MUMBAI: Amid gloomy economic forecasts, a new study has revealed how advertising performed during the economic downturn in recent years. It shows that TV advertising in the UK created the most profit (an average return of ?1.70 for every ?1 invested), and that its return on investment (ROI) has increased by 22 per cent in the last five years.
Payback 3, an independent study commissioned from Ebiquity by Thinkbox, is an econometric analysis of 3,000 ad campaigns across nine advertising sectors between 2006 and 2011. It compares, on a like-for-like basis, the sales and profit impact during the last five years of five forms of advertising: TV, radio, press, online static display and outdoor.
Other key findings include:
- TV advertising is 2.5 times more effective at creating sales uplift per equivalent exposure than the next best performing medium (press);
- TV advertising has a ‘halo effect’ across a brand’s portfolio. 38 per cent of TV’s sales effect is felt by products not directly advertised;
- TV’s ‘halo effect’ also makes other forms of advertising work harder;
- TV is responsible for 71% of attributable sales in Ebiquity’s database, but only accounts for 55% of spend.
Effective profit: Ebiquity found that TV advertising’s ROI is on average 22 per cent higher than five years ago, despite the recession. This is because TV’s effectiveness (sales uplift per exposure) has remained undiminished while the cost of advertising on TV has been falling in both absolute and relative (inflation-adjusted) terms.
TV also delivers the most extra profit Ebiquity found: an average return of ?1.70 for every ?1 invested (ROI of 1:1.7). This compares to ?1.48 for radio, ?1.40 for press, ?1.06 for online static display, and ?0.45 for outdoor advertising.
Effective sales: Ebiquity found that TV consistently outperforms other media in generating sales and is on average 2.5 times more effective per equivalent exposure than the next best performing medium. Press advertising delivers 37 per cent of the sales uplift TV creates, radio 19 per cent, online static display 15 per cent and outdoor nine per cent.
Ebiquity also found that, based on advertising investment in its database, TV advertising is responsible for 71 per cent of the attributable sales but accounts for only 55 per cent of the spend.
‘Halo effect’: TV advertising creates a ‘halo’ effect across a brand or range of goods. 38 per cent of TV advertising’s effect is achieved on products not directly advertised (e.g. if a beauty brand advertises a shampoo product on TV, the campaign is likely to boost sales of its other products, such as body spray or moisturiser).
Ebiquity found that TV advertising consistently makes other elements of campaigns work harder. It found that TV’s effects are felt by all accompanying media, but are most starkly seen in combination with radio advertising, where radio’s effectiveness is increased by up to 100 per cent and with branded search, which a typical TV campaign increases by up to 35 per cent.
Ebiquity effectiveness practice leader Andrew Challier said, “TV is weathering a perfect storm of economic downturn and increased competition from emerging media. Its unrivalled effect on sales and profit and its profound influence on other media make TV advertising both the most effective form of advertising and a powerful ally to other media and marketing mechanics, both on and offline."
Thinkbox research and planning director Neil Mortensen said, "Advertisers instinctively know that TV advertising works but we must make sure we continue to prove it. Ebiquity’s study does exactly that. Our task now is to share this important information with businesses and show them that no other form of advertising creates more profit than TV."
