December 6th, 2017
If there is anything to remember for 2017, it is that TV is not toast - far from it in fact. TV ads are still the most powerful form of advertising - they generate £4.20 in profit for every £1 spent, beating online by some way. Online video generates almost half at £2.35 while online display advertising only generates 84p. Therefore TV continues to offer incredibly good value for money and still delivers to mass audiences - something we should be proud of and excited about for the future.
We all recognise the fundamental importance of brands, but in these times of economic uncertainty, it can be tougher than ever to carve out the path to marketing effectiveness. Whilst we’re better equipped to plan, execute and measure the effectiveness of advertising, research suggests the impact of our ad investments is dwindling. The problem? A worrying increase in short termism.
The pressure to meet short-term targets is reducing our ability to drive long-term profitability. From short-term procurement techniques to attribution modelling and an unhealthy obsession with ROI, for many, the focus has shifted squarely to the here-and-now.
The reality is that driving a short-term sales return is essential, but building a base of sales that grow brand profitability in the long-term is – and always has been – at the heart of marketing effectiveness.
A new report from Ebiquity and Gain Theory - two of the largest and most respected businesses operating in the field of marketing science – has, for the first time, quantified the impact different forms of advertising have on the bottom line. It found that TV advertising out-performs all other media investments by some margin, both in the short and long term. In fact, TV delivers 71% of all profit generated by advertising, at the greatest efficiency (a profit ROI of £4.20), and for the least risk.”
‘Profit Ability’ provides advertisers with the evidence they need to build the business case for advertising and within this the case for TV. Across their data sets of better known advertiser brands whose media is bought by the major media agencies and professionally audited they have quantified how advertising drives growth in both the short and the long term.
The research falls into three broad sections:
- Profit delivered in the short term (throughout the campaign and for a period of around three months afterwards), carried out by Ebiquity
- Profit delivered in the longer term (up to three years following a campaign), carried out by Gain Theory
- A combined view across both the short and the long term to reveal total advertising-generated profit return
We've summarised the key points from the study below:
- Advertising pays back in the short term
- TV is the dominant driver of both profit and ROI
- ROI is a measure of efficiency, not effectiveness
- TV delivers scale of return
- TV is the 'safest' (lowest risk) form of advertising
- By ignoring the longer-term effects of advertising, we're doing it a massive disservice
- On average, advertising delivers a long-term effect that is 1.9 times greater than the short-term effect
- TV delivers the greatest 'Long Term Multiplier' effect
- FMCG, which struggles to deliver short-term ROI, see some of the greatest effects in the long term