‘This conversation will rage on’: Thinkbox reflects on Profit Ability
The Profit Ability 2 study released earlier this year once again highlighted how advertising can generate return on investment in the long term.
And, using data collated from Profit Ability 2, EssenceMediacom has further found that marketers could be spending three times too much on social media, while TV was not getting the budget it potentially deserves.
These new pieces of research all stemmed from the original Profit Ability study, which was published in 2017.
To mark 10 years of Grands Prix — the most coveted gong — at the Adwanted Media Research Awards (AMRAs), The Media Leader looks back on this project, which picked up the top prize at the 2019 event.
Profit Ability, commissioned by Thinkbox and led by Ebiquity and Gain Theory, sought to identify the business case for advertising.
Work by Les Binet and Peter Field has shown that advertising has become less effective due to short-termism, over-emphasis on efficiency and over-reliance on easily visible metrics to judge performance. Media channels such as TV have suffered as a result.
Thinkbox’s research aimed to refocus attention on brand-building and investment for the long term, establishing comprehensive benchmarks for the sustained effects of different forms of advertising.
Ebiquity analysed its databank to look at the short-term impact of media investment, while Gain Theory used its databank to interrogate the longer-term impact of advertising on the future base of sales.
The study found that advertising is a powerful business investment that can be risk-assessed, and businesses optimising ad investment based solely on short-term returns are massively undervaluing the total profitability driven by advertising.
It also picked up Best Custom Media Research Project — Trade Body at the 2019 AMRAs.
Matt Hill, outgoing director of research and planning, Thinkbox
What were the wider industry implications from the project?
“Profit Ability was about building the business case for advertising and the first publication to properly discuss ‘risk’ in media selection.
“We’d hope that it opened the door to more conversations between marketing and finance teams about the role for advertising, using language and thinking that matter to both departments.”
How did this project feed into further work from Thinkbox?
“Profit Ability was a progression from previous work using the Ebiquity MMM databank to provide industry media ROI benchmarks (the Payback series), but it was the first project where more than one media effectiveness consultancy collaborated (bringing in Gain Theory).
“Following Profit Ability, Thinkbox worked with EssenceMediacom, Gain Theory, Wavemaker and Mindshare on the Demand Generation study that led to the creation of the Media Mix Navigator — a tool that allows brands to optimise media investment based on their business characteristics.
“Earlier this year, we took the next step of joining up both work streams to create the ultimate databank of MMM studies across all the businesses mentioned above — and Profit Ability 2 was born.”
What was the biggest challenge in the research?
“It sounds like a small point, but client approval for adding their confidential and self-funded MMM analysis to a databank is a big ask. We were relying on the generosity and willingness of a huge number of businesses to share this data in order to get to a place where we had a robust databank.
“Kudos to Ebiquity and Gain Theory, which clearly had the strength of relationship with their clients to enable this project to get off the ground (and thanks to all the brands that shared their data!).”
What was the most surprising insight you found?
“As a final part of the study, Ebiquity conducted a ‘right-sizing’ exercise — ie. rather than optimising ad investment to short-term returns, they optimised to total returns.
“The data suggested that money is being left on the table. Across just the FMCG, retail and financial services brands in the study, there was the potential to create an additional £450m in profit (a 12% improvement) if adspend was optimised to ‘total returns’ versus ‘short-term returns’.”
Do you think there is still a debate about short term versus long term despite what the study found?
“It’s over 10 years since the publication of The Long and the Short of it and we’re still talking versus rather than both!
“This conversation will continue to rage on — there’s still much to learn and evidence to unearth to understand how to get the most out of advertising across both the short and longer term.
“One thing we really need to grasp as an industry, though, is that short/long or activation/brand decisions are much more about creative choice than about media choice.”
The 2025 AMRAs are now open for entries. The early entry deadline is 9 October, while the late entry deadline is 16 October.
‘Remain vigilant’: Sam Tomlinson reflects on PwC’s transparency study
Brands could be spending three times too much on social. You read that right
Advertising generates profit, but not all media channels are equal