A study of over 4,500 advertising campaigns from the last 7 years has found that TV advertising remains the most effective form of advertising and creates the most profit for businesses pound for pound.
The study found that TV gave an average return of £1.79 for every £1 invested during 2011-14. This is up from £1.70 for every £1 invested during 2008-11.
‘Payback 4: pathways to profit’ – commissioned from Ebiquity by Thinkbox – is an econometric analysis of over 4,500 ad campaigns across 10 advertising sectors between 2008 and 2014. It compared, on a like-for-like basis, the sales and profit impact of five forms of advertising: TV (linear spot and sponsorship), radio, press, online display (excluding video on demand) and outdoor. The study is an update on Ebiquity’s previous effectiveness study for Thinkbox, Payback 3, which was published in 2011.
According to Ebiquity’s latest study, TV consistently demonstrated the highest return on investment (ROI) of any form of advertising over the last 7 years, a period of economic recession and major upheaval in media technology and consumption.
Reasons for TV’s increasing effectiveness include ‘multi-screening’ viewers being able to act instantly on what they see; advertisers’ more sophisticated understanding of how to employ multiple TV ad opportunities and integrate them with other media; a golden age of TV content creating a higher quality environment for advertisers; as well as the falling cost of advertising on TV in recent years.
Other key findings from Payback 4 include:
- TV advertising is twice as 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. 37% of TV’s sales effect is felt by products not directly advertised in the TV campaign
- TV’s ‘multiplier effect’ makes other forms of advertising work harder
- TV created 33% more branded online searches per TV rating point during 2011-14 than in 2008-11
TV is most effective
TV advertising has consistently demonstrated the highest ROI of any form of advertising over a 7 year period, Ebiquity found. And TV also delivers the most profit: an average return of £1.79 for every £1 invested during 2011-14. This compares to £1.52 for radio, £1.48 for press, £0.91 for online display, and £0.37 for outdoor advertising. The study echoes the findings of recent econometric research by the Radio Advertising Bureau, which also found that radio gave the second best ROI after TV.
Press and radio are next best at generating sales
Ebiquity found that TV consistently outperforms other media in generating sales and is on average twice as effective per equivalent exposure as the next best performing medium. Press advertising delivers 52% of the sales uplift TV creates, radio 27%, online display (excluding VOD) 13%, and outdoor 11%.
Optimum TV investment
Based on the effectiveness analysis, Ebiquity have identified the optimum share of advertising budgets that should be spent on TV. For both Finance and Retail brands, 60% of the ad budget should ideally go on TV. For FMCG brands, it should be significantly more than this with Ebiquity identifying a major opportunity for them to increase investment in TV.
TV’s ‘halo effect’ boosts other forms of advertising
TV advertising creates a ‘halo’ effect across a brand or range of goods. 37% of TV advertising’s effect is achieved on products not directly advertised (e.g. if a finance brand advertises a current account on TV, the campaign is likely to boost sales of its other products, such as mortgages or insurance).
Multi-screening viewers boost branded search
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 one of the most significant effects is on branded search. The study found that the amount of branded searches created by TV advertising on search engines such as Google had increased by 33% per rating point during 2011-14 compared with 2008-11.
It is likely this has been encouraged by the increase in ‘multi-screening’ – using an internet connected device while watching TV – and the fact that the proportion of brands featuring specific online calls to action in their TV ads has increased from 2% in 2005 to 16% in 2013.
Andrew Challier, Effectiveness Practice Leader at Ebiquity: “TV has consistently demonstrated the highest ROI over a 7 year period, during a period of unprecedented economic and technological upheaval and change. TV is continuing to demonstrate its value as we see the first real signs of economic growth.”
Neil Mortensen, Research and Planning Director at Thinkbox: “Advertisers know that TV advertising works because they see the effect it has on sales and profit – both in the short and long-term. But it is essential we continue to prove it and explain why TV is such an effective investment.”
Total TV advertising revenue in the UK increased by 3.5% in 2013 to reach a new record high of £4.63 billion, according to full year revenue figures provided to Thinkbox by the UK commercial TV broadcasters. This is the fourth consecutive year that TV ad revenue has grown in the UK.
TV advertising investment is forecast to grow again in 2014, boosted by the World Cup in Brazil. The Advertising Association/Warc predicts TV ad revenue to grow by 6% in 2014.