Marketing mix modelling platform Mutinex’s latest Marketing Return-On-Investment (MROI) Index Report reveals that budget uncertainty is the new normal.
Marketers are adapting by shifting large chunks of budget towards digital delivery, but Mutinex warns that marketers must keep one eye to effectiveness to avoid revenue erosion.
The report analyses marketing investment data from Australian enterprise brands, up to and including October 2024, and highlights the emergence of new investment strategies that have seen an average of 18% of total budgets reallocated in the last two years, and as much as 45%.
The trend has seen investment in programmatic and digital channels surge at the expense of less agile traditional channels, with linear TV’s average share of spend dropping from 32% to 25% YoY.
In addition to recommending that marketers recalibrate their media strategies and align with seeking greater ROI efficiencies to beware of dwindling effectiveness, leading to a drop in revenue.
Mutinex chief revenue officer Danny Bass said looking for efficiencies on a channel-by-channel basis is a noble pursuit, especially when budgets are tight.
“But what looks like a cost-saving on paper, doesn’t always translate into a better bottom line," Bass said.
The report suggests that the reason why investments are shifting to digital and programmatic is it allows marketers to drive reach with more specific audiences at a lower cost, and say “we’re doing more with less”.
But a closer look at key results, including revenue drivers,reveals some orange flags to this approach.
On linear TV, for example: average share of spend dropped 7% YoY, but average share of revenue fell by 5%.
And considering TV’s sizable contribution to overall revenue, landing the efficiency has arguably cost the bottom line quite a lot.
Mutinex head of marketing science Will Marks said marketers ignore the long-term positive revenue effects of a memorable above the line campaign at their own peril.
”When changing investment plans, wasted spend should be the first area of focus. However the end goal is growth and marketers need to ensure a plan hits revenue targets above and beyond efficiency goals," Marks said.
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