IPA: spending 40-50% media on digital is optimal

Advertisers have more success with campaigns which mix their media spend online and offline, a research committee supported by the IPA has found.

The Advertising Research (ARC), was launched by Magic Numbers’ founder Dr Grace Kite with the support of the IPA, discovered revenue per £1 adspend was highest when 40%- 50% of the budget was spent online.

Its analysis also found that the optimum budget split for offline and online advertising in a campaign was 55% spend offline and 45% spend online.

According to GroupM Data, the UK’s current overall advertising budget split is 52% offline and 48% online.

The report found that media mixes that use half online channels had highest ROI regardless of the size of the advertiser’s business, and in different categories.

ARC data found a business with £50m or more turnover received 40p more revenue per £1 spent on advertising when it combined online and offline advertising.

The same database discovered that across categories if up to 30% of ad budget is spent online, category ROI increased as that budget increased.

The findings come as the effectiveness of focussing too heavily on online advertising, particularly social media, has been questioned by industry leaders.

The report mentioned the risks of online shares of budget going too high as well as too low.

In particular, it highlighted that in between 2005 and 2016 a significant change in online investment going “too high” appeared to negatively impact its effectiveness.

However, as online budgets became more stable after 2016, “new equilibrium” was reached as advertisers became more confident about how online channels fitted into holistic advertising plans and ROIs grew.

The ARC’s findings were released as part of this week’s IPA EffWorks Conference. ARC  collected effectiveness data from 343 “typical” non-award-winning campaigns which made up around £5bn of adspend.