Linear TV advertising investment by businesses born online has increased by 37% since 2019, with some categories upping their spend by as much as 279%.
Analytics firm Nielsen and TV marketing body Thinkbox define online-born businesses as those which began online, with no prior bricks and mortar presence. According to new data provided by Nielsen, the online category increasing spend on TV the fastest is exercise brands, which collectively increased spend 279% to £12.4m. The category includes brands such as Peloton and Echelon.
Online used car services are another category driving considerable growth, with brands such as Cazoo, Carwow, Cinch and Webuyanycar having collectively upped their spend by 235% compared to the same period in 2019, reaching £36.3m in total.
The categories recording the next biggest spend increases are gifting and greeting cards, with brands such as Moonpig and Thortful boosting investment by 209% to £11.5m, online food delivery services such as Deliveroo, Just Eat and Gousto, which saw investment rise by 194% to £65.1m, and streaming platforms including Disney+, Netflix and Amazon Prime, which upped their collective spend by 137% to £32.1m.
Meanwhile, online marketplaces such as Amazon, eBay, Etsy, Vinted and Gumtree increased TV spend by 103% to £63.1m.
Notable outliers include travel companies (Expedia, AirBnB, Hotels.com, Booking.com), which cut investment by 57%, as well as financial brands (Experian, ClearScore, Credit Karma) which dropped spend by 9%.
Altogether, online-born businesses invested £559.9m in TV advertising in the UK between January and July this year, a £151m boost. Collectively, these businesses now account for 20% of all linear TV ad spend, ahead of food (10.1%), finance (8.5%) and entertainment and leisure (7.2%).
“In order to grow and meet venture capitalist demands – or for some, to maintain revenues now that society is opening back up – increasing net reach has become even more of a priority for online brands, and TV is particularly good at that,” says Marketing Week columnist and strategist JP Castlin to explain the rise in investment.
Indeed, Thinkbox’s research and planning director Matt Hill says while there is “no doubt” that online-born businesses have increased their marketing investment overall as a result of the pandemic, the scale of additional investment in TV “clearly demonstrates they see TV as a valuable means of driving growth”.
In comparison, while spend on radio has increased 64% over the same period, that only represents an extra £30m. Hill therefore describes the rise in TV spend as a “dramatic shift in momentum” and a “tipping point”.
“We’re not just seeing toes being dipped into TV’s waters. Even at launch, many have been diving in at scale with major investments,” he says. For example, online start-up Ismybillfair is due to launch its first TV campaign this week as the challenger brand looks to disrupt the price comparison market, with its marketing spend to rise from £100,000 a month to “well above” half a million pounds as a result.
“This is significant not least because so many online-born businesses are backed by venture capital – investors known for tight control over expenditure. That they are devoting sizeable budgets to TV demonstrates they buy in to what TV delivers.”
Despite being early days in the UK in terms of the ecommerce boom, Hill adds he is “confident” there will be continued growth as TV broadcasters are seeing signs that online-born businesses which tried TV for the first time last year are “enjoying the results” and increasing their investment.Meet the startup going big on TV to disrupt the price comparison market
According to James Hankin, founder and consulting strategist at Vizer Consulting, what these brands are hoping TV can deliver for them is “mental real estate”.
“Simply put, if you don’t have physical stores that communicate through simple presence then you have to use other ‘real estate’ to counter balance. Ergo, ‘mental real estate’, or memory,” he explains. “TV and broadcast communications are typically best for building this in the context provided.”
Hankin adds that once one online brand in a category has “won” the available mental real estate among consumers, it becomes very difficult for other brands in the market to win share.
This can be seen among some of the big digital aggregators, he says – MoneySuperMarket has been the leader in the price comparison market for over a decade with little having been taken from it in terms of share. It’s a similar story for Zoopla, as it takes on rival property platform and market leader RightMove.
“[TV] is something that many online brands have been nervous about historically because of the large cost – they’ve not been used to big capital expenditure investments in the main,” Hankin continues. “But if you lose the initial fight then you have to work very hard to overcome the next, and even then its not a guarantee.”
Overall, forecasts suggest TV advertising investment will finish 2021 up by as much as 18% compared with 2020, more than reversing the pandemic-induced decline of 11%.