New report finds that cutting TV advertising can damage brand value
A new report has found that cutting TV advertising budgets relative to competition is very likely to shrink ‘brand value’ – the willingness of consumers to pay a relative premium for a specific brand.
Produced by PricewaterhouseCoopers LLP (PwC) for Thinkbox, the report shows that, within a year, reducing share of advertising investment – in particular TV investment – is very likely (78%) to diminish a business’s competitive position as consumers become less willing to pay for that brand.
However, increasing share of TV investment is very likely (86%) to improve that position and, by extension, potential profitability.
In addition, a report by data modelling consultancy Data2Decisions (D2D) found that brands that stop advertising on TV for only one year will need five years to undo the damage this lack of exposure causes.
PwC’s research took in 10 different markets – airlines, mobile phone operators, electrical appliances, haircare, fruit juice, cereals, motor insurance and three separate car markets – and involved an in-depth examination of consumer ‘willingness to pay’ for brands, a trusted economic measure that is a strong indicator of immediate and future revenue.
Tess Alps, chief executive of Thinkbox, said: “The message to business is very clear; protect your TV spend at all costs. In fact, if you can increase your TV spend right now you are very likely to reap great rewards.
“TV represents the best value in the media marketplace while delivering the most reliable returns; it’s the most effective medium per pound spent and the consistent growth of commercial impacts is delivering 1992 prices at early ’80s at constant pricing. Don’t lose this opportunity to get ahead of your competition by turning to the best media bargain in the UK.”
Thomas Hoehn, partner, PricewaterhouseCoopers, said: “The key lessons of our study are twofold. Firstly, competition does not disappear in a downturn so reducing your relative TV investment has a clear downside. Secondly, TV continues to drive significant shifts in consumer preferences and willingness to pay for a brand.”
“This also further underlines the greater consumer impact of TV advertising relative to other media,” he added.
D2D were commissioned by Thinkbox to analyse and compare YouGov’s Brand Index data and Nielsen’s Ad Dynamix database of media spend, over three years and over 1,000 brands. As with the PwC study, D2D found that TV was the leading media contributor to brand value, delivering across a broader range of metrics than other media, especially relating to perceptions of quality, reputation and ‘buzz’.
It also found that TV is the leading influence on perceptions of value for high consideration items, and works powerfully with more response-based media like online and direct mail in generating positive brand perceptions.
Thinkbox: www.thinkbox.tv