New Study Shows TV ads Deliver the Most Profit

LONDON, October 13, 2011 -

TV ROI is 22% Higher Than 5 Years Ago, Despite Recession

- TV delivers more profit per £ spent than other forms of advertising, according to Ebiquity -

- TV has a ‘halo effect’ which improves the performance of other advertising -

Amid gloomy economic forecasts, a new study has revealed how advertising performed during the economic downturn in recent years. It shows that TV advertising created the most profit (an average return of £1.70 for every £1 invested), and that its return on investment (ROI) has increased by 22% in the last five years.

Payback 3, an independent study commissioned from Ebiquity by Thinkbox, is an econometric analysis of 3,000 ad campaigns across nine advertising sectors between 2006 and 2011. It compares, on a like-for-like basis, the sales and profit impact during the last five years of five forms of advertising: TV, radio, press, online static display and outdoor.

Other key findings include:

• TV advertising is 2.5 times more effective at creating sales uplift per equivalent exposure than the next best performing medium (press);
• TV advertising has a ‘halo effect’ across a brand’s portfolio. 38% of TV’s sales effect is felt by products not directly advertised;
• TV’s ‘halo effect’ also makes other forms of advertising work harder;
• TV is responsible for 71% of attributable sales in Ebiquity’s database, but only accounts for 55% of spend.

Effective profit

Ebiquity found that TV advertising’s ROI is on average 22% higher than five years ago, despite the recession. This is because TV’s effectiveness (sales uplift per exposure) has remained undiminished while the cost of advertising on TV has been falling in both absolute and relative (inflation-adjusted) terms.

TV also delivers the most extra profit, Ebiquity found: an average return of £1.70 for every £1 invested (ROI of 1:1.7). This compares to £1.48 for radio, £1.40 for press, £1.06 for online static display, and £0.45 for outdoor advertising.

Effective sales

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%.

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.

‘Halo effect’

TV advertising creates a ‘halo’ effect across a brand or range of goods. 38% of TV advertising’s effect is achieved on products not directly advertised (e.g. if a beauty brand advertises a shampoo product on TV, the campaign is likely to boost sales of its other products, such as body spray or moisturiser).

Ebiquity found that TV advertising consistently makes other elements of campaigns work harder. It found that TV’s effects are felt by all accompanying media, but are most starkly seen in combination with radio advertising, where radio’s effectiveness is increased by up to 100%, and with branded search, which a typical TV campaign increases by up to 35%.

Andrew Challier, Effectiveness Practice Leader at Ebiquity: “TV is weathering a perfect storm of economic downturn and increased competition from emerging media. Its unrivalled effect on sales and profit and its profound influence on other media make TV advertising both the most effective form of advertising and a powerful ally to other media and marketing mechanics, both on and offline.”

Neil Mortensen, Research and Planning Director at Thinkbox: “Advertisers instinctively know that TV advertising works but we must make sure we continue to prove it. Ebiquity’s study does exactly that.  Our task now is to share this important information with businesses and show them that no other form of advertising creates more profit than TV.”

www.thinkbox.tv

www.ebiquity.com

Research methodology

1. All reported findings are drawn from Ebiquity’s exhaustive database covering all measured advertising effects across 3,000 models, 9 categories and over 100 UK base clients.
2. Ebiquity’s database has been ‘cleansed’ with outliers and inconsistencies removed to enable robust comparison.
3. The advertising effects are derived via modelling techniques that have been methodologically consistent across the last 10 years; the lead approach is econometrics which enables understanding of all key drivers of sales including marketing effects. Fundamental techniques used are ordinary least squares (OLS) and Seemingly Unrelated Regression.
4. Ebiquity always take a ‘bottom up’ approach to understanding the role of marketing and media; this ensures a causative relationship is established, rather than the more questionable correlative effect of a top-down longitudinal approach which can misattribute key effects and misestimate the true impact of advertising.

Contact: Simon Tunstill | Head of PR, Thinkbox | +44(0)20-7630-2326

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