Profit Ability: the business case for advertising – Nick Manning ThinkTV presentation

Date posted: May 28, 2018
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Advertising effectiveness: TV still top driver

On April 25th ThinkTV and RadioConnects hosted Nick Manning who was presenting findings from ThinkBox’s 2017 advertising effectiveness study: “Profit Ability: the business case for advertising”.  The study analysed over 2,000 advertising campaigns across 11 categories to uncover the impact that different forms of advertising have on both short-term profit, and the long-term, to determine advertising’s total contribution to the bottom line.  In particular, Profit Ability focused on a few key areas:

  • The evidence for the short and long-term effects of advertising
  • Understanding the role of TV within these effects
  • Using the language of the board room: profit return and risk
  • Advocating for the responsible use of ROI

Below are our highlights.  You can also access the full study on ThinkTV’s page here.

Importance of short AND long-term measurement

Over the years, a growing obsession with short-term measurement, ROI and digital metrics has created a fundamental shift in the advertising industry towards digital at the expense of broadcast. Nick shared Binet and Fields’ study results which showed the proportion of campaigns that last over 6 months declining from 25% 10 years ago to 10% now.  He argued that marketers and agencies have failed to take into account the detrimental long-term effect of this shift and its significant negative impact on brand equity.  In his words, this is an issue that should concern not just the CMO but also the CFO and CEO, since they relate directly to the long-term health of an enterprise.

According to the Ebiquity study, digital (online display) creates just 2% of short-term profits and 1% of long-term profits. TV, on the other hand, is a fundamental driver of advertising effectiveness. It consistently generates higher short-term and long-term profit than other media (with radio second) (62% and 71% respectively). In addition, TV also has the largest long-term multiplier effect, meaning that it makes other media on the plan more effective.

An erosion of trust in brands and advertising. 

As the advertising industry comes under increasing pressure over data use, measuring multiplatform audiences and market changes, negative sentiment and distrust has grown.  69% of UK consumers claim to distrust advertising; 43% trust it less than they used to. And this was before the Facebook/Cambridge Analytica data scandal which many believe will increase distrust, particularly of advertising on digital platforms. (This is also true a little closer to home according to eMarketer’s May 11, 2018 article called ‘Dealing with the Media Trust Meltdown’ which shows Marketing & Advertising as the least trusted industry at only 3%.)

In closing, Nick leaves us with his final thoughts:

  1. For the sake of long-term brand equity, the marketing industry needs to reappraise the role of TV in driving advertising effectiveness.  The data shows that TV has a critical role to play in multi-channel marketing and media planners must go beyond simply analyzing audiences to analyzing the effectiveness of advertising in order to achieve the optimal media mix for their clients
  2. The industry, as a whole, needs to make the case for advertising overall, not just media within advertising. We need to reassess how advertising contributes to business growth, in short and long term as the longer-term benefits of advertising have been undervalued and overlooked.

 

For our take on the need for ‘right-term data’, click here.

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