RAB eyes marketing budgets by winning over the finance director

From today (9 October), the trade body is promoting a research study, comprised of media-planning agency data, which indicates that every pound a brand spends on radio advertising results in 7.7 times the return on investment (ROI) on average.

This represents the first time the body has used econometric data to win over a larger proportion of client budgets, starting today with a presentation in front of brands and media planning agencies. 

Simon Redican, RAB managing director, says the research study is the biggest ever undertaken by trade body and forecasts its conclusions will help reverse many advertisers’ inclinations to try new platforms, such as online, in favour of platforms with a “more proven” ROI.  

He says: “Agencies are increasingly using econometric modelling to decide where to spend their clients’ budgets…The key thing about this study [and using it to win over a greater share of budgets] is that this is not the RAB’s data, it’s econometric data taken directly from the media agencies.”

A key constituency within the advertising sector the trade body hopes to appeal to are brand finance directors, whom it believes can have a more direct influence over where marketers’ ad budgets are allocated. 

“We’ll definitely hope to get this in front of finance directors, as there’s a real business message in the data, and that is that in order to get the best ROI, advertisers should be spending 20 per cent [of campaign budgets] on radio,” adds Redican.   

Currently, 6 per cent of all advertising budgets are spent on radio, but if this average was increased to 20 per cent – with no increase in overall campaign expenditure – the total campaign ROI would rise by over 8 per cent, the study suggests. 

The RAB used data provided by the industry’s leading advertising agencies, including Havas Media, Group M agencies and Starcom Mediavest, covering more than 2,000 media campaigns to generate the findings. This data was then analysed by data research house Holmes & Cook to provide its econometric conclusions. 

Redican says: “We wouldn’t be surprised if the game-changing findings prompt finance directors to ask their marketing teams ‘Are we allocating at least 20 per cent of our media budget to radio?’” 

Research from TV marketing body Thinkbox conducted by research firm Ebiquity found that TV is 15 per cent more effective than radio when comparing more than 3,000 ads between 2006 and 2011. Its study found every £1 invested in TV will result in a net profit of £1.70 in return on average, compared with radio which the study found generates £1.48 for every £1 invested.