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TV advertising is the apex profit generator, according to new study

TV advertising represents the safest long-term media investment for brands, with a focus on profit, both long-term and short-term measurement, and a strategy optimized for brand growth all key to responsibly maximizing ROI; according to a new study from Thinkbox, Ebiquity and Gain Theory.

The research, which for the first time quantified the total profit produced by different medias, was presented to a packed audience at the latest Thinkbox event, Profit Ability: the business case for advertising. It casts a revealing light on the business impact of advertising in the short-term and long-term.

TV makes its case

The findings provide a compelling argument for why brands should centre their media strategies around TV, which accounted for 71% of all advertising-generated profit over the three years of research. To add context, print was its closest rival, at just 18%.

The report, published as a joint venture by Ebiquity and Gain Theory, also shows that TV emerges at the top of the pile when looking at average profit ROI, with £4.20 delivered for every £1 spent. Print once again followed with £2.43, trailed by online video (£2.35), radio (£2.09) and OOH (£1.15). Online display was the only medium found to deliver a deficit (£0.85).

Long and short-term gains

Shifting the eye of scrutiny to the short-term (within 3-6 months of a campaign finishing), TV was responsible for 62% of ad-generated profit, with an average ROI of £21.73 for every pound spent. It was followed by print (22%), radio (5%), online video (5%), OOH (3% and online display (2%). It was also revealed that television is the medium that carries the lowest short-term investment risk, with 70% of all TV campaigns delivering profit.

When factoring in long-term business effects (covering a 3-year period after the campaign has ended), 86% of TV advertising drove a profitable ROI, once again trailed by print (78%), radio (75%), online video (67%), OOH (48%) and online display (40%). What’s more, TV’s ability to generate profit is scalable: it continues to propel business growth at higher levels of spend, with many brands likely to be missing out because of under-investment.

A team player

One media combination that has demonstrated its ability to drive high long-term multiplier effects is out-of-home and TV, with radio also an effective accomplice. Both mediums boost exposure and recency, amplifying the brand building power of TV at times when the small screen’s influence is limited: eg, on the school run, commute and in office environments.

Online video (including VOD and YouTube), was also found to produce strong long-term brand effects, adding credence to the view that audio-visual content is a powerful branding tool that works across multiple media channels as part of a carefully devised strategy.

The danger of short-termism

Whilst TV’s effectiveness as a generator of short-term results cannot be contested, an overarching theme at the event was that, in order to harness the medium’s (and advertising in general’s) full potential, brands across all sectors need to focus more on the full, long-term picture.

We should be looking at ROI not as a measure of effectiveness, but efficiency, positioning it within the context of volumes of spend. By focusing on online attribution models as the sole performance indicator, brands are only measuring 18% of TV’s total business effects, Gain Theory found. Consequently, business and agencies should be optimizing media strategies around wider brand growth; bringing a larger pool of data into the equation, and assessing it through a longer lens.