Marketers instinctively know that advertising works and that investment over the long term helps develop and maintain brands. But that is not enough – we need to prove it to them.We know that advertising builds & maintains a ‘base’ of sales. This long term effect varies between 50% - 300% of the short term effect, depending on the brand & sector of course.And techniques like econometrics can help us understand the effect each medium has in a campaign in the short term as well as long term effect on the brand as a whole.And as you would expect the impact of TV advertising investment has long been of paramount importance to Thinkbox The ‘payback’ of advertising expenditure is under constant scrutiny, particularly in these current volatile economic climes. Since 2007 Thinkbox has been looking at how we can prove TV’s effectiveness in the long and short term for a range of markets using data over several years not merely weeks. We are continually looking at new ways to show TV works not just on its own but alongside other media.
In the last five years there have been a number of landmark studies exploring the issue of advertising payback in great depth. They have allapproached it from different angles: TheIPA’s seminal Marketing in the Eraof Accountability, through to our two previous Payback studies with PwC, our work with Data2decisions looking at advertising in a recession, and, most recently, the study we did with the IPA and Gunn Report looking at the link between creativity and effectiveness.BACK UP NOTES - 7 of the key things we have learned from previous studies;ONEFirst, from PwC, we know that not only does TV payback but it pays back more than any other medium. It is important to note that, on average, for every £1 spent on TV advertisingyou get back £4.50 back in increased SALES REVENUE not profit. That is an important distinction that we’ll talk more about later.TWOWe also know that TV has a huge effect on sales beyond year 1 of investment. This long term effect on sales is generally not factored into day to day, short-term focused sales uplift. But it is important to remember that TV advertising works immediately but also helps Year 2 remain almost as strong as year 1 and, whereas the effect of other media on sales fades quite quickly after year 1, TV still keeps working in the longer term THREEAnother finding from PwC was that, for all the brands they measured across a whole decade, the strongest correlation with higher brand values was with TV spend. When a brand is supported by TV spend its value in consumers’ minds increases and allows the advertiser to support a higher premium in the market. TV increases Willingness to Pay.FOURIt is vital for us to warn of the potential dangers to your business by reducing your TV budget or even cutting it out - “going dark”.Our work with Data2Decisions showed that cutting your TV budget even for just one year has a massive effect on a brand’s long term health. They found that 60% of advertising revenue loss would occur in year 1 alone and that for some brands it can take anything between 2-6 years to recover the lost profit.FIVEAnd happily the brilliant work done by the IPA’s in “Marketing in the Era of Accountability” coincided with the launch of our first payback study and very much backed up our findings. Analysing over 26 years of IPA effectiveness award entries, it proved that TV is a highly effective medium and showed that campaigns that used TV outperformed those that didn’t.SIXAnd additionally that whatever the size of your brand, by investing in share of voice on TV in excess of your brands share of market, you can drive that market share over your competition. SEVENFinally, and remarkably, the IPA study also found that even with the increased competition for eyeballs over the last three decades - TV’s ability to adapt and grow, offering more convenience, better quality and an improved commercial environment for advertisers has helped TV to become more effective over the last 30 years.
The first main theme to come out of the research is based around TV being the lead effectiveness medium. Ebiquity found that TV consistently outperforms other media in generating sales and is on average 2.5 times more effective per equivalent exposure than the next best performing medium. Press advertising delivers 37% of the sales uplift TV creates, radio 19%, online static display 15%, and outdoor 9%.[The data is based on the sales uplift per exposure for that medium (you can use substitute GRPs for exposure if that makes more sense).So a simple way of putting it would be if an exposure on TV delivers 100 product sales, then an equivalent exposure on Press would produce 37 product sales.]Crucially, over time TV effectiveness has remained pretty resolute – there is no evidence that sales uplift per TVR has really changed at all – the pre 2008 average and the post 2008 average are nearly identical. Ebiquity also found that, based on advertising investment in its database, TV advertising is responsible for 71% of the attributable sales but accounts for only 55% of the spend(therefore TV is punching well above its weight for advertisers).
Not only can TV deliver the strongest ‘direct’ sales effect it also delivers a halo across brand portfolios like nothing else. So for example, in finance, if a bank advertises its mortgage product on TV, the campaign will also boost sales of its other offers, such as house insurance or current accounts. Of the financial return delivered within a campaign, 38% is delivered via halo (or non-advertised) products – which is pretty consistent across our key sectors. As you may imagine, strategically, this can play a key role in the way advertisers advertise their products and the way they leverage the “masterbrand”.
…which leads us onto the BIG headline from this study…TV return on investment is 22% higher now than it is 5 years ago. Returns are better now than they ever have been. With the cost of advertising on TV offering brilliant value and the sales effectiveness of TV consistently outperforming other media - a million pound investment on TV today will yield you 22 per cent more profit than it would five years ago. If you take the cost of the media out of this equation (i.e. the pound you would have to spend) you get a whopping 65% increase on the pure profit returnEither way, a £1million investment will deliver £000s more today than it did 5 years ago. TV advertisers have never had it so good…
And TV on average delivers more ROI than any other media and is 15% better than the next most efficient media, Radio. (we have to bear in mind that the best ROI in radio is delivered due to the amplification effect of TV) – later point in presentationNote – Online Display does not include any VOD activity on broadcaster sites or catch up. Comment from Ebiquity on VOD…sample size is small but we tend to find that VOD performs similarly to TV on a per 100 ratings perspective.
Categories do behave differently when it comes the ROI for each medium (due to size of brands and margins on average in each sector)But in most categories TV is critical to delivering the best ROI. Ebiquity built some models from their database to show what level of investment into TV would create the best ROI by category. Typically TV accounts for 68% in Ad Dynamix and 72% of total campaign spend for FMCG amongstEbiquity’s clients but we rarely see other media delivering anything like the efficiency and effectiveness of TV. If anything TV should be even more dominant than it already is. For retail TV’s fair share of mass media spend is, and should be, around half of the total. For Financial Services the theoretical optimum is around 60% whilst the database average is lower at 48%.Ebiquity would stress that these are theoretical models based on “typical” campaigns in each instance.They do not propose that all campaigns should be planned against these benchmarks. Indeed they have already advocated that each campaign needs individual consideration based on the task at hand.The models DO demonstrate that there is no evidence of an over-reliance on TV. If anything there is scope for increased TV investment in the current market.
And finally Ebiquity found that TV advertising consistently makes other elements of campaigns work harder. Basically TV delivers right the way through a campaign and makes every other part perform better. These are a number of consistently observed findings that Ebiquity has built up via its work with its clients. Firstly, TV is a multiplier on other awareness building channels – especially where there is branded coherence Through The Line. It is fair to say that Radio does benefit the most from this synergy and as a result the multiplier is the strongest here. Sometimes integrating Radio with the TVC can ‘make-or-break’ the effectiveness of Radio. Ebiquity have seen multipliers of over 100%.On other channels the effect is up to and around 10% under normal circumstances. Secondly TV drives branded search, particularly in our key sectors Retail and FS. On average (across 100 brands sitting within sectors such as FS, Retail, Electronics, Automotives), we see brand terms increase by c. 35% per 100 TVRs. This is very important…firstly as branded PPC delivers much greater click-through conversion than generic search. Also, branded PPC is significantly cheaper than Generic – this varies drastically by sector, product, brand, term types but, on average, there is a factor of 5 differential. Also we do see growing evidence that TV is driving increased generic search click-through conversion. In addition to all this, TV drives conversion via aggregators and price comparison sites up to 6%.Thirdly TV is a multiplier for promotional effectiveness. By aligning TV advertising with in-store promotional activity, Ebiquityfound, under normal conditions, a multiplier effect of up to 20%.
1. New Thinkbox research intoAdvertising EffectivenessPayback 3: ad success intough times
2. Thinkbox and advertising effectiveness since 2007… Marketing in the Era of Accountability 2007 meta-analysis of 26 years of IPA entries Payback 1 – 706 brands in 7 markets, 2007 10 years of dataPayback 2 – Brand equity analysis, 2008conjoint analysis in 10 markets 2008 Advertising in a Recession – the link between brand health and media spendCreative Effectiveness – IPA datamine 2010and Gunn report
3. The new news about TV payback…To prove the effectivenessof TV in testing financial timesTo include greater detail andnew data like online andcategory levelActionable results, commonthemes and norms
4. Why use EbiquityExperienceLarge data setIndependenceReal observations
5. 1. TV is the lead effectiveness medium This sales effectiveness has remained consistent pre and post recession 120% 100% 100% Effectiveness Index TV Index = 100 TV is c. 2.5 times 80% more effective per impact than next 60% best medium 40% 37% 19% 20% 15% 9% 0% TV Radio Press Online Outdoor displaySource: Ebiquity database
6. 2. TV has strongest ‘halo’ effect across the portfolio TV drives sales of non advertisers products The average TV ‘halo’ effect is 38% of total ‘Halo’ as a percentage Halo Direct 100% 90% 80% 35% 41% 40% 70% 60% 50% 40% 30% 20% 10% 0% FMCG Retail FinanceSource: Ebiquity database
7. 3. TV ROI is 22% higher now than 5 years ago 2006 2011 Invest £1 million £1 million Net Profit £1.49 million £1.81 million +22% Net Net Profit £0.49 million £0.81million +65%Source: Ebiquity database
8. 4. TV delivers the best return for your money Averaged across the last 3 years £2.00 £1.70 £1.48 £1.50 £1.40 Average ROI £1.06 £1.00 £0.50 £0.45 £0.00 TV Radio Press Online display OutdoorSource: Ebiquity database
9. 5. Categories behave differently In most categories TV is critical to campaign ROI 100% 100% 90% 80% 72% 68% 70% 60% 60% 48% 50% Nielsen 50% 47% 44% 43% Ebiquity 40% Optimum 30% 20% 10% 0% FMCG Finance RetailSource: Nielsen AdDynamix (Oct 10 – Sep 11) Ebiquity DatabaseAverage TV % spend relative to Print, Radio, Outdoor, Online Display. Does not include Search and DD/DM
10. 6. TV is the beating heart of a campaign effectiveness medium TV helps drive greater effectiveness Through-The Line REACTIVE INTERACTIVE ACTIVE TV is a multiplier on TV drives branded other ‘awareness- search …by c. 35% per building’ channels 100 TVRs TV: Radio TV is driving increased TV increases promotioneffectiveness multiplier generic search click- effectiveness the strongest through conversion …by up to 20% …can be > 100% TV also drives Multipliers to other conversion via media …up to 10% aggregators/price comparison sites …by up to 6% From brand building…………......to ‘call to action’
11. Summary TV is the lead effectiveness medium TV ROIs hit new high TV has the strongest ‘halo’ effect across the portfolio TV delivers the best return for your money TV is critical to the total campaign ROI for the majority TV delivers the best return for your money TV helps drives greater effectiveness Through-The-Line