UK publishers calculate the profit brands miss out on

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British publishers' marketing group Newsworks has launched a new campaign to tell brands about the £3 billion ($5.45 billion) profit they're missing out on.

New effectiveness research, based on a Planning for Profit study undertaken by Benchmarketing, shows what brands are losing by under-utilising print and digital newsmedia.

The study separates out digital newsbrands from general online display for the first time, giving a much clearer picture of the effectiveness of both print and digital newsbrands and the impact of context in the online environment.

Even at current modest levels of investment, digital newsbrands deliver strong profit returns but the group says there is a much greater opportunity for advertisers to optimise spend. Boosting investment in digital newsbrands would result in higher profit levels, up to as much as £300 million.

Looking at print, cuts to investment mean that almost all categories are currently operating at the lowest levels of short-term campaign profitability. The research shows that increasing print newsbrands' share of budget to the optimum level would more than double current campaign profit return on investment.

In a bid to move away from a widespread focus on sales as a key metric, this study concentrates on the primary indicator of marketing success, profitability. By taking into account the media investment and cost of goods or services, it provides a clearer guide to advertising payback than simply looking at revenue.

Newsworks chief executive Vanessa Clifford says the "unique" approach to measurement means most UK advertisers will be able to see how individual categories are performing and how to rebalance ad budgets to achieve full profit potential.

As well as conducting a meta-analysis of 684 econometric models across a number of different sectors, Benchmarketing also developed five 'super-categories' as distinct segments, including 'everyday pickups' and 'shiny new things'. The super-categories cover 86 per cent of the total UK advertising market and more than 90 per cent of advertised brands. In addition, there is also in-depth category analysis for four individual categories:

Supermarkets: Profits could be increased by 60 per cent if spend in print newsbrands was raised by a minimum of four and up to 11 percentage points. For digital newsbrands, allocating a 2.1 per cent share of budget is recommended as a minimum;

Finance: Clients are missing out on £264 million potential profit by underinvesting in print and digital newsbrands. For maximum profit return, the average recommendation for print newsbrands' share is 11.9 per cent of overall campaign spend (compared to the current 7.2 per cent), while for digital newsbrands it stands at 5.6 per cent (compared to the current 4.1 per cent);

Motors: Clients are missing out on £56 million potential profit through underinvesting in newbrands, particularly print. With a current average spend of four per cent of overall media budgets, print newsbrands' recommended minimum share is six per cent

Retail: Boosting print's share of media spend to an average 21 per cent of total campaign investment (from just under 14.4 per cent) and digital newsbrands' to 3.7 per cent (from 1.7 per cent) is Benchmarketing's recommendation. Overall, the category is missing out on £1.34 billion potential profit

Benchmarketing managing director Sally Dickerson says the project is an "industry first", assessing newsbrands' role in overall campaign effectiveness, giving business effect estimates comparable with other channels and, significantly, isolating newsbrands' digital spend as a structural factor.

For more, visit: http://effectiveness.newsworks.org.uk/planning-for-profit/

Planning for Profit was conducted by Benchmarketing (part of Omnicom Media Group) and comprised a meta-analysis of data from 684 econometric models built between 2011 and 2017. The missing profit is calculated first by examining the current percentage of budget delivered to newsbrands and the resulting profit return on investment (PROI). The optimum percentage of budget to be allocated to newsbrands in order to maximise profitability from advertising spend is calculated, and the profit lost as a result of sub-optimal media allocation is estimated.

As an example, here is a chart for the supermarket category:

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