Warc, 15 May 2014
LONDON: TV advertising has shown consistently demonstrated the highest ROI of any form of advertising in recent years, despite the growth of digital media and the impact of recession, a new analysis has claimed.
Thinkbox, the marketing body for commercial TV in the UK, commissioned an econometric analysis of over 4,500 ad campaigns across ten advertising sectors between 2008 and 2014. It compared, on a like-for-like basis, the sales and profit impact of five forms of advertising: TV (linear spot and sponsorship), radio, press, online display (excluding video on demand) and outdoor.
The subsequent report – Payback 4: pathways to profit – said that TV created the most profit for businesses, with an average return of £1.79 for every £1 invested during 2011-14; this was a 5% rise on the £1.70 earned during the earlier period of 2008-11.
Comparable figures for other media were £1.52 for radio, £1.48 for press, £0.91 for online display and £0.37 for outdoor advertising.
Thinkbox attributed TV's increasing effectiveness to several factors. Multi-screening viewers were able to act instantly on what they saw, advertisers had developed a more sophisticated understanding of how to employ multiple TV ad opportunities and integrate them with other media, a "golden age" of TV content had created a higher quality environment for advertisers, and the cost of advertising on TV had been falling.
The report said that TV advertising consistently made other elements of campaigns work harder. This was especially true of branded searches, the number of which had risen by one third as multi-screening viewers turned to internet connected devices and as advertisers included more specific online calls to action in their TV ads.
A further benefit of TV advertising was the 'halo' effect created across a brand or range of goods. The study found that 37% of TV advertising's effect was achieved on products not directly advertised. Thus, for example, if a finance brand advertised a current account on TV, the campaign was likely to boost sales of its other products, such as mortgages or insurance.
The analysis also suggested that finance and retail brands should ideally allocate 60% of their advertising budgets to TV and said that for FMCG brands that figure should be rather higher.
Data sourced from Thinkbox; additional content by Warc staff