How to stop digital marketing spend from going to waste

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With budget season upon us, a looming recession, and squeezed budgets, how can marketers plan to improve the effectiveness of digital campaigns on a budget to retail customers? ROI Hunter’s CEO, Karel Schindler, believes he has the answers.


The future looks complex for the marketing industry. Rising costs, looming recession and the real possibility of shrinking budgets present a tough landscape. This summer the UK government called for businesses to cut marketing costs to deliver lower prices for consumers.

And more recently, John Lewis has admitted it will redirect some of its marketing budget to help pay for food for struggling staff. Reports by Nielsen also show that UK advertising spend in the first half of the year was up 20% year-on-year before it slowed in the second quarter amid the cost-of-living crisis.

Buyers are also harder to engage as they tighten their purse strings and become more discerning about non-urgent purchases. For retailers, the ability to understand how consumers think, feel, and decide is crucial, particularly considering the current climate.

Consumer behaviour is being increasingly shaped by digital mediums and many retail marketers have already shifted a large proportion of their marketing spend to digital channels.

With budgets getting tighter and pressure from business leaders becoming greater, choosing activities that can deliver the greatest return on investment is crucial, and it’s easy to assume that digital channels are the answer.

But when retailers are wasting an average of £19,000 a month on ineffective digital marketing, marketers must find ways to improve the efficiency of their digital campaigns.

Digital marketing must be driven by product performance data


To ensure that every campaign is as impactful as possible, digital marketing demands a data-driven strategy. Without insight into which products are good for the company margin and which are bad, retailers risk putting their budget behind the wrong SKUs.

This was validated in our recent study that showed retailers are spending an average of £52,000 each month on digital advertising with a staggering 37% spent on ineffective channels. This equates to £228,000 of wasted budget every year.

Incredibly, 52% of marketers admit to regularly wasting budget on digital ads that don’t deliver and half (45%) don’t understand how much in revenue or sales is driven from digital advertising.

Customer data is just one piece of the puzzle


Part of this mis-spend is because marketers are targeting the wrong people; the other part is because marketers are promoting the wrong products.

This isn’t surprising considering the challenges involved in making use of product performance data: insights need to be shared from across multiple departments in order to determine true product profitability, and beyond that, they need to communicate the right products to the ad networks in real time.

With almost two-thirds of consumers (64%) regularly served adverts for irrelevant products, and 50% receiving ads for out-of-stock items, a significant number of digital ads are clearly failing to resonate.

Not only does this result in wasted money for the retailer, it threatens consumer loyalty: 38% of customers say they have boycotted a brand after being served irrelevant online ads.

Data-driven marketing makes budgets work smarter, not harder


Confidence in digital as a channel remains high, but with budgets being squeezed and the customer journey becoming increasingly complicated, marketers need to ensure the products they promote are generating the best returns possible.

Taking a data-driven approach is now an essential part of modern marketing campaigns, but retailers need to think beyond customer data, and start taking individual product performance metrics, such as product level adspend, ROAS, and conversion rate, into account.

This understanding will enable them to place their budgets most effectively, and keep their focus on the products that will bring the greatest return on ad spend.

Marketing isn’t the only department that can benefit from an understanding of product performance; commercial teams can use marketing spend and performance to make more informed pricing, discounting, and purchasing decisions.  


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