Payback report looks to understand TV's short-term impact on sales

Latest research released by ThinkTV analyses nine channels to understand ROI, sales contribution and optimum mix of channels

TV’s short-term as well as long-term contribution to sales and marketing ROI has taken centre stage in the latest edition of The Payback Series research released this week.

The latest edition of The Payback Series research encompasses 60 brands turning over $23 billion between them and an annual media spend of $450 million. There were 10 industry categories involved including financial services, FMCG, automotive and retail.

The research has been undertaken by Monash University Department of Marketing head, professor Peter Danaher, with GroupM and WPP-owned marketing effectiveness consultancy, Gain Theory. The latest results were revealed as part of this week’s Future of TV Advertising event in Sydney.

The research analysed nine media channels - total TV, radio, out-of-home, search, print, social (Facebook), cinema, social video and digital display – using more than 850 ROI observations across three years’ worth of media campaigns. Data aggregated as an indicator of ROI included weekly TV TARPs data and digital impressions, plus the other respective metrics used by channel, linked to weekly sales.

The big question the research was looking to answer was whether TV can generate sales demand both short as well as long term. To do this, the research employed econometric and market mix modelling to better gauge media channels and their capability to drive a sales response. It also looked at what ROI different channels delivered over various time frames and across multiple categories, as well as combination of channels and their respective joint payback.

While TV is recognised as a good vehicle for brand building, other channels – most notably search and digital – tend to be preferred for performance marketing activities and are better recognised for driving short-term sales, Danaher commented. Yet with marketers increasingly required to justify spend against sales generated, it’s clear short-term ROI has been taking up more bandwidth and priority.

"There is this perception that television is only really good for long term. I want to dispel that myth and do it compellingly… and show TV can work well in the short term, as well," Danaher said during his keynote at today's Future of TV Advertising event. 

"I don’t have to convince many people as to why short-term is so important… often with TV, people think if I’m trying to build brand awareness and equity, I should look towards TV. While if I want quick results, I should look towards digital media. So TV tends to get overlooked. But TV is very capable of getting short-term results as well."

The starting point for the research was to reinforce TV is good at delivering demand in the longer term. And according to the research and data points collected, this proved out, with TV returning the highest ROI over the long term at $18.30 for every $1 spent. Following behind TV were social ($14.10), out-of-home ($13.70), digital video ($13.20) and search ($12.40).

The research then looked at the short-term ROI of the nine channels included by restricting datasets to a return in three months or under. Leading the way in terms of channels for best ROI was search at $4.50 for every $1 spent, followed by TV at $4.30. Digital video came in a close third ($4.20), while rounding out the top five were social ($4.10) and digital display ($4.00). Cinema appeared the least effective short term (3.5).

Based on quadrant analysis, TV also showed itself to be good across various timeframes, report authors said. This contrasted with search, which showed to be below average for longer-term ROI scores using this analysis, the researchers said.

Another finding from the latest research is that TV produces more media-driven incremental sales than other channels. By indexing media channels and using market mix modelling to identify the percentage of sales driven by media, researchers found TV to be three times the size of the next best contributor in terms of indirect sales volume. Following TV and scored out of 100 were out-of-home (30), radio (27), search (27) and digital display (20). Rounding out the list were print (11), social (11), digital video (7) and cinema (7).

“It’s an interesting finding because when you look are ROI, it’s taking into account the cost of media. TV generates by far the largest amount of sales, but it costs more. If you take cost out of the equation, TV hands down generates the best response,” researchers explained, adding the diminishing returns for TV spend and volume are also above other channels. “In other words if you spent more on TV, you get more back. If you spend more on search, you won’t get as great a return in terms of sales volume.”  

The research also cited TV contributed 18 per cent of the indirect contribution of search to sales demand. This was higher than digital (11 per cent) and non-TV channels (6 per cent). Search’s direct contribution was 65 per cent.

Across a mix of channels, TV was also reported to have the most synergistic effect when used in partnership with the other channels. For example, TV was found to have increased the effectiveness of search by 7.12 per cent, Facebook advertising by 6.02 per cent and display by 5.28 per cent. The nearest best non-TV combination appeared to be search with social (1.46 per cent).

The current research is an aggregate of the channel ROI results across industries, and with the concept of short and long-term often differing significantly depending on category, final results on ROI and impact of cross-channel mix could well differ. The research team agreed, and said their next priority is to provide optimisations and category specific results to allow marketers to see results specific to their sector.

Danaher also presented TV’s above-average performance for advertising ‘elasticity’, or the consumer response to advertising. With a global average sitting at around 0.05, TV’s short-term as well as long-term elasticity was found to be above the global average long-term and well ahead of the other media channels included in the research for the mix of short and long-term.

In addition, in a look at diminishing returns across media channels for spend, TV was again reported to be ahead of the pack for value.

"If you imagine a 100 metre dash, TV gets out of the starting blocks the fastest and stays the fastest - no one outruns TV," Danaher said.

“TV's strength in driving business impact over the longer-term is well established, however, this research shows that with its broad reach, high levels of attention and time spent viewing, the platform also initiates a strong demand-response from the very first exposure,” Danaher summed up.

“2020 tested marketer’s agility with sales windows opening and closing and market conditions changing with little notice,” ThinkTV CEO, Kim Portrate, added.  “As 2021 begins, advertisers are in need of quick sales to make up for lost time or a fast start to their quarterly sales period. This research proves TV – potentially under-allocated in marketer’s short-term campaigns – is the perfect partner to help make the most of the new year.”

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