The Big Budget Problem: Why Advertising's Efficiency Obsession Is Killing Effectiveness
The Big Budget Problem: Why Advertising’s Efficiency Obsession Is Killing Effectiveness. Les Binet warns of “small thinking” tactics over scale.
Advertising has become more efficient but less effective, a paradox that reveals the industry’s fixation on doing more with less has backfired spectacularly. Since COVID-19, return on investment has risen 4%, yet net profit generated by advertising has fallen 11% after inflation. The culprit? Budgets have shrunk by 14%, and advertising-to-sales ratios now sit 40% below pre-pandemic levels.
Les Binet, whose work with the IPA Databank has shaped modern marketing thinking, argues the industry has developed what he calls “small thinking” an obsession with clever tactics, tight targeting, and performance metrics that ultimately starves campaigns of the scale they need to work.
Les Binet presents a keynote presentation at the IPA Effectiveness Conference in London, October 2025
The mathematics of effectiveness
Most senior marketers believe spending how matters twice as much as spending how much. A survey of 500 CMOs found they attribute roughly equal weight to budget (35%), media planning (30%), and creative (35%) in driving effectiveness. In other words, they reckon ROI is about twice as important as the size of the budget itself.
The IPA Databank tells a different story. Regression analysis shows budget accounts for 89% of variations in effectiveness, whilst ROI explains just 11%. Budget isn’t merely important—it’s eight times more influential than ROI.
Why? Because budgets vary far more than returns do. Most campaigns generate ROIs clustered in a fairly narrow band. The wild card is spending. One brand might allocate £100,000 to a campaign; another puts down £10 million. That range effectively zero to infinity gives budget its outsize influence. And unlike ROI, which depends heavily on factors outside a marketer’s control, budget is something firms can actually decide.
The death spiral of small thinking
Tight budgets breed conservative strategy. Picture a brand that decides to focus on Gen Z, despite older consumers accounting for more than half of spending in most categories. Then it narrows further, targeting the 5% of that segment currently in-market rather than the 95% who aren’t. Match that with a stripped-down media plan perhaps performance digital only and you’ve got a campaign optimised for efficiency but strangled of reach.
This is where the trouble compounds. Efficiency does tick up slightly under these conditions, just as the data shows. But effectiveness measured in actual sales and profit falls hard. When results disappoint, CFOs tighten budgets further. Marketers respond by shrinking plans even more. Round it goes.
Gartner’s recent data illuminates the scale of the pullback. When COVID hit, budgets were slashed. They bounced back as restrictions eased, but never regained pre-pandemic levels. The slide has continued since. Advertising-to-sales ratios, a more reliable predictor of effectiveness than absolute spend, are down 40% from where they stood in early 2020.
The fixed-cost trap
Scale matters for another reason that’s often overlooked: fixed costs. Binet notes that roughly 60% of a typical marketing budget disappears into overheads salaries, agencies, production, platforms—before a penny reaches media. That leaves perhaps 30–40% for the actual advertising.
For a campaign to break even, media alone must generate an ROI of around three. Anything less and the advertiser is subsidising the work. Binet suspects half the industry is losing money once fixed costs are properly accounted for, yet few marketers include them in ROI calculations. It’s a blind spot, one that econometricians rarely address.
This makes the case for fewer, bigger campaigns. Spreading budget thinly across multiple creative ideas means each asset must earn back its share of fixed costs. Better to concentrate resources on a single strong concept, give it serious media weight, and run it longer. The myth that brand advertising wears out quickly is largely fiction; successful ads can be sweated for extended periods without diminishing returns.
Les Binet and Will Davis presents a keynote presentation at the IPA Effectiveness Conference in London, October 2025
How big is big enough?
Binet offers rough benchmarks. A decent online video ad needs one to three million exposures simply to break even. To generate a meaningful sales uplift in the UK, a campaign wants 30 to 60 million exposures. For genuine market-share gains, think 200 million to a billion.
These numbers sit awkwardly in an era when “going viral” has become the go-to response to questions about scale. The trouble is, viral campaigns fail 96% of the time. Even the successes deliver relatively modest reach compared with traditional media buys. Influencer marketing, whilst useful, typically adds less incremental reach than a solid schedule on a channel like ITV3.
The industry has lost its sense of scale, Binet argues. Marketers now celebrate small stunts, a clever social post, a niche activation, rather than the large, sustained campaigns that actually move markets. Awards often reinforce this by rewarding ingenuity over impact. The result is a profession that has forgotten what effective advertising looks like.
What firms should do
First, improve budget-setting. Most companies focus on intermediate metrics awareness, clicks, engagement rather than modelling the financial impact of different spending levels on sales and profit. Few test budgets experimentally. Without rigorous analysis, CFOs remain unconvinced, and budgets stay tight.
Second, optimise media planning earlier. Too often, creative assets are developed first, then handed off for media planning as an afterthought. By that stage, fixed costs are already committed. Brands create new work without ensuring sufficient media spend to make it pay back. The sequence should reverse: determine what scale of campaign is viable, then develop creative to that brief.
Third, reach all category buyers, not just a favoured segment. The most successful brands cast wide nets. Targeting the whole market doesn’t preclude tailored messaging, but it does require budgets and media mixes capable of genuine reach multiple channels, sustained presence, broad demographic coverage.
Finally, make fewer ads. Concentrate budgets on bigger, better creative ideas. Run them longer. Stop churning out fresh assets for the sake of novelty when existing work still has life.
The case for thinking big again
Binet’s argument isn’t a nostalgic plea for 1980s excess. It’s a call to align strategy with how advertising actually works. Effectiveness depends on scale. Scale requires budget. And budget is the variable most under a firm’s control—yet the one most neglected in recent years.
The industry’s obsession with efficiency has delivered diminishing returns. ROIs are up 4%; profits are down 11%. That’s not a rounding error. It’s a structural problem born of systematically underinvesting in the one factor that drives effectiveness most powerfully.
Advertising doesn’t need to be clever. It needs to be big.
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