Study: TV the most effective medium on which to advertise
Television remains the most effective medium on which to advertise, with the highest return on investment for every pound invested, according to a new study commissioned by Thinkbox.
The Ebiquity research, which analysed over 4,500 ad campaigns across ten advertising sectors between 2008 and 2014, found that TV gave an average return of £1.79 for every £1 invested between 2011 and 2014, up from £1.70 between 2008 and 2011.
‘Payback 4: pathways to profit’ 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 VOD) and outdoor.
Despite TV’s dominance, press and radio were found to be the next best at generating sales, with press advertising delivering 52% of the sales uplift that TV creates, radio 27%, online display (excluding VOD) 13%, and outdoor 11%.
However, a separate econometric study, conducted last October by the Radio Advertising Bureau, said that radio advertising has the second-highest performance behind TV, giving radio advertisers their money back 7.7 times over, placing press in third place.
The main reasons for TV’s increasing effectiveness were found to be multi-screening viewers being able to act instantly on what they see; a more sophisticated understanding from advertisers of how to employ multiple TV ad opportunities and integrate them with other media; a ‘golden age’ of TV content creating a higher quality environment for advertisers; and the falling cost of advertising on TV in recent years.
“TV has consistently demonstrated the highest ROI over a seven year period, during a period of unprecedented economic and technological upheaval and change,” said Andrew Challier, effectiveness practice leader at Ebiquity.
“TV is continuing to demonstrate its value as we see the first real signs of economic growth.”
Thinkbox’s research and planning director, Neil Mortensen, added: “Advertisers know that TV advertising works because they see the effect it has on sales and profit – both in the short and long-term. But it is essential we continue to prove it and explain why TV is such an effective investment.”
TV advertising has consistently demonstrated the highest ROI of any form of advertising over a seven year period, with TV also delivering the most profit: an average return of £1.79 for every £1 invested during 2011-14. This compares to £1.52 for radio, £1.48 for press, £0.91 for online display, and £0.37 for outdoor advertising.
Press and radio are next best at generating sales
TV consistently outperforms other media in generating sales and is on average twice as effective per equivalent exposure as the next best performing medium. Press advertising delivers 52% of the sales uplift TV creates, radio 27%, online display (excluding VOD) 13%, and outdoor 11%.
Optimum TV investment
Based on the effectiveness analysis, Ebiquity has identified the optimum share of advertising budgets that should be spent on TV. For both Finance and Retail brands, 60% of the ad budget should ideally go on TV. For FMCG brands, it should be significantly more than this with Ebiquity identifying a major opportunity for them to increase investment in TV.
TV’s ‘halo effect’ boosts other forms of advertising
TV advertising creates a ‘halo’ effect across a brand or range of goods. 37% of TV advertising’s effect is achieved on products not directly advertised (e.g. if a finance brand advertises a current account on TV, the campaign is likely to boost sales of its other products, such as mortgages or insurance).
Multi-screening viewers boost branded search
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 one of the most significant effects is on branded search. The study found that the amount of branded searches created by TV advertising on search engines such as Google had increased by 33% per rating point during 2011-14 compared with 2008-11.
It is likely this has been encouraged by the increase in ‘multi-screening’ – using an internet connected device while watching TV – and the fact that the proportion of brands featuring specific online calls to action in their TV ads has increased from 2% in 2005 to 16% in 2013.
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