How Companies Waste Advertising Dollars

Even for those of us in the marketing business, the sheer volume of money currently being spent on advertising is enough to make your head spin. Media advertising in the US alone topped $220 billion in 2018, with that number projected to near $290 billion by 2022. The biggest areas of media spending are TV advertisements and digital media advertisements, with the latter overtaking “traditional” media in both volume and total dollars spent. With all of this money flying around, the question then becomes, is all of this spending worth it?

In many cases, the answer is yes. Well implemented marketing campaigns absolutely deliver a worthwhile return on investment. Unfortunately, companies still waste millions of dollars on advertisements each and every year. Here’s how.

The Problem of Wasted Ad Campaigns

Comcast spent $6.12 billion on advertisements in 2018. Between January 2018 and December 2018, Comcast stock value fell from a high of $42.80 to $33.75. So what the hell happened? This example goes to show that many ad campaigns focus more on volume and brute force than targeted, effective marketing. The result? Huge swaths of wasted money. (As an editorial note, Comcast is also one of America’s most hated companies and these types of practices do not help that reality).

There are a number of reasons why advertising dollars are wasted. Some are avoidable, others are not. Here are some common examples of how money spent in good faith can go down the toilet:

Poorly implemented digital ads

With digital ad spending overtaking traditional media, major brands are relying on digital ad materials to get in front of consumers. Unfortunately, this simply doesn’t always happen. Problems including ad fraud, background videos, bots, and more can lead digital ad materials to go unviewed or unnoticed.

Failure to pinpoint your target audience

Customers are inundated with marketing materials at an unprecedented rate. This means that ad money is best spent getting the right message in front of the right customers. Pinpointing moments of influence and using other data analysis tools like geospatial site analyses are great ways to make sure that your ad campaign is getting views from the right potential consumers. 

The wrong marketing materials for your audience

Of course, getting ads in front of the right sets of eyes is only half the battle. Getting the right ads in front of the right sets of eyes is another matter entirely. Brands often waste their advertising dollars not through any series of logistical missteps, but simply by failing to stick to their brand personality and brand identity.

How Much Advertising Spend is Wasted?

We discussed the raw amount of money being poured into advertisements, but how much of this is truly wasted? It is common for marketing professionals to throw around the notion that about half of all advertising dollars are wasted. While it is virtually impossible to put a definite number to this statistic, a recent survey of marketing professionals yielded the following results:

• About half of respondents felt that they wasted 0-20% of their marketing budget “on the wrong channels or strategies”
• 30 percent of respondents felt that they wasted 21-40% of their marketing budget
• 12.2 percent of respondents felt that they wasted between 41-60% of their marketing budget
• 4.6 percent of respondents felt that they wasted between 61-80% of their marketing budget
• 2.9 percent of respondents felt that they wasted between 81-100% of their marketing budget

Simple Ways to Decrease Wasted Ad Money

In reality, there is no way to achieve 100 percent efficiency for marketing spending. Even the most laser focused ad campaigns will have waste. That being said, here are some high level tips to decrease wasted ad spending:

1. Understand exactly how your ad money is being spent. Perhaps the biggest commonality for wastefulness in advertising is agencies who do not fully understand how their money is being spent. Taking a metaphorical inventory of your ad spending is step one towards reducing wasteful spending.
2. Market only towards your key consumer base. The same marketing materials in front of two potential consumers might result in wildly different outcomes. Focusing your ad campaigns on the right audience is critical.
3. Identify and capitalize on key touchpoints. Within those key demographics, when and how your brand interacts with consumers is another way to increase efficiency. 
4. Take advantage of micro-moments. Another huge waste factor for advertising in the digital age is assuming consumers will watch lengthy ads or take the time to view longer materials. Instead, tailoring ad materials to micro-moment interactions ensures that your intended message will not be wasted by an impatient viewer.

Clock Tower Insight Helps Companies to Spend Advertising Dollars Efficiently

Clock Tower Insight helps our clients to build their brands through any means necessary. We believe in using cutting edge research to deliver unparalleled insight and understanding into today’s rapidly changing marketplace. With over 15 years of dedicated experience, our marketing insight has helped organizations including Belle Tire, Nielsen, Orbitz, and Kraft Foods. 

We are proud to offer a number of services to our clients, including customer experience management, brand positioning in the marketplace, market sizing, market testing, and more.