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Companies ‘can create 500pc return’ through effective advertising campaigns

Investing in advertising will generate a 500pc return for businesses, according to a new report.

For every €1 spent on advertising, businesses can expect to recoup gross sales of €8.26 and a net return of €5.44, according to the “Marketing Multiplied” report, published today by Core Media and the Association of Advertisers in Ireland.

Creative campaigns have six times the impact of less-creative campaigns, and emotionally-charged ads resonate more with audiences, according to the research.

It found that recruitment of new customers was more profitable than trying to drive increased sales among existing customers.

Brands that use paid media normally grow three times faster than those that do not, the research found, noting that larger brands have an inherent advantage over smaller ones.

The report adds that marketers should target 60pc of their budget on brand-building that focuses on creating a long-term, emotional reach.

The report – which was authored by economists Chris John and Jim Power along with Core Media ceo Alan Cox – examined the impact of marketing campaigns both from a micro and macroeconomic standpoint.

Despite the significant upsides from targeted marketing campaigns, the report finds that boardrooms “are still not convinced” of the benefits marketing and advertising can have in driving the growth of business.

Of the S&P1500 index of leading US companies just 2.6pc have a board member with managerial-level marketing experience, the report said.

“The absence of marketers from boards cannot be good for companies. It means that a critical part of the business is not being given sufficient voice or respect and it goes a long way to explain why marketing budgets are thought of an expense rather than an investment,” said Patrick Coveney, non-executive chairman of Core Media and chief executive of Greencore Group .

Advertising contributes €643bn a year to the European economy, accounting for 4.6pc of total gross domestic product on the continent. Over six million jobs are supported by the industry in the EU.

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