Magonomics: the high ROI of magazine advertising

On average, magazine advertising achieves a higher return on investment (ROI) than television, the internet, or newspapers.

Usually this is related to under-investment in magazines: while TV and other media tend to receive investment beyond the point of severe diminishing marginal returns, magazines are normally left on a steep part of the diminishing returns curve, where ROI has not yet flattened out.

These are among the principal conclusions from the Magonomics project commissioned by PPA, the magazines national association in the UK, and conducted by Mindshare UK’s Business Planning Unit. The project analysed econometric data from 77 real-life advertising campaigns with advertising spend of up to £6m.

Media re-allocation analyses showed a consistent overall increase in sales when magazine media are deployed at higher spend levels – but within the same overall budget.

The analyses revealed that, for the brands covered, magazine budgets had to be at least doubled before magazine ROI dropped to the same level as television.

Moreover ‘bonding’ is a critical influencer of purchase behaviour, and a strong correlation has been found between print magazine investment and high bonding scores.

Another significant conclusion concerned the importance of using the appropriate input data when assessing magazine advertising through econometric analyses. In particular, the use of readership accumulation data is vital, to ensure the correct distribution through time of magazine advertising exposures. Magonomics showed that, on average, correctly distributing magazine audiences over time leads to an uplift of 19% in magazine ROI, compared with the traditional assumption that all magazine exposures occur during the week the issue came on sale. This exactly mirrors the uplift found in American studies.

PPA head of research, Marius Cloete, said “Our work with Mindshare and Ohal has conclusively shown just how powerful, and frequently underestimated, is magazines’ ability not only to get consumers closer to brands, but to make a substantial contribution to an advertiser’s bottom line when deployed and measured appropriately.”

For further details contact Marius Cloete.

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