Imagine starting a magnificent jigsaw puzzle, carefully connecting each piece. But just as the final pieces are within reach you abandon it, leaving it incomplete.
In today’s economic climate, we’re seeing this again and again in the ad industry. Advertisers often face pressure to focus only on short-term results in their media investments. However, a new report by Google and WARC — based on analyses from industry think tanks — reveals that marketers who look primarily at short-term gains could be missing out on as much as half of their potential returns.1
It’s like abandoning that puzzle. You’ve invested time and effort, but you’ll never experience the satisfaction of seeing the full picture.
How marketers are missing out on half their ROI
Many advertisers are optimising their media investments with a short-term, performance-driven focus. They use it as the north star for their whole marketing budget, even for their branding campaigns with long-term goals.
The new report taps into long-term studies by Nielsen, commissioned by Google, to analyse media investments from different European brands. The data shows that the returns on media investments in the first four months are equal to the returns across the subsequent 20 months:
Unfortunately, those 20 months of returns tend to go completely unnoticed. Just think: you have no idea how much value your marketing investments are driving. And neither does your CMO. This highlights the need for a more holistic approach to measure the true impact of your marketing efforts.
This analysis aligns with other research showing that advertisers typically see an average short-term profit ROI of £1.87 for each £1 of investment. When the sustained effects are measured, this figure increases to £4.11.
Traditional attribution models, however, struggle to capture the long-term effects of brand building. That’s why tracking brand metrics like awareness and consideration over time is essential.
The solution: adopting a modern measurement framework. Marketing mix modelling (MMM), in particular, can help measure the impact of upper- and lower-funnel activities more holistically. It brings additional insights to the attribution results by filling in the gaps that usually prevent digital marketers from having a more comprehensive view of their marketing returns.
Optimising media spend for short-term and long-term gains
Finding the optimal balance between investment in upper funnel (brand building) and lower funnel (performance) activities can be a challenge for marketers. That’s why the Google and WARC study outlined the ideal split for media spend, based on an analysis by Ipsos MMA — an Ipsos subsidiary specialised in marketing performance measurement.
Ipsos MMA reviewed the e-commerce ROI from different European brands and suggests that the sweet spot for media investment is found in dedicating between 50% and 60% of marketing spend to brand building.2 This leaves 40-50% for performance-related tactics,3 such as display ads and paid advertising.
When pizza chain Domino’s shifted their YouTube strategy to run brand awareness campaigns concurrently with performance campaigns they identified a 45% increase in overall ROI from the video platform.
“Previously, we had considered those two campaign types separately,” explains Sarah Barron, CMO U.K. & Ireland for Domino’s. “But the new findings were illuminating — we were able to see proof that they are mutually reinforcing.”
It’s important to recognise that maximising media ROI isn’t simply about shifting budget allocations.
Lower funnel activities should ideally be demand-led. This means having an agile budgeting strategy in place to tap into new and unexpected demand for your product or service, even if initial advertising goals are met. This allows you to capitalise on all demand generated by your upper funnel brand building efforts, such as Display and YouTube ads.
And research shows that investing in brand awareness through upper and mid-funnel marketing not only drives long-term growth, but also has a tangible impact on the bottom line. A Nielsen study for Google featured in the new research shows that a 1% increase in brand awareness leads to a 0.4% increase in short-term sales and a 0.6% increase in long-term sales.4
A marketing plan for better ROI in 2025
It’s clear that marketing efforts and media spend have a much bigger impact on a business’ bottom line than most people realise. That’s why measuring media effectiveness should be a top priority for marketers in 2025:
- Strive for balance by aiming for a 50-60% allocation to brand building activities, with 40-50% on performance tactics.
- Implement long-term measurement solutions, like MMMs, to capture a more complete ROI picture. Then ensure senior leadership and finance decision-makers know about the long-term power of this media spend.
- Maintain flexibility and keep lower-funnel investments demand-led, while investing in upper and mid-funnel efforts to drive sustainable growth.
Good things come to those who wait. Or, at least, to those who understand the long-term impact of brand marketing.
Taken from: Think with Google