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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
Download the full research now
This immense new study brings together the vast econometric databases of Ebiquity, EssenceMediacom, Gain Theory, Mindshare, and Wavemaker, to create the most comprehensive analysis of advertising effectiveness to date. Collectively it has examined £1.8 billion worth of media spend across 141 brands and 14 categories.
Profit Ability 2.0
The study is an update and expansion on Ebiquity and Gain Theory’s ground-breaking Profit Ability study from 2018, and it is much needed. The world has transformed since that original study in almost every respect – from consumer behaviour to media consumption to the socio-economic and political contexts we now live in.
How has this affected advertising effectiveness? Does advertising still deliver business growth as profoundly as before? How does this differ by category? How are profit effects sustained over time? Which media are the least or most risky investments? These questions were discussed at the recent event held by Thinkbox to launch the research where alongside the new Profit Ability study, they showcased a new analysis by ITV exploring advertising’s role in supporting prices which you can watch here.
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
On average, a pound invested in advertising returns just over £4 in profit.
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.
