Brands Have a 'Profit Blind Spot' — and Binet Says Promotions Are the Culprit
Updated: 6 days ago
TL;DR: New research from Les Binet and Dom Boyd finds brands are over-investing in short-term promotions while around three-quarters of marketers can't even estimate whether that promotional spend is profitable — a 'profit blind spot' quietly eroding margins.
The Finding
The research, from effectiveness experts Les Binet and Dom Boyd and reported by Campaign, lands an uncomfortable point: brands invest more in promotions than in advertising, yet roughly 75% of marketers cannot estimate the profitability of their promotional spending.
That gap — between how much is spent on promotions and how little is understood about their profit impact — is the 'profit blind spot.' It is not that marketers aren't measuring; it's that they're measuring the wrong thing on their single biggest lever.
Why Promotions Feel Safe but Often Aren't
Promotions produce immediate, visible sales spikes, which makes them feel accountable. But a spike is not the same as profit. Discounts frequently pull demand forward from future weeks, train customers to wait for the next deal, and erode both base price and margin.
Binet's long-standing work has argued that brand-building delivers the larger, longer-term profit — captured in his well-known guideline of splitting budgets roughly 60% to brand and 40% to activation. Heavy price promotion can flatter short-term volume while quietly damaging the economics underneath.
Marketing Minute's Read: Measure the Thing You Spend the Most On
The irony is almost comical: marketers track the cheapest thing they buy — a click — to two decimal places, and fly blind on the most expensive — the margin surrendered in promotions. The discipline the research implies isn't a new model; it's a habit.
For smaller businesses the fix is concrete. For every promotion, calculate incremental profit, not just incremental sales: subtract the margin you would have earned from customers who'd have bought anyway, and the cost of any demand you simply pulled forward. If you can't do that maths, you are guessing with your largest budget line.
Quick FAQ
What is the 'profit blind spot'?
Research from Les Binet and Dom Boyd describes it as brands spending heavily on promotions while most marketers — around 75% — can't estimate whether that promotional spend is actually profitable.
Are promotions bad for brands?
Not inherently, but they often pull demand forward, train customers to wait for discounts and erode base price and margin. The problem the research highlights is spending on them without measuring their profit impact.
What should marketers do?
Measure incremental profit, not just incremental sales — account for the margin you'd have earned without the promotion — and weigh short-term activation against longer-term brand-building.
We measure the cheapest thing we buy — a click — to two decimal places, and fly blind on the most expensive: the margin we give away in promotions. Binet is pointing at the obvious. Discounting feels accountable because you can see the spike, but a sales spike isn't a profit. Measure what you spend the most on. — Daniel Nikolla, Founder of Merx Marketing
A sales spike is not a profit — if you can't calculate the incremental margin of a promotion, you're guessing with your biggest budget line.
Do you measure the profitability of your promotions, or just the sales they drive? Be honest — and tell us how you do it.
If you would like to know more about this topic, please contact us on danieln@merxmarketing.co.uk
Sources: Campaign (research by Les Binet and Dom Boyd).
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Written by Daniel Nikolla, Founder of Merx Marketing Ltd and Marketing Minute
