for more information Looking for authenticity? A look at international LGBTQ+ media perceptions

Notes:

1. SME Brand Influence Study Q1 2022

Research and news about streaming’s impact on TV watching habits are plentiful. Most recently, U.S. streaming usage hit a new high in April, capturing more than 30% of audiences’ total TV time. This time of fragmentation in viewership has significant implications for advertisers. However, many marketers have continued to focus on traditional TV and increased their advertising spend steadily since the COVID-driven pullbacks at the beginning of 2020.

The upsides of traditional television are still very strong, despite the streaming boom. An actual fact is that viewers still spend more time watching TV live than viewing content via the internet. From that perspective, TV remains a key channel for brand awareness, marketers’ top objective for the year ahead. This goal is reflected in TV advertising spending, with nearly half of all ad dollars going to television stations across the U.S.

There’s no discounting the importance of reaching the largest audience possible, but doing so requires more planning and strategy than it did when our media choices were far more finite. SME Scarborough data shows 47% of U.S. adults watch either little or no TV (weekly cable, broadcast) while traditional TV is still the media staple. The light viewers also spend less time watching TV than traditional TV, spending less then two hours every day. This fragmentation of audience time can present challenges, but when advertisers have a clear understanding of channel usage, they’re better positioned to balance their spending for optimal returns.

People who see more television are more likely to be exposed to ads than people who don’t watch as much. However, as only under 30% Americans are able to watch TV for less than two hours each day, reaching and frequency strategies that heavily rely on TV can be costly and challenging. A typical three-month national TV campaign will not resonate well with viewers who watch very few advertisements. In a recent campaign, SME Media Impact found that light viewers didn’t even see two ads. Heavy TV viewers, on the other hand, were exposed to as many as 25 advertisements. It can also be hard to control the amount of ads viewers see when a campaign relies too heavily on one media.

It’s possible that a brand could achieve its reach and targeting goals with a narrow media mix. However, as audiences stream more and media behaviours change, it is becoming increasingly important to have a diverse media mix. And many marketers are actively pivoting to engage audiences where they’re spending more time, paying increasing attention to emerging digital channels like social media and connected TV. 

SME 2022 Annual Marketing Report found that North America marketers have spent over half of their 2021 advertising budgets in digital channels. They plan to continue increasing digital spending in the future. North America’s marketers were planning to boost their spending on social media by 61%. This is despite the fact that they consider it more effective than radio and TV (57% extremely/very efficient vs. 49%, 41% and respectively) 

As with any strategy and decision, data needs to be a marketer’s best guide. However, perceptions may not always be accurate. To better understand the ways in which different channels perform, we recently used SME Media Impact to gauge the effectiveness of a single, one-month $5 million auto campaign simply by adjusting a typical media plan to include traditional radio—without adjusting the budget. SME Ad Intel found that automotive manufacturers spend 67% and 27% respectively on TV and digital media.

Because 19 million people were more likely to be exposed, the optimised campaign increased the reach of the auto brand by 26%.

Marketers who want to maximize media plan optimization have always found it important in order to make sure that they spend efficiently across all channels. It becomes more crucial as media devices and channels fragment. It will be the responsibility of marketers to deliver tangible returns on investment. That’s the nature of marketing. But as consumers’ time spreads across new platforms and devices, effective marketing plans will consider them through the lens of target audience, time spent and messaging frequency.

Television viewing, like other activities has its historical norms. Many are influenced by the calendar. However, streaming continues to grow and claim 31.9% in total television time.

May is traditionally the month that TV viewers are at their lowest. And this year was no exception, with total time spent with television falling 2.7%. In comparison to broadcast or cable viewing, however streaming usage rose by 2%. The increase was amplified through the release of Obi Wan KenobiDisney+ Season 4 Stranger ThingsNetflix. The appetite for these titles was significant, helping the two platforms attract big viewership as the programs dropped: Disney+ attracted 2.5% of the total TV share  on May 27, and Netflix claimed 9.0% on Saturday, May 28.

Both cable and broadcast viewing fell in May in accordance with historical norms. Cable viewing also declined 3.5%. For broadcast viewers, drama continued to dominate with procedural crimes dramas like NCIS, FBI Blue BloodsThe genre captured one-third the total broadcast viewing. Cable news viewing fell 4.2% in May. However, sports viewing was higher by 7% and accounted for 9%. The NBA playoffs were the most-viewed cable program during May. 

The summertime is a time of lull for television and could serve as an indicator for streaming services. Keep checking back for more iterations and updates from The Gauge, as we continue mapping these trends.

Please refer to the below methodology.

The video gives you a glimpse into the workings of The Gauge by Brian Fuhrer.

METHODOLOGY & FREQUENTLY QUESTED QUESTIONS

Monthly macroanalysis by The Gauge of consumer access across major television platforms including Broadcast and Streaming. The chart also shows the breakdown of major streaming distributors. This chart shows individual streaming distributors’ share of each category as well as total TV usage.

The Gauge’s data are derived from two weighted panels. They then combine to make the graphic. SME’s streaming data is derived from a subset of Streaming Meter-enabled TV households within the National TV panel. The linear TV sources (Broadcast and Cable), as well as total usage are based on viewing from SME’s overall TV panel.

The data are based upon a particular viewing period. The data, representing a 5 week month, includes a combination of Live+7 for weeks 1 – 4 in the data time period. Notice: Live+7 covers live viewing of television and watching up to seven days after. The Live+3 package includes live television viewing and viewing for up to three additional days.

Within The Gauge, “Other” includes all other TV. It includes any tuning other than the one shown, unmeasured video-on-demand (VOD) streaming, other devices (DVD playback), and all other other television. Because streaming via cable set top boxes does not credit respective streaming distributors, these are included in the “Other” category. SME will continue to work towards crediting individual streaming distributors via cable set-top boxes as we improve our Streaming Meter technology.

Streaming platforms listed as “Other Streaming” includes any high-bandwidth video streaming on television that is not individually broken out.

Hulu Live viewing is included in Hulu, and Youtube viewing includes Youtube TV.

Ecoded Linear Streaming, also known as encoded TV, can be found under the Broadcast or Cable group (linear TV), as well as under Streaming, and other streaming options e.g. Hulu TV, Youtube TV, and Other Streaming MVPD/vMVPD Apps. MVPD is multichannel video programming distributer. This service provides several television channels. Distributors who aggregate TV programming from multiple networks are known as vMVPDs. They offer a subscription that allows for standalone access to the content.

How to navigate the two-way relationship between consumers and suppliers 

Previously, the relationship between brands and consumers was purely one-way and transactional—brands provided a good or service for which consumers paid. With more buying power, consumers are now able to advocate and critique brands through their networks. As a result, marketers have had to pay closer attention to consumer sentiments to ensure consumers’ expectations were being met, especially when it comes to brands supporting social causes.

SME Scarborough data reveals that 52.3 percent of American consumers buy products that give back. 36% more expect their brands to help social causes. Global marketers responded that diversity, equality, and inclusion are important aspects of their marketing campaigns. They also emphasize diversity and inclusion when ad content is purchased. Although marketers are prioritizing these efforts, consumers aren’t convinced: More than half (55%) of consumers feel as though brands are not making true progress when it comes to championing social causes.

Marketers have to establish trust with customers and let them know how brands live up to their social responsibility commitments. Authentic, consistent messaging through a mix of channels can help establish and fortify brands’ purpose to consumers, shedding light on direct actions that keep the brand’s promise. 

Influencer marketing and social media can amplify brand messaging

According to SME’s 2022 annual marketing report, 64% of global marketers agreed that social media is the most bankable channel, with many finding success on platforms such as Instagram and TikTok. The effectiveness of social channels in evangelizing brands and making clear their social causes is a key factor. They can also be combined with other media to amplify the message. 

To reach right people on social media, marketers might consider investing in influencer market. Though not necessarily a new channel, influencer marketing’s popularity has grown as consumers have sought more interpersonal connections, and global consumers rank it as a credible marketing tactic, along with recommendations from family and friends, branded websites, ads on TV, and TV program product placements.

Marketing strategies that use influencer marketing must be effective. Marketers need to identify people who share the same values as them. This gives influencer marketing campaigns authenticity and increases the likelihood that customers will interact with the content.

Safety for brands

Marketers should also consider the context within which they are seen, as this can have a negative impact on their brand promise. One example is the rise in hate speech online during the Asian pandemic. This was due to the xenophobic, harmful rhetoric about the COVID-19 viruses. However, the advertising industry remained unaffected by hate speech, and brands could be linked with it through an adjacent placement.

This means marketers need to have heightened awareness surrounding the content adjacent to their advertisements, which the overwhelming majority of respondents (85%) in this year’s annual marketing report stated. It is important for marketers to consider the impact of brand safety on their campaigns. By working with brand safety partners, publishers and ad tech providers to glean better insights into ad placement options, marketers can stay vigilant in keeping their brand reputation—and therefore promise—intact while meeting consumer demands.

Make the brand promise come true

Marketing professionals must be more personal in their messages if they want to establish deeper connections with consumers and improve brand loyalty. Marketers can foster deep consumer engagements by ensuring that they keep their promise to consumers to match consumer sentiments. They also need to differentiate themselves from other brands, use different social media channels, prioritize safety and leverage different social media channels.

Original version of this article: dmcny.com. 

Much has been said about the impact of streaming on the way audiences engage with TV, but the extent is no better exemplified than by the behavior of audiences in TV homes who don’t pay for cable or satellite programming. A specific subset of these homes, which rely on a digital antenna for free, over-the-air (OTA) programming, watch the most broadcast programming of all U.S. TV households, but that’s starting to change. 

The significant amount of broadcast TV viewing within these homes certainly isn’t surprising, given that’s what digital antennas provide access to. These former broadcast programs are now more connected and OTT content has become more popular. This is allowing them to balance their TV programming with sports and news.

OTA home viewers still see more broadcast programming that those who have broadband or cable plus, but they are less likely to be able to access it.¹Television households are now watching less TV than ever before (1:54 per person per day in 2017 vs 2:25 in 2018). They also watch streaming video in addition to their TV viewing. The fact is that OTA households now stream more content than viewers in homes with satellite or cable programming.

Despite the shifting behavior of viewers, the remarkable stability that this segment of U.S. television households enjoys is perhaps the most striking. Although the proportions of cable and broadband households has changed dramatically in the last few years, the OTA home percentage is still very steady. In fact, it’s actually increased.

Despite having a broadcast focus, audiences who watch OTA content are shifting to streaming, which is mirrored the changing viewing behavior of viewers in OTA homes. A recent survey by SME TV found that streaming content is moving to the forefront.²80% of OTA home viewers also say that they subscribe to a streaming provider. Over two-thirds (65%) of those who have access to both OTA and streaming content say they view more streaming than broadcast.

SMETV panel data indicates that OTA home without additional SVOD and virtual multichannel programming distributor (vMVPD), services is on the decline. These OTA-only households have a median age of 61, compared to 45 in those that receive SVOD or vMVPD and 49 with SVOD.

Many OTA households have always had to consider cost when streaming. In fact, half of those surveyed said that they watched ad-supported, free streaming services. This is twice as many TV viewers who watch other options such as satellite or cable. Just 70% of OTA audience members say they pay less than $100 per month to watch their television programming. But when asked about the features they look for most in TV service, OTA audiences rank “ad-free” and “ad skipping” at the bottom of their priority lists, presenting significant upside for brand advertisers.

Two key principles remain constant despite the evolution in TV viewing.

These stables provide stability and opportunities for the OTA marketplace, given what is known about OTA audiences. They are more likely to watch local news (both national and local), sport and daytime TV, than others, and their streaming consumptions are expanding. 

But all TV audiences love news and sports programming, which is where the opportunity is for broadcasters, largely because many audiences don’t know enough about the OTA options in their areas, or how to access them. Among the audiences who said they aren’t likely to buy a digital antenna, 35% said it was because they don’t know what channels are available to them. 60 percent of non-OTA audience members were asked if it would make sense to invest in an antenna if broadcast TV was available for free.

Notes

1. The cable plus home is one that allows you to view television programs via a satellite, cable or telco provider.
2. SME TV’s consumer survey was carried out in English only from March 9-24 2022 via an online survey. The survey was conducted on 1,500 U.S. adult 18+, who use TV in their homes.