New study proves that advertising is a profitable driver of business growth.
Profitability varies greatly by media – TV is the greatest driver of overall profit volume
A vast new study of advertising effectiveness has proven that advertising is a profitable driver of business growth and that all forms of advertising pay back, especially when their sustained effects are measured.
The study – ‘Profit Ability 2: the new business case for advertising’ – was commissioned by Thinkbox from Ebiquity, EssenceMediacom, Gain Theory, Mindshare, and Wavemaker UK and brings together their vast econometric databases of client data. It is an update and expansion of Ebiquity and Gain Theory’s ground-breaking Profit Ability study from 2017, offering the first post-Covid/Brexit view of advertising’s business performance.
Profit Ability 2 analysed the profit generated by advertising at different stages as its effects build over time. It examined four speeds of payback:
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Immediate payback – within one week
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Short-term payback – up to 13 weeks – i.e. includes immediate payback
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Sustained payback – week 14 through to 24 months
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Full payback – total payback 0-24 months
Advertising has an average short-term profit ROI of £1.87 per pound invested which increases to £4.11 when sustained effects are included
On average, a pound invested in advertising returns just over £4 in profit. But that’s an average across a wide scope of different media investments. Within this, the study’s key findings include:
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Advertising works: all categories analysed in the study generated a positive payback from advertising when sustained effects are accounted for.
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Time matters: 58% of advertising’s total profit generation happens after the first 13 weeks.
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TV accounts for 54.7% of advertising’s full payback but only accounts for 43.6% of total advertising investment. Within this, Linear TV accounts for 46.6% of full payback and BVOD accounts for 8.2%.
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Generic PPC (unbranded online search) offers the highest immediate payback, however its effects rapidly diminish after the first week and it has a weak sustained payback.
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Linear TV is the second strongest performer for immediate payback, followed by Paid Social, Audio and BVOD.
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TV accounts for nearly two-thirds (63.0%) of profit payback beyond the first week of advertising.
Despite the upheaval the world has been through, the fundamentals of advertising effectiveness still apply. It’s great to see TV performing so strongly at whatever speed you want to drive profit, but this is about the strength of advertising as a business investment that grows the bottom line and grows the economy. I hope business acts on these findings.”Matt Hill, Thinkbox’s Research and Planning Director
Summary of key figures from the study
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% of profit volume |
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% of advertising investment |
% of full payback |
% of sustained payback |
% of short-term payback |
% of immediate payback |
Full payback ROI |
Short-term ROI |
All media |
100% |
100% |
100% |
100% |
100% |
£4.11 |
£1.87 |
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TV (Linear + BVOD) |
43.6% |
54.7% |
64.3% |
41.5% |
27.8% |
£5.61 |
£1.79 |
Linear TV only |
35.0% |
46.6% |
55.7% |
33.9% |
20.5% |
£5.94 |
£1.82 |
Generic PPC |
18.9% |
14.6% |
8.8% |
22.5% |
30.5% |
£3.52 |
£2.29 |
Paid Social |
13.2% |
9.4% |
8.0% |
11.4% |
15.1% |
£3.20 |
£1.62 |
BVOD only |
8.6% |
8.2% |
8.6% |
7.6% |
7.3% |
£4.25 |
£1.66 |
Audio |
6.2% |
6.9% |
6.0% |
8.2% |
8.6% |
£4.98 |
£2.47 |
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3.3% |
4.8% |
4.7% |
4.9% |
4.8% |
£6.36 |
£2.74 |
Online video |
3.9% |
3.4% |
3.2% |
3.7% |
3.6% |
£3.86 |
£1.76 |
OOH |
5.0% |
3.1% |
3.0% |
3.1% |
3.3% |
£2.78 |
£1.19 |
Online display |
5.5% |
2.9% |
1.8% |
4.4% |
5.9% |
£2.34 |
£1.50 |
Cinema |
0.4% |
0.3% |
0.2% |
0.3% |
0.3% |
£2.56 |
£1.19 |