Retailers are achieving a remarkable 300 per cent Return on Investment (ROI) from online advertising according too new statistics from Microsoft Advertising and BrandScience.
The research legitimises the claim long made by online proponents that online advertising is one of the most effective methods of advertising for modern audiences. As advertising through digital media is still a growing industry, some executives have been reluctant to invest money advertising online without tangible results to demonstrate solid ROI.
However, Microsoft Advertising and BrandScience have shown through econometric modelling studies of 26 of the UK’s top 100 retailers that online advertising does work. On average, for every pound spent investing in online advertising, retailers received £3.44 back, more than triple the original investment.
In the first six months of 2009, £1.75 billion ($2.91 billion) was spent by retailers online, which means online advertising is responsible for generating revenues of over £6 billion ($9.98 billion).
By comparison, ROI from TV advertising budgets returned a little over double the investment, adding further weight to the argument that online advertising has surpassed TV advertising as the premier advertising avenue.
Some of the more traditional “bricks and mortar” retailers whilst still lagging behind online retail are embracing the online marketing and seeing returns of £2.84 for every pound spent online. Currently bricks and mortar retailers allocate 16 per cent of their advertising budgets online, but this figure is expected to grow as the reputation of online’s ROI becomes more widespread.
The study also showed that online advertising had a synergistic effect, improving the performance of other media including TV, print and newspaper advertising.