The research commissioned by Thinkbox from Ebiquity and Gain Theory found that, all forms of advertising create profit to varying degrees. On average, advertising creates a total profit return on investment (ROI) over 3 years of £3.24 per pound spent.
Within this, the study, Profit ability: the business case for advertising, found that TV advertising delivered the largest volume of both short-term and total advertising-generated profit.
This makes it the lowest-risk form of advertising investment with the highest ROI per pound spent.
Here are the key findings from the study for all forms of media:
Ebiquity and Gain Theory found that TV advertising was responsible for 71% of total advertising-generated profit at an average profit ROI over three years of £4.20 for every pound spent, the highest ROI of any media.
TV is followed by print, which accounted for 18% of total adveritising-generated profit, online video (4%), out of home (3%), radio, and online display (1%).
In the reserach, online video advertising included both broadcaster VOD and online video advertising on sites such as YouTube and Facebook.
In the short term, TV was also found to be the most effective, responsible for 62% of all advertising-generated profit in the short term at an ROI of £1.73 for every pound spent, also the highest of any media.
This is followed by print (22%), radio (5%), online video (5%), out of home (3%) and online display (2%).
The study also identified the relative safety of different advertising investments.
TV was found to be the medium most likely to create advertising-generated profit both in the short term and the long term.
In the short term, 70% of TV advertising campaigns delivered a profitable return. This is followed by radio (62%), print (61%), online video (52%), online display (37%) and out of home (19%).
And in the long-term, in the three years after ad campaigns had finished, 86% of TV advertising campaigns delivered a profitable return.
TV is followed by print (78%), radio (75%), online video (67%), out of home (48%), and online display (40%).
The study concluded that advertisers may be missing out on maximising advertising-generated profit by under-investing in TV. Currently, TV accounts for 54% of advertising spend among Ebiquity’s database, yet it is responsible for 71% of total advertising-generated profit.
"The study is important because it shifts the emphasis away from the ROI number ‘arms-race’ to a more responsible approach that talks about the scalability of ROI by media channel, and the impact that this has on profit generation," Andrew Challier, chief client officer at Ebiquity. "This is arguably more business-relevant and almost certainly of more interest to chief financial officers."
With marketers having to justify everything they spend, it is important to provide them with a refreshed and updated understanding of what different forms of advertising contribute, Matt Hill, Thinkbox’s research and planning director, said.
"This study by two highly respected, independent organisations with robust data at their disposal bridges the gap between the marketing and finance departments with compelling evidence that quantifies advertising’s ability to deliver shareholder value, and TV’s centrality to that," he said.
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