Study: ROI Focus Can Undercut Advertising Growth

RADIO ONLINE | Monday, September 14, 2026 | 2:20pm CT

Cumulus Media | Westwood One

An advertising industry's increasing focus on return on investment may actually be working against sales and profit growth, according to research examined in a new Cumulus Media | Westwood One Audio Active Group blog post.

Pierre Bouvard, Chief Insights Officer of the Cumulus Media/Westwood One Audio Active Group, examines findings from a new study by marketing effectiveness expert Les Binet and Will Davis, "Go Big Or Go Home: How Small Thinking is Killing Advertising and What To Do About It." The research finds that since COVID, advertising ROI has increased 4% while profit generated by advertising has fallen 11%.

Bouvard says one of the central problems is that marketers frequently treat ROI as a measure of business growth. The report argues that ROI is instead an efficiency ratio measuring revenue or profit generated relative to advertising spending, while sales, profit and customer growth are measures of effectiveness.

The distinction can produce counterintuitive results. The analysis shows that campaigns generating lower ROI can produce substantially greater total sales because more money is invested. As advertising spending increases, total sales and profits can rise even as the resulting ROI declines.

Research from the Institute for the Practitioners of Advertising Effectiveness Databank cited in the report found advertising budget to be a much stronger predictor of profit than ROI. According to the analysis, 89% of the variation in profit is attributable to advertising budget and 11% to ROI, making budget roughly nine times more important.

The report also points to the importance of balancing brand-building and performance marketing. Research cited from WARC found that a 50/50 mix of brand and performance marketing produced 27% greater revenue growth after one month than an all-performance strategy. That advantage increased to 40% over periods of up to six months and 50% over the longer term.

Another key indicator is "share of voice," which compares a brand's advertising spending with total advertising spending in its category. The research finds that when a company's share of voice exceeds its market share, sales tend to grow. When the two are roughly equal, sales tend to remain stable, while a share of voice below market share tends to be associated with declining sales.

Binet and Davis recommend three approaches for determining advertising budgets: advertising spend ratios, task-based budgeting and share-of-voice analysis. The authors suggest the methods can be used together to develop a more informed advertising spending strategy.

Read the complete Audio Active Group blog post here.