Latest Payback Series report: Not all media channels are equal in the quest to generate sales demand

Latest research looks at how budget, opportunities for growth, channel scale and short and long-term factors play out in finding the optimal media mix

Media channels vary greatly in their ability to generate sales growth over the short to long term, with the rate of diminishing returns, scale and risk key elements in achieving the optimal media mix for your brand.

This question of what the optimal media mix looks like in the context of generating sales demand is the focus of the fifth tranche of ThinkTV’s The Payback Series, released today. Data used in market mix modelling to create the new report comes from GroupM and incorporates 60 brands across 10 categories representing $450 million worth of annual media spend. This resulted in more than 850 ROI observations across multiple years and media campaigns.

The report strives to understand optimal media mix for sales by analysing several factors: Budget, opportunities for growth, risk or variability, and the connection between investment, channel scale and generating sales demand.

One top-line observation is that size of campaign and how much you have to spend on marketing impacts your ability to optimise sales opportunity. For example, the research shows the sweet spot for a majority TV mix sits between $3 million to $10 million. When brands allocate at least 50 per cent of their media spend on TV advertising, TV also delivers more than 50 per cent of media-driven sales.

By contrast, out-of-home figured in the optimal media mix if you have more than $5 million to spend on media. The research also found a less optimal return: For example, when campaigns allocate on average 18 per cent of spend to OOH, this accounts for under 16 per cent of media-driven sales.

For annual media spend of $500,000, the channel representing the largest share in terms of optimal media mix is digital video (31 per cent), followed by TV (22 per cent) and social (19 per cent). Digital video also featured as the biggest percentage of spend in an optimal media mix for those with budgets of $250,000 or under (52 per cent), followed by social (22 per cent).

Of course, return on media channels does differ over time. According to the research, the rate of incremental sales for TV reduces more slowly long-term than compared with other channels, indicating increased investment in TV improves ROI over time. The report stated investing more in TV can generate three times the growth opportunity from incremental sales compared to the next best channel (OOH), followed by search, radio and social. Least likely to deliver incremental sales growth based on this data is digital display.

Another aspect of the research is analysing risk in achieving sales returns by channel. Digital video was found to be the least risky channel, while cinema is the most. In second place was TV, third was digital display, fourth was radio and fifth was search. The report authors also noted a higher risk media mix does not necessarily deliver better efficiencies or growth.

On the short and long-term front, the latest Payback Series report attempted to understand how sales growth ROI is sustained over time across channels. Over the short term, search has been found to have the strongest ROI ($4.50), followed by TV ($4.30), digital video ($4.20), social ($4.10) and digital display ($4).

Credit: ThinkTV


However, the report stated search had one of the weakest results for generating incremental sales beyond a three-month timeframe. This is because search is driven by other media and is more a demand ‘harvester’ than a demand ‘driver’, the authors stated.

Commenting on the latest figures, ThinkTV chief, Kim Portrate, said marketers have been chasing the best return on investment for campaign spend for a long time. While advocating for TV and highlighting it as having the strongest media-driven incremental sales across channels alongside scale, it’s clear there isn’t a one-size-fits-all answer to achieving the optimal media mix as a CMO. Category, campaign objective, timeframe and measurement all play a part, she said.

“If you invest in cheap channels based on ROI, and those channels don't generate the right volume of sales before you start to see diminishing returns, you're never going to grow brands. Other channels will be needed to make your media spend work the way it should,” Portrate said.  

The research shows efficient ROI may not always be effective ROI, Portrate added.

“While ROI is important to all brands in all categories, not all ROI is equal. This research suggests a much-needed reassessment of channel selection is required to ensure campaigns are being optimised for maximum ROI and maximum sales impact over both short- and long-term timeframes.”

ThinkTV initially embarked on The Payback Series of research in 2017.

Don’t miss out on the wealth of insight and content provided by CMO A/NZ and sign up to our weekly CMO Digest newsletters and information services here. 

You can also follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, follow our regular updates via CMO Australia's Linkedin company page

 

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments
cmo-xs-promo

Latest Videos

More Videos

Nice blog!Blog is really informative , valuable.keep updating us with such amazing blogs.influencer agency in Melbourne

Rajat Kumar

Why flipping Status Quo Bias is the key to B2B marketing success

Read more

good this information are very helpful for millions of peoples customer loyalty Consultant is an important part of every business.

Tom Devid

Report: 4 ways to generate customer loyalty

Read more

Great post, thanks for sharing such a informative content.

CodeWare Limited

APAC software company brings on first VP of growth

Read more

This article highlights Gartner’s latest digital experience platforms report and how they are influencing content operations ecosystems. ...

vikram Roy

Gartner 2022 Digital Experience Platforms reveals leading vendor players

Read more

What about this one FormDesigner.pro? I think it's a great platform providing a lot of options, you can collect different data and work w...

Salvador Lopez

Gartner highlights four content marketing platform players as leaders

Read more

Blog Posts

Marketing overseas? 4 ways to make your message stick

Companies encounter a variety of challenges when it comes to marketing overseas. Marketing departments often don’t know much about the business and cultural context of the international audiences they are trying to reach. Sometimes they are also unsure about what kind of marketing they should be doing.

Cynthia Dearin

Author, business strategist, advisor

From unconscious to reflective: What level of data user are you?

Using data is a hot topic right now. Leaders are realising data can no longer just be the responsibility of dedicated analysts or staff with ‘data’ in their title or role description.

Dr Selena Fisk

Data expert, author

Whose responsibility is it to set the ground rules for agency collaboration?

It’s not that your agencies don’t have your best interests at heart – most of them do. But the only way to ensure they’re 100 per cent focused on your business and not growing theirs by scope creep is by setting the guard rails for healthy agency collaboration.

Andrew Pascoe

Head of planning, Hatched

Sign in