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

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​.​