Thinkbox, the UK Television marketing body, commissioned a major new study and launched the results last week. Working with Ebiquity and Gain Theory (who both independently evaluate advertising effectiveness and performance for brands), the study looked at the business impact of advertising-examining it in both the long and short term. In total, over 2,000 advertising campaigns across 11 categories were analysed. This analysis set out to uncover the impact that different forms of advertising have on short-term profit (within 3-6 months of a campaign finishing), and then combined these learnings with results for profit generated over the longer term (up to 3 years on) to determine total profit return.
The research found that, all forms of advertising create profit to varying degrees. On average, advertising creates a total profit return on investment (ROI) over 3 years of £3.24 per pound spent.
Drilling down, the study found that TV advertising delivered the largest volume of both short-term and total advertising-generated profit.
This makes it the lowest-risk form of advertising investment with the highest ROI per pound spent. TV is followed by print (which accounts for 18% of total advertising-generated profit), online video (4%), out-of-home (3%), radio (3%), and online display (1%). Online video advertising includes both broadcaster VOD and online video advertising on sites such as YouTube and Facebook.
Key points raised by the study where:
• 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
With marketers having to justify everything they spend, it is important to provide them with a refreshed and updated understanding of what different forms of advertising contribute, Matt Hill, Thinkbox’s research and planning director, said.
“This study by two highly respected, independent organisations with robust data at their disposal bridges the gap between the marketing and finance departments with compelling evidence that quantifies advertising’s ability to deliver shareholder value, and TV’s centrality to that,” he said.