IRI, Turner: Excessive promotional spending has brands locked into 'cycle of commoditization'

By Elaine Watson contact

- Last updated on GMT

IRI, Turner: Excessive promotional spending is squeezing margins

Related tags: Investment, Advertising

Shifting 10% of promotional spending to media advertising would boost firms’ ROI on marketing spend by 10-25%, according to Chicago-based market research firm IRI and global media company Turner.

In a report​ based on an assessment of marketing spend across 62 CPG brands representing $20bn in sales and $3bn in marketing spend, they concluded: “Sales lift from merchandising programs has been—and is still—on a steady decline. Excessive (and growing) promotional spending has brands locked in a cycle of commoditization, and margins are being squeezed to near extinction.

“Despite declining promotional return on investment (ROI), companies continue to allocate the majority of their spending here, getting stuck in a vicious cycle of brand erosion through brand commoditization."

While the short-term return on investment of media investments is comparable to that of standalone promotional efforts, they claimed, “When considering long-term ROI, the ROI of media investments is two to three times higher than promotion… Even a 10% shift in share of spending from promotions to media will substantially improve marketing ROI and support long-term growth​.”

Read more HERE​.​ 

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