Media Mix Analysis Suggests Spending More on Digital, But Not Going Too Far

April 5, 2021

Kantar Global Media Cost Effectiveness April2021Getting the right balance of online and offline media in a campaign can be difficult. An analysis of multimedia campaigns in Kantar’s CrossMedia database shows that although investment in offline media is still high, the investment is not that cost-effective.

It appears that advertisers’ confidence in whether they have the right media mix has decreased, with Kantar’s 2020 data showing that half (51%) are not confident they have the right mix. This is up from 44% who felt the same way in 2019.

The data also shows that advertisers may be over-invested in offline media. Offline (including TV, out-of-home and radio) accounted for 74% of global investment in the multichannel campaigns tracked last year. This is even with the across-the-board decrease in ad spend on traditional media experienced last year, largely because of the pandemic.

By comparison, even though spending on internet advertising grew last year, online media only accounted for 26% of global media investment in the multichannel campaigns analyzed. This does, however, represent an increase of 5 percentage points in share of investment over 2019.

Offline Less Cost-Effective

What is clear from Kantar’s analysis is that the investment in offline media is not as cost-effective as online media. While offline currently accounts for three-quarters of investment, it only results in 57% share of contribution to brand metrics.

Looking closer at specific offline media, TV is the least cost-effective, per Kantar data cited by WARC. In 2020, TV accounted for one-third of total media investment in the campaigns analyzed. (Of note, other research from WARC shows that the bigger the campaign budget available, the larger the share of the budget is allocated to TV.) Nevertheless, this investment only results in a 16% share of contribution to brand metrics.

Out-of-home (OOH), although still not cost-effective — accounting for 9% of investment and 6% of brand metrics — is more cost-effective than in 2019. Kantar notes that this is due to the decreased share of investment within a campaign and not to the overall decline in investment in OOH last year, “as OOH was present in a similar number of campaigns as the previous year.”

Radio also contributes to offline media not being cost-effective. In 2020, it accounted for 20% of investment but only 5% of campaign impact.

Getting the Mix Right

At its current share of investment (26%), online is considered to be quite cost-effective, accounting for 43% of contribution towards brand metrics. However, it appears that digital’s cost-effectiveness is due in part to its comparatively low share of investment.

This means that as the share of investment in online grows, its cost-effectiveness decreases. This can be seen in the relative cost-effectiveness index. That 5 percentage point year-over-year increase in share of investment online experienced in 2020 resulted in its cost-effectiveness index falling from 199 in 2019 to 167 in 2020. Likewise, as the share of investment in offline media decreased between 2019 and 2020, its relative cost-effectiveness index increased (74 to 77, respectively). In fact, Kantar says that “if TV and digital have a similar share of spend, TV is actually more likely to be cost-effective.”

What it comes down to, according to Kantar, is a need for a more balanced investment across online and offline channels. Instead of putting most of their eggs in one basket, “greater online to offline equilibrium will help advertisers get better value for money for their campaigns.” In essence: “the key is spending proportionally more on online, without going too far.”

About the Data: Findings are based on an analysis of multimedia campaigns in Kantar’s CrossMedia database.

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