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Navigating AI in
Marketing Mix Modeling:
Risk and Rewards

Discover how Artificial Intelligence is reshaping the marketing
measurement landscape and learn how to leverage that power
to optimize your Marketing Mix Modeling approach.

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Navigating AI in
Marketing Mix Modeling:
Risk and Rewards

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Learn more about…

The evolving AI trends in recent years and how perceptions have shifted, along with potential new opportunities

The pitfalls associated with AI if incorrectly applied within Marketing Mix Modeling

The essential framework for effective AI in marketing measurement  

More resources

Unleashing the Power
of Creator Content

Nielsen + Whalar: Predictive ROI accurately estimates what creators bring to the Mix

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CPG Marketing Mix Modeling Meta Analysis

Nielsen + TikTok: MMM accurately measures the impact of TikTok advertising

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Why long-term marketing drives business longevity

Understand which tactical investments produce the best returns in the long run

Read the insights

The post Navigating AI in Marketing Mix Modeling: Risk and Rewards appeared first on Nielsen.

Up until now, mobile ad IDs (MAIDs) and third-party cookies were used to connect the dots, at least across open digital platforms. But their days are coming to an end, and the transition continues to be hectic. What options do marketers have now?

Most marketers are betting on first-party data because it allows them to stand out from their competitors, maintain control over their data assets, and steer clear of privacy complications. But everyone uses different identifiers. Netflix knows you by your email address, Macy’s by your phone number, Delta by your SkyMiles number, Instagram by your handle, Xbox by your gamertag. A website you visit without logging in might still assign you a third-party cookie today or collect your IP address. 

For consistent, comprehensive and comparable audience measurement across platforms, marketers need a robust ID system with an identity graph designed specifically for measurement.

What’s an identity graph?

Consumers use many devices, apps and identifiers to interact with the world, and those interactions leave a steady trail, like snapshots in a photomosaic. Every snapshot tells only one fragment of the story, but put together, they produce a 360° portrait of who we are, our likes and dislikes, our interests and preferences, and—most crucially for marketers—what we might do next.

To put the pieces together, large advertisers, publishers and data providers have developed identity graphs: large databases where millions of devices, identifiers and their users are linked together to create unified customer and household profiles. They use those graphs for targeting and personalization, matching customers and prospects on a brand’s mailing list to a platform’s audience members. For example, Nielsen’s activation side of the business has a graph that focuses on targeting. 

Campaign activation isn’t the only reason to use an identity graph. Let’s examine why a reliable, independent and well-calibrated identity graph is essential for modern measurement.

What makes a measurement-grade identity graph different?

Not all identity graphs are focused on accurately representing the population at large. The data sources they use might be biased toward a certain geography, the users of a certain platform or just one type of device. Deduplicating records may not be a top priority either, as long as some matching can take place and ads end up in front of people.

But match rates aren’t everything. If measurement is the ultimate goal, statistical representation and deduplication are necessary to properly measure reach, frequency and other important campaign KPIs like return on ad spend (ROAS) or lead conversions. At Nielsen, when we load new data into our identity graph, we take great care to validate matches between devices, people and households against census data and our own people-based panels. As we learned earlier in our Need to Know series, carefully curated people-based panels are critical to calibrate big data.

How extensive is our data cleanup process? Every year, our systems ingest billions of identifiers and links from a wide variety of external data sources, but only 20% make it into the resolved identity graph. We use our people panels to calibrate these Big Data sets and ensure the accuracy of our audience assignments and graph clustering. As a result, the Nielsen Identity graph is optimized for the representativeness and accuracy needed for measurement.

How are marketers using the Nielsen identity graph?

Identity graphs are not built to stand alone. The Nielsen identity graph sits at the center of a comprehensive ID system that includes four distinct steps:

As we mentioned earlier in the article, Nielsen’s activation side of the business, Nielsen Marketing Cloud, has a person-level activation graph that uses many of the same sources as Nielsen’s measurement graph and shares the same resolution logic that delivers a deduplicated view of the audience. But instead of measurement, it’s engineered to drive campaign reach and personalization at scale. 

What are the privacy implications of a digital ID system?

Ingesting ad exposure and outcomes data from external sources can be a thorny proposition in today’s data privacy climate. Even when user consent has been secured, marketers are justifiably nervous about testing the limits of that consent by sharing customer data with outside partners. This is especially true in highly regulated industries like healthcare or financial services. Hash algorithms can help obscure sensitive identifiers like email addresses, but hashed IDs are considered personal identifiable information (PII) in some jurisdictions (like Europe), and they can’t always prevent bad actors from identifying the person behind the hashed ID anyway.

What’s the solution? At Nielsen, we’ve implemented a suite of data privacy and security processes to facilitate data collaboration (such as finding the overlap between an advertiser and a publisher dataset) without actually sharing sensitive information between data partners. For example, clean room integrations ensure data from Nielsen, our clients and our partners stay within their respective environments while still enabling measurement. Techniques like confidential computing and differential privacy allow for parties to work together without seeing each other’s data.

Privacy is a top priority for marketers and consumers. Any digital ID system you work with should take it seriously. 

Digital measurement beyond third-party cookies

Third-party cookies might be on their last leg, but marketers still need to make sense of their cross-platform campaigns. And they want to capitalize on new planning and targeting opportunities—like those unlocked by advanced audiences—to stay ahead of their competitors.

Perhaps more than ever, marketers need measurement partners that can help them connect the dots, and produce accurate and consistent audience and outcome metrics relevant to their business.

The post Need to Know: What’s an identity graph and why do marketers need them? appeared first on Nielsen.

Case study

Unleashing the Power of Creator Content

Nielsen + Whalar: Predictive ROI accurately estimates what creators bring to the Mix

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Case study

Unleashing the Power of Creator Content

Nielsen + Whalar: Predictive ROI accurately estimates what creators bring to the Mix

Contact us

Introduction

Measure the effectiveness of creator-specific campaigns

Whalar, a leading global creator company, specializes in unlocking the power of creators for brands in their marketing strategies. Whalar commissioned Nielsen to measure the incrementality and ROI of their creator-specific campaigns.

Objective

Quantify results quickly to maximize investments

The objective was to swiftly and accurately quantify expected ROI and Sales Impacts, with the end goal of optimizing media plans to maximize ROI potential from creator investments.

Challenge

Harness the power of Marketing Mix Modeling

Whalar sought a solution versatile enough to cover various categories, countries and brands of all sizes. Not only did they want to harness the power of a traditional Marketing Mix Modeling (MMM) study, but they also required a highly accurate source for insight into optimization prior to campaign launch.

Solution

Use predictive analytics to identify optimization opportunities

Nielsen introduced Predictive ROI (PROI), an advanced solution designed to provide rapid and cost-effective ROI insights, even for emerging media types like creator content. PROI harnessed the power of Compass Planner, Nielsen’s premier MMM normative database, employing media saturation curves and campaign data from prior MMM analyses to forecast ROI and gauge effectiveness.

By leveraging Nielsen’s unparalleled MMM benchmarks and utilizing the synergistic predictive tool, Whalar empowered clients to gain immediate visibility into the anticipated ROI of their media plans and uncover opportunities for optimization, all before the campaign launch.

Key findings

Key findings

$2.63

Strong ROAS

While the ROAS across the 6 measured campaigns ranged from $1.5 – $4.5, the average ROAS across the campaigns was $2.63.

9%

ROAS comparison

The average ROAS across the campaigns ($2.63) was only 9% different compared to total platform ROAS ($2.43) measured via a prior executed MMM. This reaffirmed earlier research by Nielsen, connecting the comparability of PROI results to MMM.

25%

Underinvestment in content creator campaigns

Historical execution levels were approximately 25% of saturation levels, indicating an underinvestment in content creator campaigns within advertiser marketing plans.

20%

Key performance drivers

Weeks on air and optimal weekly impressions emerged as pivotal drivers of campaign performance. An optimization scenario implemented on one of the campaigns revealed that doubling weekly support while maintaining the same number of weeks on air could increase ROAS by approximately 20%.

Results

Optimize quickly to maximize campaign performance

The study results presented a significant opportunity for advertisers to enhance their ROIs by optimizing weekly paid media weight levels and the length of time on air, as well as reallocating resources to maximize the potential of their creator marketing campaigns.

How it works

PROI, Nielsen’s leading advanced media performance measurement solution, enabled Whalar to engage in sophisticated budget allocation and planning through the use of machine learning algorithms to estimate the outcome of media plans for their advertisers’ brands in their markets. PROI unveiled an unmatched global scale with benchmarks across 5K+ models, 25K+ curves, and hundreds of categories in 50+ countries. Its advanced modeling capabilities and validation ensure accuracy and reliability, even with less data granularity, for Whalar’s multifaceted campaign.

Conclusion

Improve campaign effectiveness with Nielsen’s predictive analytics

Nielsen’s PROI solution demonstrated its effectiveness in providing rapid and cost-effective ROI insights for creator marketing campaigns. By leveraging MMM principles and historical data, the study shed light on the untapped potential of content creator campaigns, presenting advertisers with actionable recommendations to optimize their investments.

The biggest challenge facing the Creator Economy is determining the impact on ROI, quickly, and at scale. Since MMM isn’t always an option, Nielsen’s PROI solution is perfect for Whalar’s brand partners. It employs methodology by tapping into Nielsen’s vast MMM database to highlight the significant impact of Whalar’s creator campaigns.

Gaz Alushi | Whalar
President of Measurement and Analytics

Want to talk with our team of experts?

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Want to talk with our team of experts?

Contact us

Want to talk with our team of experts?

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The post Unleashing the power of creator content appeared first on Nielsen.

As one of Europe’s leading operators and a world leader in converged broadband, video and mobile communications, Liberty Global needed an entertainment metadata powerhouse to help create its next-generation entertainment platform, Horizon 4, as it rolled out across 85 million subscribers. Nielsen’s Gracenote first partnered on metadata for Liberty Global’s UK business, Virgin Media, in 2010, and has gone on to power metadata solutions across the operator’s markets, completing its support for Horizon 4 in early 2023. 

Download the case study to learn how Liberty Global and Gracenote are aggregating metadata to deliver the next chapter in immersive, content-led visual experiences. 

The post Liberty Global’s metadata journey to super-aggregation with Gracenote appeared first on Nielsen.

There is no shortchanging the complexity of today’s media industry, or the impact that the ever-expanding range of choice has on effective cross-media measurement. That complexity, however, doesn’t grant marketers any leeway when it comes to delivering on business objectives. In reality, we know that increased complexity simply amplifies accountability.

And managing complexity isn’t enough. Marketers need to find ways to keep things simple, streamlined and clear—oftentimes with reduced budgets and fewer resources. Marketers are on the hook to deliver for their businesses and justify their investments along the way. In that way, the complexity of today’s media landscape has become both a unique and a universal challenge.

The proliferation and growth of new media channels presents one of the most pressing difficulties in the quest for effective cross-media measurement, especially as audiences increase their connected TV (CTV)¹ usage, which provides access to streaming services. Streaming may be the most top-of-mind today, but the future of cross-media measurement will need to be adaptive to many new channels as they emerge.

Today, however, marketers know that streaming is where the audience is, and they’re adjusting their marketing plans accordingly. In fact, the survey supporting the 2023 Nielsen Annual Marketing Report found that 45% of ad budgets globally, on average, are shifting to CTV channels. The flipside, however, is that marketers don’t yet see the value in their CTV spending, as only 49% of marketers say CTV is either very or extremely effective.

Given the appeal of streaming with audiences, it makes sense that marketers are leaning in—even though the perceived effectiveness is currently low. When any new channel gains audiences, marketers need to balance between spending where they know the audience is and the risk associated with learning what they need to know to prove their investment there.

But measuring audiences across the streaming landscape won’t be marketers’ last hurdle. It’s simply the one they’re facing now. Widespread connectivity will continue opening the doors to new options, all of which will have their own measurement needs. That’s where the real cross-media measurement challenge is.

Tools and solutions that measure engagement at the channel level have never been able to provide marketers with a holistic view of how individual people are engaging across all channels. Historically, the road to cross-media measurement has relied on marketers’ ability to aggregate channel measurement and then surmise what a complete consumer journey looked like. Channel proliferation and increasing privacy regulations make that an increasingly tall order, and sentiment from global marketers reflects the increasing difficulty: Only 50%, on average, say they’re extremely or very confident in their ability to measure for full-funnel ROI across channels.

Confidence aside, marketers know they need to address the challenge, as 71% overwhelmingly acknowledge the importance of arriving at a single view of audience engagement across channels (i.e., comparable, deduplicated measurement).

If marketers truly desire that single view of audience engagement across every touchpoint, they’ll need to abandon any tool or solution that isn’t complementary from a data perspective. Marketers should consider leveraging as few tools as possible to arrive at that single view of audience engagement. Undoubtedly, a shift like this could be unsettling for many. But as marketing dollars span an increasing number of channels, disparate datasets from channel-specific tools will require an increasing amount of manual reconciling.

With confidence in arriving at full-funnel ROI measurement at relatively low levels today, an increasingly rich media landscape in the years ahead suggests the need for transformative thinking based on data and solutions that are both trusted and channel agnostic. With audiences adding and seamlessly switching from channel to channel, it makes sense that measurement should be able to do the same.

For additional insight, download the 2023 Nielsen Annual Marketing Report.

Note

Connected TV (CTV) refers to any television that is connected to the internet. The most common use case is to stream video content.

The post Audiences transcend marketing channels; measurement can do the same appeared first on Nielsen.

Marketers aren’t confident in channel-level measurement

Across traditional and digital media, marketers have 15 different channels¹ at their disposal. Despite this fragmentation, just under 70% of the global marketers surveyed for the 2023 Nielsen Annual Marketing Report believe they have the right marketing technology to measure the aggregate returns on their investment. The flipside, however, is that their stated confidence in ROI measurement at the individual channel level is much lower—which stands in stark contrast to their full-funnel marketing confidence.

The gap between holistic and channel-level confidence highlights a primary flaw in leveraging channel-specific marketing tools to assess overall marketing effectiveness. Arriving at a single metric for reach and frequency across channels is incredibly difficult, and sentiment from global marketers underscores the inherent complexities, especially across many of the digital channels that marketers are investing more in.

Even when believing in their martech, global marketers acknowledge the problem, with only 54%, on average, expressing confidence in their full-funnel media measurement capabilities (i.e., end-to-end measurement). Confidence is slightly higher in EMEA and slightly lower in Asia-Pacific.

Given the challenges associated with cross-media ROI measurement, such as quality audience data and reduced use of existing marketing technology, 52% of global marketers, on average, are currently solely focused on reach and frequency metrics.

Multiple tools widen process gaps and information silos

To keep up with the growing media options, many marketers report using an array of tools and solutions to measure their campaign performance. This isn’t surprising, but it can complicate the road to holistic measurement. The more tools you work with, the more datasets your systems—and people—have to be ready to ingest. And each one takes time. Add to that the historically different methodologies for linear and digital measurement and it’s clear to see the need and difficulty of arriving at comparable, deduplicated metrics. Globally, 62% of marketers, on average, use multiple measurement tools for their cross-media measurement. Comparatively, just 34% report using one.

Globally, marketers know how important comparable metrics are in understanding the effectiveness of their ad spending. Amid an increasingly rich media landscape that will continue to offer new experiences in the years ahead, marketers should consider tools, solutions and metrics that are media-agnostic to achieve their long-term measurement—and business—objectives. Without a comprehensive view of the audience, marketers won’t have a complete view of campaign performance.

For additional insights, download the 2023 Nielsen Annual Marketing Report.

Note

¹ Traditional: Radio, linear TV, print, direct mail, OOH, cinema. Digital: Email, search, social media, podcast, digital display, digital video, OTT/CTV, streaming audio, native ads.

The post Channel overload is hurting full-funnel marketing effectiveness and ROI confidence appeared first on Nielsen.

To do their jobs, marketers need information that’s representative of people, not devices or digital signals. However, only 23% of the marketers surveyed for Nielsen’s 2023 Annual Marketing Report strongly agree that they have the quality audience data they need to get the most out of their media budgets. In Asia-Pacific and Europe, the Middle East and Africa, it drops to 21%.

Well aware of how audiences are engaging with media, marketers continue increasing their spending across digital channels, especially CTV, social media and digital video. Without quality audience data, however, many will lack insight into whether they’re reaching the right audiences—the primary cross-media measurement metric of 52% of marketers surveyed for Nielsen’s 2023 Annual Marketing Report. And when we look at where audiences are spending most of their time, time with digital channels continues to grow. 

In fourth-quarter 2022, for example, U.S. audiences spent an average of five hours and 13 minutes per day² accessing media with their digital devices³, accounting for more than 52% of their daily time with media.

The incredible growth of streaming use adds yet another set of data to the cross-media scenario, and some companies are using the data from smart TVs for measurement purposes. There is no discounting the importance of this data, but by itself, this data only tells us what’s on the screen. Without knowing who’s engaged with what’s on the screen, marketers don’t have ample information to make critical ad spending decisions. In fact, a Nielsen study conducted at the end of 2022 illustrates the shortcomings of smart TV data as a measurement source. In short, smart TV data can’t accurately tell you how many are watching. 

When combined with information that details representative, person-level behavior, smart TV data sets provide significant scale to the science of audience measurement. Importantly, the World Federation of Advertisers, the Association of National Advertisers and the comparable organizations in over 30 other nations believe the future of audience measurement should include a combination of quality panels and big data.

The customer has always been the North Star for marketers, and the growing number of media options doesn’t change that. It does, however, place increasing pressure on marketers’ ability to engage with them, especially when there’s a gap between digital signals and actual people. Bridging that gap will be critical as device and channel fragmentation increase. The lack of demographic information in big data highlights the importance of representative, person-level behavior in any measurement solution. After all, without the audience, it’s just data.

For additional insight, download the 2023 Nielsen Annual Marketing Report.

Notes

1. World Population Prospects Report
2. Nielsen National TV Panel
3. Connected TV devices, internet on a computer, app/web use via smartphone, app/web use via tablet

The post As media options proliferate, quality audience data is the key to delivering marketing impact appeared first on Nielsen.

When it comes to brand lift benchmarks like awareness and purchase intent, recall is even slightly more important than a person’s baseline awareness for a brand. In looking at the five key drivers and baseline awareness, brand recall influences 38.7% of brand lift in emerging media; baseline awareness comes in second at 37.5%.

The value of tracking brand recall in emerging channels

Understanding the importance of brand recall in emerging media channels comes at an important time, as global marketers continue to increase their ad spending across digital channels, with social media, native advertising and podcasts leading the way. According to the global survey Nielsen fielded to support our 2023 Annual Marketing Report, global marketers plan to increase their spending across these three media types as follows:

• Social media: 59% planned increase
• Native advertising: 48% planned increase
• Podcasts: 38% planned increase

These planned increases reflect growing audience engagement with digital channels and the fact that global marketers continue to focus on brand awareness and new customer acquisition—a trend that we’ve seen hold steady in each of the annual marketing reports that Nielsen has produced since 2020.

Emerging media’s role in driving overall brand lift

For brands, leveraging these emerging marketing channels can be a gamechanger when the goal is raising awareness. Advertisements in podcasts, for example, have the potential to boost brand awareness by 13 percentage points¹. From a brand awareness perspective, podcast advertising touts an aided recall rate of 71%, significantly higher than the 50% associated with people who aren’t exposed to an ad.

Podcasts, like influencers, offer brands the opportunity to convey their messages through an industry voice instead of their own, which speaks to the uniqueness of these channels. From a brand awareness standpoint, however, Nielsen Podcast Ad Effectiveness data shows that host-read ads perform just slightly better than non-host-read ads. Within the podcast space, host-read ads have a bigger impact in mid- and lower-funnel activations.

Influencer marketing and branded content present similar opportunity, as they have the potential to improve brand awareness by nine and 10 percentage points², respectively. From a brand awareness perspective, influencer marketing boasts an aided recall rate of 79%, notably higher than the 62% unaided recall rate. Similarly, branded content touts an aided recall rate of 81%, significantly higher than the 63% unaided recall rate.

Despite the economic headwinds at the start of the year, nearly 70% of the global marketers surveyed for this year’s annual marketing report expect their budgets to increase. And with a focus on awareness and customer acquisition, marketers are focused on channels that are attracting larger audiences. In the U.S. for example, marketers spent $43.1 billion³ on social media last year, up from just $20.6 billion a year earlier. By tracking brand recall performance, you’re setting up the rest of your funnel up for success. And by understanding emerging media’s role in delivering brand recall and overall brand lift, you have a sharper sense of how to widen your mix and use each channel to their best advantage.

For additional insights, download our 2023 Brand Lift Report: Building Brands with Emerging Media.

Notes

 ¹ Nielsen podcast brand impact norms database, Q4 2022
 ² Nielsen branded content impact norms database, 2018-2022
 ³ Nielsen Ad Intel

The post In emerging media, brand recall is the biggest driver of lift appeared first on Nielsen.

Environmental drivers are outside of a marketer’s control and are market-specific—like competitive landscape and consumer dynamics—but they nevertheless have an impact on ad performance. Look to these drivers of ROI to unlock insights that can lift performance.

Top Environmental ROI drivers

Brand size and category dynamics
The larger the brand and the larger the category, the more opportunity there is to drive incremental purchase through effective marketing and media. In fact, Nielsen Compass data has found large brands typically have media ROIs that are about 3.5X those of small brands.

For marketers managing small brands this means that, while bigger brands will have an advantage, there is also tremendous value in investing in the growth of smaller brands, as ROIs will grow in line with the brand.

Other aspects to consider are the level of competitive activity (media landscape) and elasticity of consumption (consumer demand), both of which can impact cost and ROI. Highly-competitive categories, for example, might produce lower ROI since there is more competition for the same volume, driving up costs. Categories with inelastic consumption, or a more fixed consumer demand, like durables or toilet paper, face similar struggles in crowded markets. On the other hand, more elastic categories like snacks or beverages provide opportunities for increased consumer demand and, in turn, increased sales and higher ROI.

Media environment dynamics
While marketers can do things to manage cost in terms of channel optimization, variations in media cost by geographic market can throw a wrench into even the most carefully-planned budget. Media channel penetration, effectiveness and even consumer viewing preferences can vary from market to market, all affecting media cost and potential returns.

The average cost per impression in some markets, for instance, can be up to 7X higher than other markets for the exact same tactic¹. And in markets with heavy viewership on ad-free platforms, average costs for advertising can surge substantially due to limited supply.

Market Economic Opportunity
ROI can also be impacted by the economic opportunity afforded by a particular geographic location. Countries with larger populations, higher gross domestic product (GDP) and lower unemployment are more likely to produce higher ROIs. For example, the U.S. is one of only 17 countries with a GDP of $1 trillion or more, and when combined with an unemployment rate below 5%, ROI potential is higher in the U.S. than in regions that have smaller economies or higher unemployment. Importantly, the magnitude of difference in these metrics will impact potential returns from market to market. So, while the U.S. and Indonesia both have GDP over $1 trillion, the U.S. economy is more than 19X larger, which is a significant difference when measuring ad spend impact.

Understanding the impact that environmental ROI drivers have and properly accounting for that leads to more accurate ROI estimates. Nielsen predictive ROI (PROI) data found that data-driven predictions were up to 65% more accurate than using norms and benchmarks alone.

Because environmental ROI drivers change from market to market, accounting for their impact when predicting outcomes—and accurately measuring campaign performance—are critical for advertisers. Those able to identify top ROI drivers for their markets and adjust ad spend accordingly see impressive results. The Nielsen Compass Database shows that top markets can have returns that are 3-6X higher than bottom markets for the same tactic, and at the regional level, the difference between a high and low performing region can be up to 85%.

Notes:

1. Nielsen Compass database

The post Environmental ROI drivers: Unlocking insights to lift performance appeared first on Nielsen.

The Nielsen Compass Database shows a significant difference in return on advertising spend by market and region. Top markets can have returns that are 3-6X higher than bottom markets for the same tactic, and at the regional level, the difference between a high and low performing region can be up to 85%.

In general, ROI drivers fall into two categories: executional and environmental. Executional ROI drivers are what marketers can do to optimize ad performance through data-driven decision-making, like budget planning, media channel allocation and in-flight campaign optimization. Environmental factors are the market-specific drivers, like competitive landscape and consumer habits, outside of a marketer’s control that nevertheless have an impact on ad performance. 

With so much variation in media effectiveness across situations, marketers need to understand major drivers of ROI at the market level to unlock insights that can lift performance. 

Top executional ROI drivers

Media planning excellence 

Every successful media campaign starts with a solid foundation. Media planning and strategy are essential elements in any campaign, but many marketers fail to realize the impact planning can have on ROI outcomes. Balancing the amount of media support needed with cost and reach is tricky, but brands that are able to dial in optimal levels for each will maximize return on ad spend while lowering overall media costs. 

Amount 
When it comes to ad spend, most marketers are erring on the side of caution, and timidity is limiting ROI opportunities. A Nielsen study of media plans found that only 25% of channel-level investments were too high to maximize ROI, and within this group, the median overspend amount was 32%. And while reducing spend would improve channel ROI by a modest 4%, brands would also see significantly reduced sales volume due to a drop in ad-driven sales.

Underspending, on the other hand, is a significant challenge. Nielsen’s 2022 ROI Report found that 50% of planned media channel investments were too low to achieve maximum ROI. The median underinvestment level was 52%—a large gap that most brands won’t be able to close in a single planning cycle. But brands that do close the gap can improve ROI by a median of 50.3%.

Cost
When it comes to minimizing cost, it’s not as simple as choosing the least-expensive media channels, as there is often variation on both cost and performance within even a single channel. Digital video, for example, has a typical range of variation in cost of about 2-3X within a country, according to Nielsen data.

If a premium digital video ad is more expensive than a non-premium ad, for example, but the premium ad has a greater positive impact on ROI, then the higher upfront cost is money well spent. To determine which channels provide the best value and drive the most ROI per market, advertisers need to be able to measure and attribute ROI granulary, so they can optimize channels and tactics for each region.

Targeting
Getting your ad in front of the most receptive audience is critical.  Reach and audience composition metrics don’t just help marketers understand who they’re reaching, they can also help them drive better sales outcomes. 

A recent analysis using Nielsen Digital Ad Ratings found that ad partners that served fewer ads to their target audience saw an average ROI of $0.25 per $1 spend, while those who delivered more ads to their target audience realized an average ROI of $2.60 per $1 spent. 

Messaging and creative excellence

In a media landscape where consumers have more choices than ever before, staying top-of-mind with consumers often comes down to creative excellence. According to a recent Nielsen study commissioned by Google, ads perform best when they draw attention, feature the brand, connect personally with audiences and direct them to take action. Campaigns that delivered ads following those principles saw a 30% higher sales lift than those that didn’t. And the more message and platform testing a brand does will likely increase positive returns.

The complexity of executional ROI drivers and how they change from brand to brand and channel to channel make it critical for advertisers to be able to customize their media plans to their unique situations. And with so many factors affecting campaign execution, the more customization of inputs that marketers consider, the more accurate their ROI projections can be. In fact, Nielsen predictive ROI (PROI) data found that data-driven predictions were up to 65% more accurate than using norms and benchmarks alone.

The post Executional ROI drivers: Optimizing campaigns to maximize returns appeared first on Nielsen.