Shiny new things

Overview

Clients in this category invested around £3.8 billion in media during 2017. Overall digital spending for ‘shiny new things’ brands has increased from 30% in 2013 to almost 50% in 2017. TV and print newspapers have been the main casualties of the digital switch.

Benchmarketing’s analysis shows that, although all cases include some newsbrands in the media mix, low spending in these channels is harming the profit return from the campaign. This results in lower payback for the entire campaign and diminishing returns from overinvestment in digital media.

To maximise campaign PROI for brands in the ‘shiny new things’ super-category, Benchmarketing recommend that an average 16.8% of the total media budget is allocated to print newspapers, while maintaining digital newsbrands’ share at 2%.

Clients are losing out on over £1.4 billion potential profit through underinvesting in print newsbrands.

16.8%
Print newsbrands' minimum recommended share of budget
2%
Digital newsbrands' minimum recommended share of budget

Adspend patterns

The total spend allocated to digital display, video and search in the ‘shiny new things’ super-category was 49.5% in 2017. Digital display alone accounted for a third of budgets, although there do seem to be some signs that growth in online display is slowing. TV spend has fallen over 10 percentage points in five years, while only OOH has maintained share recently.

Print newsbrands’ share of advertising expenditure has stabilised somewhat in the last couple of years following a period of declining investment and currently stands at 7.2% of the overall ‘shiny new things’ super-category budget.

Spend in digital newsbrands is pretty consistent at around 2% of total media spend.

Given the high reach (25 million daily and 41 million weekly, according to latest PAMCo data) and quality profile of newsbrands, together with their readers’ trust in them to spark ideas and recommendations, it is perhaps surprising that budgets are so circumscribed.

Campaign PROI: print

While the buying cycle for brands in the ‘shiny new things’ super-category can vary from weekly (for the most avid fashionista) to every two to three years (for computers and phone contracts), they have one thing in common. Strong brand preference before people set out on a buying journey builds consumer confidence and protects against rival offers.

Average print spend currently sits at 7.2% of overall media budgets, so it falls into the lowest third (tertile) of cases analysed. Multimedia ‘shiny new things’ campaigns in this tertile generate a PROI of just 0.62. Short to medium-term payback (a PROI of 1) is achieved when print newsbrand spend is between 7.8% and 16.8% of the total campaign investment. However, when print newsbrands’ share is over 16.8%, the PROI multiplier for the campaign is 2.55..

This means that they pay back £2.55 for every £1 invested. This in turn will mean considerably higher long-term profit: Benchmarketing’s estimate of the long-term effect is twice the short to medium-term PROI.

PROI is 2.55
when print newsbrands are at optimum level

Campaign PROI: digital

For the first time, the profitability of adding digital newsbrands to campaigns specifically can be quantified.

It is still early days, as the vast majority of campaigns allocate just a few percentage points of budget to newsbrand sites. However, there is a reasonable campaign PROI of around £1.50 for every £1 spent when digital newsbrands are allocated up to 2.6% of total campaign budget.

Nevertheless, it is also evident from analysis that overspending on digital display is creating diminishing returns that lower campaign PROI. The effect of increasing print spend results in a campaign PROI that far outweighs the effect of adding digital display.

PROI is 1.49
when digital newsbrands are at optimum level

The profit gap

The current average 7.2% investment in print newsbrands elicits a campaign profit of just over £270 million.

If the average rose to the recommended 16.8% minimum share of media spend to optimise overall short to medium-term campaign profit levels, the additional profit released could be more than £1.4 billion.

For digital newsbrands, the recommendation is to maintain share at 2% (while reducing the overall amount committed to digital display), as this is the most efficient level for generating campaign PROI.

Missing profit
 £1.6bn - £167.5m = £1.44bn
Potential campaign profit
£630.2m x £2.55 = £1.6bn
Recommended average
investment in print newsbrands

16.8% = £630.2m
Campaign profit
£270.1m x £0.62 = £167.5m
  Digital newsbrands
Currently spending in optimum range 
Current investment in print newsbrands
7.2% = £270.1m

Current 'shiny new things'    super-category spend = £3.75bn

Total missing profit =
£1.4bn
Lorem Ipsum

Where should the money come from?

To understand how budgets in the ‘shiny new things’ super-category can be effectively realigned, Benchmarketing looked at two separate pieces of further analysis in addition to PROI calculations – adstock and response curves.

Adstock is strongest for audio-visual channels and print channels in the ‘shiny new things’ super-category. Digital display has the lowest carry-over effect.

Response curve analysis indicates that TV and then print newsbrands remain the most scaleable channels, delivering incremental profits as investment rises for longer than any other media. Declining investment levels in these channels has negatively impacted profits.

Digital video is a growing channel, performing well in both the adstock and the response curve analysis, and is an important part of the digital newsbrand offering. By contrast, digital display is currently receiving a disproportionate level of spend in light of its response curve (and adstock). Digital channels tend to have lower adstocks than established channels. This suggests that the 33% of ‘shiny new things’ media expenditure currently invested in digital display is subject to diminishing returns.

The recommendation is therefore to adjust online budgets in order to boost print newsbrand investment to 16.8% average share of campaign budgets.