Industry Identifies $50 Billion In Ad Waste: Wrong Messages, Wrong Timing

For years Madison Avenue's leading thinkers have pondered the same fundamental question: which half of their advertising actually works. Now the industry's research authorities believe they've narrowed the answer down to about 20 percent. In what is likely the grandest post-buy analysis of all time, the Advertising Research Foundation this week will release findings of a review of more than a dozen of the most sophisticated cross-media case studies ever conducted. Its conclusion: about $50 billion in U.S. ad spending is "wasted." Actually, that figure equates to about 18.8 percent of the $266 billion in U.S. ad spending estimated by Universal McCann for 2004, but the precise number isn't as important as the fact that the ad industry now claims to have identified some of its biggest and most obvious areas of waste.

"These are biggest ways of pissing money away, that get done over and over and over again," says Taddy Hall, chief strategy officer at the ARF, who led a team that conducted the detailed analysis of about 18 different studies from the Interactive Advertising Bureau's series of XMOS cross-media case studies. The ARF, which has assumed responsibility for managing future XMOS projects (see related story in today's MediaDailyNews) - and perhaps more importantly, for mining and extracting industry-wide insights from them - so far has come up with about ten specific areas of waste, though Hall says there are a two primary ones:

1) Wrong message, which is estimated to be worth $20 billion to $30 billlion in wasted advertising;

2) Wrong timing, which is estimated to be worth $10 billion to $20 billion in wasted advertising.

Bob Barocci, president-CEO of the ARF, says a primary focus of the XMOS learning will be to recapture the "low hanging fruit." By testing creative before it runs in media, he estimated Madison Avenue could immediately recover about $10 billion in advertising value.

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