The econometric study found that every £1 invested in TV between 2011 and 2014 generated £1.79 in profit. That ROI figure is up from the £1.70 return from TV advertising investments between 2008 and 2011, when the previous Ebiquity/Thinkbox study was published.
The increasing effectiveness of TV advertising can be attributed to the effect of “multi-screening” – allowing consumers to immediately act on the ads they see; marketers becoming more “sophisticated” about how they link TV advertising to other media; the “golden age” of TV programming; and the falling cost in TV ad prices, the study suggests.
Based on the analysis, Ebiquity suggests that finance and retail brands should allocate 60 per cent of their advertising budgets to TV, while FMCG brands should be spending “significantly more” on TV as a proportion of their total ad spend.
This is compounded by the finding that TV advertising makes other elements of a marketing campaign work harder. The study found that the amount of brand searches created by TV advertising had increased by 33 per cent per rating point between 2011-14 compared with 2008-11, likely boosted by the consumer shift towards multi-screening.
TV is twice as effective as the next best performing media – radio – which the study found generates £1.52 for every advertising £1 spent, according to the study. This compares with £1.48 for press and 91p for out of home advertising.
The research appears to suggest that online display is the least effective advertising medium – generating just 37p in profit per £1 spent. That is despite a separate study, conducted by eMarketer and published earlier this year, predicting consumers are set to spend more time with digital media than TV in 2014.
Tim Elkington, the Internet Advertising Bureau’s director of research and strategy, says the IAB “welcomes” the Thinkbox research – despite its dim outlook for online display – because it highlights the need for cross-screen integration.
He adds: “The recent IAB/PwC adspend study shows that digital display advertising spend has more than doubled in the last five years from £755m in 2009 to £1.8bn in 2013 and mobile display is growing at 180 per cent a year – this increased investment by advertisers is testament to the clear returns marketers derive from online and mobile. The success of digital display is further underpinned by the Advertising Association and WARC, who have forecast that it will continue to grow, by 16 per cent in 2014.”
The Payback 4: Pathways to Profit study analysed more than 4,500 ad campaigns across 10 different sectors between 2008 and 2014, comparing on a like for like basis the sales and profit impact of five forms of advertising: the TV spot, radio, press, online display (excluding VOD) and outdoor. It is an update to the previous Thinkbox/Ebiquity study – Payback 3 – released in 2011.
Total UK TV advertising revenue has grown for four consecutive years, with the figure growing by 3.5 per cent to a record high of £4.6bn, according to Thinkbox figures
The Advertising Association and Warc predict TV advertising revenue will grow by 6 per cent in 2014, boosted by the broadcast of the Brazil World Cup. Yesterday (14 May) ITV forecast a 13 per cent ad revenue spike in its second quarter as brands kick off their summer football campaigns.