The advertising industry has undergone rapid change over the past decade as the emergence of new forms of advertising in digital and changes in consumer behaviour have led to growing competition for investment.
That has led to huge debate around how effective advertising now is, as well as which media should be attracting marketers’ attention and budgets. The likes of Google and Facebook have won over many with their plethora of data and claims of reach and targeting. But there are still many cautioning the industry not to forget about what really matters in marketing – driving profitable growth.
Into this complicated scene comes Thinkbox. As the trade body for TV advertising it clearly has a vested interest in proving that TV still works. But like with most of its research, the latest has been independently carried out by both Ebiquity and Gain Theory in an attempt to work out the business case for advertising.
The study analyses more than 2,000 advertising campaigns across 11 categories, looking at the impact on short-term profit (within three to six months of a campaign finishing). It then combines these with results for profits generated over the longer term (up to three years). The aim was to determine total profit return.
The IPA has been doing something similar with its database of entries to its Effectiveness Awards, but where this differs is that it is across all campaigns, not just those judged the best.
[Digital data] is like methamphetamine; the risk is that is the only conversation [the rest of the business] wants to have.
Mark Evans, Direct Line Group
The research finds that all forms of advertising create profit to varying degrees, both in the long term and the short term. On average, advertising creates a total profit return on investment (ROI) of £3.24 per £1 spend over three years.
Matt Hill, Thinkbox’s research and planning director, speaking at an event last week (16 November) to unveil the study, said: “[There has been] a worrying and disturbing picture that advertising is becoming less effective. There are numerous reasons behind this: CMO tenure, the high incentives for MDs and executives based on short-term goals, over-reliance on attribution modelling, the rising role of procurement teams, and the growth in direct response advertising at the expense of brand building.
“This is a depressing and worrying backdrop. So we wanted to show just how effective and powerful advertising can be.”