Establishing the impact and true return of advertising

How our Analytics team’s research for Thinkbox made the case for ‘responsible ROI’

CEOs and CFOs know brands are important, supporting short- and long-term sales and margins. They understand brands are built on customers’ end-to-end experience of, and word-of-mouth recommendations about, buying and consuming products, reinforced by advertising. This report is a great first step towards maximising the net present value of advertising investment.

Patrick Barwise
Emeritus Professor of Management & Marketing at
London Business School

Practice & Location

Ebiquity Analytics
Office: London

Objective

Thinkbox represents the interests of the UK commercial TV industry and is dedicated to proving marketing effectiveness. Through a sustained series of research reports over several years, Thinkbox has sought to help the media and marketing communities reappraise and realise the true value and impact of TV advertising, in the context of other media channels. As digital spend has grown so strongly – and in some categories come to dominate during the past decade – Thinkbox wanted to understand the relationship between media investment and business performance.

Approach

Beginning our partnership with Thinkbox in 2011, we centralised several thousand econometric studies we had undertaken into a single database. We used this to make the case for the impact of advertising on TV, a medium that has high engagement, broad reach, and competitive pricing.

In our second study in 2014, we undertook a deep dive into the role of TV compared with digital, analysing the cumulative effects of both branded and generic search. And in our most recent, 2017 study, we focused on the effectiveness and return on investment TV is able to deliver to brands, and at scale. This enabled us to recommend – by category – how brands should adjust or right-size their investment in different media channels. By 2017, the database included results from more than 6,000 campaigns from 150 advertisers in 11 different sectors.

Outcomes

Our research for Thinkbox has reliably and consistently shown that most brands in most categories are underinvesting in TV advertising. In the 2017 study, we found that in FMCG, financial services, and travel – three of the biggest and most important sectors in UK advertising – the percentage of spend on TV should increase. IN FMCG it should grow from 75% to 85%, financial services 54% to 65%, and travel 40% to 46%.

What’s more, when looking across all advertising investment in the UK market, if all brands were to right-size investment, profitability in the UK marketplace would increase by up to £450m. Right-sizing would see brands investing more in TV and radio but reducing spend on digital display and out-of-home. We called this opportunity “the application of responsible return on investment”.

Demonstrated most brands would increase ROI with enhanced TV spend

Identified right-sizing opportunity to grow profitability in UK economy by up to £450m

Found consistent over-investment in digital display and out-of-home advertising

Showed that TV has both short-term and long-term impact on business performance

Project & Process

Analysed thousands of econometric studies to assess true impact of TV advertising

Connected investment decisions with business outcomes and KPIs

Compared performance of TV with other channels, in key vertical markets

Updated pioneering 2011 study with 2014 and 2017 research showing ROI at scale