Marketers aren't spending enough on ads, researcher says

The political-season barrage against pharma advertising contends that drug companies are spending too much money on ads. But according to one researcher, they're not spending nearly enough.

Advertising Research Foundation CEO Gayle Fuguitt

Fact is, consumers are running across more advertising than ever, so advertisers really need to ratchet up spending just to stay level, says Gayle Fuguitt, CEO of the Advertising Research Foundation--and more platforms are better.

"If you're only buying television, you should buy television plus digital which will actually create an exponential effect," Fuguitt said, adding, "If you look at how fast consumers' consumption of advertising across all these platforms has changed, the fact that advertising spending is only increasing 4% (annually) isn't really keeping up with the pace of change of consumer consumption."

In new findings from the ARF's "How Advertising Works Today" project, advertisers got an average 20% better return when a TV buy was supplemented by digital. That means every $1 spent on TV averaged $1.20 in return on investment when digital was also used on the campaign, Fuguitt said. Even better news was that well-targeted combined TV and digital platform campaigns returned an average 60% gain, or $1.60 for every $1 spent. The ARF study included 1,000 brands--including pharma stalwart Pfizer ($PFE)--looking at 5,000 different campaigns that totaled $375 billion in ad spending.

Pharma specifically might be leaving too much money on the table, Fuguitt said.

"For lower involvement categories like CPG, there is a pretty set standard response to social media. But what we find that in terms of search or social media--not banner ads, but more engaging communications--consumers spend much more time in categories like pharma, financial services, health and wellness and entertainment," Fuguitt said, adding, "What that leads to is a much higher ROI for those industries in certain formats in online media."

Well-targeted and carefully planned media buying was found to be important, as Fuguitt noted in the 60% ROI gain for good buys. While adding more advertising platforms was found to be definitively more effective, simply placing more of the same ads--that is, just increasing frequency--had the opposite effect. In the case of online banner ads, for instance, once a consumer sees the same brand 40 times or more within a month, sales start to decline, the study found, with negative perceptions cropping up long before those 40 views.

Creative was another important factor in overall ad effectiveness, the study found, with creative found to contribute 75% of an ad's effectiveness. However, that doesn't mean every ad execution or campaign has to be a brilliant big idea. Consistency in creative with similar messages, tones and images across different platforms is the key to improved effectiveness, Fuguitt said.

Her advice to pharma? Spend more, but spend smarter. That means creating a consistent strategy and creative across platforms that is customized for that platform--and be careful about frequency. That's when more spending makes sense.

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