Marketing News

Marketing ROI is key as big firms still waste over £40bn a year on digital

4 Sep 2019

Global consumer products companies waste around $50 billion (just over £40 billion) each year in digital marketing and trade spending, reports The Drum.

According to a study by global consulting company AlixPartners, that amounts to around 60% of FMCG brands’ digital marketing spend.

The report, which surveyed 1,110 FMCG decision-makers about digital proficiency levels in their company, found that business leaders are finding a low ROI in online investment. The survey revealed that last year, $47 billion (60%) of the $79 billion spent on digital marketing by FMCGs around the world failed to deliver any noticeable ROI.

Looking at the figures in more detail, the study found that FMCG’s ad spend was $242 billion, with pure-play digital ads alone – on platforms such as Facebook and Google – amounted to $60 billion.

Responses from executives at food, health, beauty and household brands showed that $25 billion of that figure yielded a positive ROI, $27 billion had a negative return and $8 billion wasn’t even measured. This highlights the extent to which FMCGs are struggling to extract value from their media spend.

These losses come despite some of the biggest players in FMCG, such as Unilever and P&G making transparency in online media spend a key focus for the past two years.

Marc Pritchard, chief brand officer at P&G has described the digital ad supply chain as “murky at best, fraudulent at worst.”

Both companies have spearheaded efforts to tackle issues such as ad fraud, viewability, immeasurable media spend and ad misplacement, as well as culling agency partners, in-housing and holding digital platforms to account.

In spite of these efforts, the figures from AlixPartners suggest brands need to do much more in order to ensure their digital and media transformation strategies get more value from online investments.

The benefits of measurement

The survey also revealed a certain amount of progress. Respondents who said they were currently monitoring digital ROI reported 70% more efficiency in driving positive returns compared to respondents who were just starting their digital transformation journeys.

According to the report, the functions most likely to change as a result of digital transformation in FCMGs are IT and technology (83%), logistics (79%) and marketing and insights (78%).

Speaking about the study, Brian Major, managing director at AlixPartners, explained: “Many companies, in an effort to chase the promise of growth through digital, have simply thrown money at the problem, leading to billions in wasted investments.”

He continued: “However, digital for the sake of digital will serve no one. Success is achievable over time by using more precise and targeted methods, which have greater opportunities for consumer engagement and data analytics.”

As the path to purchase becomes less linear, the need for accurate marketing measurement has never been more pressing. Marketers in FMCG who can prove ROI will get real value from their online investments.

If you’re looking to get more value from your marketing efforts by investing in the right talent, get in touch with Stopgap to find out how we can help.

Many companies, in an effort to chase the promise of growth through digital, have simply thrown money at the problem, leading to billions in wasted investments
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