There is a perception gap in terms of what marketers believe drives advertising effectiveness versus what actually does, according to new IPA research from Les Binet and Medialab Group chief data officer, Will Davis.

Binet and Davis analysed winning IPA Effectiveness Award case studies and found that ROI only accounts for 11% of the variations in profit payback observed, compared to 89% for budget. This means that larger budgets are eight times more likely to drive effectiveness versus the ROI of the campaign.

This contradicts the views of many marketers, who are looking to drive efficiency in advertising over seeking to invest with scale. According to new research carried out by Medialab, just 35% of the 500 senior marketing decision-makers surveyed said budget was the most important contributor to effectiveness, compared to 65% for ROI.

The findings of the research, which will be presented at the IPA Effectiveness Conference 2025 later today (7 October), were reflected in comments from Binet last week at Marketing Week’s Festival of Marketing, where he urged marketers not to “lose sight” of size and scale.

Les Binet: Small thinking reduces effectiveness

“We’re all focused on ROI and we are all trying to do more with less, and the result is that small thinking actually reduces effectiveness, and reduces sales, reduces profit,” he said.

This idea that marketers are increasingly fixated on the idea of ‘more with less’ at the expense of broader effectiveness is reflected in analysis from the IPA databank, which finds that although ROI has increased by 4% since the Covid pandemic, net profit generated is down 11% in the same timeframe.

The research also finds that marketers may be scaling back their activity and pursuing narrow targeting as a result of tighter budgets, thus curtailing the potential of their campaigns.

Over half (56%) of the senior marketers surveyed say they target sub-segments of customers with advertising, rather than all of their potential customers.

Older generations are particularly neglected, with 62% of marketers not targeting over-45s, despite that cohort accounting for 50% of consumer spending.

According to Binet, this targeting may also be resulting in a narrow media mix, where performance and activation activities are being prioritised over brand building.

He calls this a “death spiral” of budgets, with campaigns and profits all getting smaller and smaller.