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Advertising drives Business Profit Ability

A recent study commissioned by Thinkbox from Ebiquity and Gain Theory, companies who independently evaluate advertising performance and effectiveness for hundreds of brands, have used their databanks of over 2000 advertising campaigns across 11 categories to evaluate the impact that different forms of advertising have on short term profit throughout a campaign and within 3-6 months of a campaign finishing, the highlights of their findings are as follows;

Long term profit overlooked.

Less than half the impact on profit through advertising is realised in the short term and with some businesses only evaluating the benefits of advertising investment on this easy to measure short term returns are undervaluing the total profitability estimated at a further 58% through the growth and value, advertising brings to there company.

Advertising is a powerful Business Investment.

Over a 3 year period, the average campaign delivers a profit of £3.24 per pound spent; this figure varies by media platform but all forms of advertising deliver profitable returns through their long term impact with the exception of certain aspects of online.

In the short term TV is responsible for 62% of all advertising generated profit the highest of any media with an ROI of £1.73 for every pound spent, while in the longer term, TV advertising creates 71% of total advertising generated profit with a 5 year ROI of £4.20 for every pound spent, also the highest of any media.

TV Delivers!

Due to TV’s scale and popularity, it enables it to deliver efficient profit returns against high volume of spends, so businesses can increase investment in TV to higher levels than other media and it will still generate profitable returns before diminishing returns ‘kicks in’.

In the long term 72% of advertising campaigns create profit, while in the short term 70% of TV advertising campaigns deliver a profit this increase to 86% during the 3 year period.

Are Advertisers missing out on Advertiser Generated profit?

Whether it is TV, the study concludes that a potential return is generated by different media platforms and advertisers are missing out on the opportunity of maximising their advertising generated profit by underinvesting in their brands.

TMS View

TV keeps on working – there’s no doubt that retail TV campaigns that we have run for our clients support the above findings; and on targeting financial offers to high net worth individuals we’ve tracked responses coming in over a year after the final spot.

John Alligan

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