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Effectiveness of TV Advertising

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Television advertising for many years was the favourite format for both companies and advertisers. Tv commercials have also become a creative and original way of presenting products. Award such add on, acknowledge some of the best ads and agencies each year. But how effective television advertising is?

For those ones who are not very familiar with the ins and outs of television advertising, the first official paid Tv commercial aired in the US in 1941 and today it is still the most dominant format attributing to 37% of total global ad spend in 2015. Even so, it is expected that companies will spend more on digital advertising than TV for the first time ever.

No other marketing format is more engaging and capable of driving consumers than video commercials. Thanks to the combination of sound, motion and music, it manages to build an emotional connection with audiences. That is why television is so powerful and effective.

Is television advertising still effective? Television advertising remains very effective and it is definitely amongst the top best performing marketing channels.

U.S. TV ad spending was up by 3.1% in 2018, finishing the year at $72.4 billion.

How effective is TV advertising?

ProfitAbility: the business case for advertising’ (2017), by Ebiquity and Gain Theory, found that television advertising:

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TV advertising remains at the forefront of advertising, when combined with a digital advertising campaign and a conversion rate optimization programme, it is proven to deliver some of the highest results that any marketing material could offer.

According to Thinkbox, television advertising is responsible for generating over 70 per cent of all profit derived from any marketing and promotional efforts. Television is great at building customer engagement thanks to its combination of pictures, music and messages.

A research carried by TiVo shows a clear correlation between a lowering in sales and decrease in television advertising spend, not only TV advertising has an immediate impact on sales but also it is proved that it manages to significantly enhance the impact of digital advertising.

While TV is regarded and backed by statistics as the most effective method to achieve KPI’s to drive sales, profit and gain market share; it works much better when used in combination with a digital marketing strategy.

There are several alternatives which might return a higher profit, search engine optimization ROI goes from somewhere between 50% and 5000% according to a Quora article.

On the other hand, PPC, which is very popular these days, shows an average return of 2 dollars per every dollar spent. Print advertising ROI is much lower with an average of 20%.

TV advertising effectiveness over time

Tv advertising effectiveness has increased over the years. From the 1980s, it has almost quadrupled its effectiveness from around 11% to 40%. Most big corporations and advertisers are very aware of that fact and they have been leveraging the TV advertising over the last decade. For instance, the most revolutionary and successful technological giants of our time such as Google, Netflix and Facebook spend over 60% of their marketing budgets on TV advertising. TV advertising has helped many corporations and companies grow notably over the last 5 decades and even though the internet and the digital world is taking over almost every single transaction these days, disregarding TV as a promotional method could become a fatal mistake.

Rich Lehrfeld, global brand marketing and communications manager at American Express said in an AdAge article: “TV as a traditional medium is still important. When we run a heavy TV schedule, we see a lift in sales and product awareness. We need to run two weeks of digital to get the reach of one day of broadcast.”

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During the decade that goes from 1996 to 2006, television advertising effectiveness received a significant increase (it doubled its effectiveness) in comparison to the previous decade.

Media channels profitability in the short term

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The table above shows how profitable most of media channels and how effective they are at generating profit in the short term. Online display is bottoming profitability as opposed to the other channels. In the era of digital technologies, print advertising is still delivering solid results with an average return-on-investment of 20%.

59% of marketers said that they will be increasing their budgets for advanced TV, including data-driven linear TV and addressable TV. (Source: eMarketer)

Short term television advertising effectiveness

Long and short term effectiveness are very important when choosing what kind of campaign to run. For short promotions or campaigns, it is crucial to define what kind of campaign is more convenient for a product, time of year and decide whether it is optimal for the campaign’s goals. Short and long term will deliver different results. For example, short term campaigns are aiming to increase sales for a season, such as summer or Christmas time. On the other hand, long term campaign usually aim to increase brand awareness and gain a larger market space.

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In the short term, television advertising is also responsible for delivering the highest return-on-investment with an average of 62% of all profit generated by advertising, making it the highest media of them all. Similarly, in the long term, it creates larger profits, over a period of 3 - 6 months, it can deliver up to 86%.

In the long-term (3 years after the campaign was over), 86% of the campaigns resulted in a profitable return

Long term television advertising effectiveness

What are the results in sales and revenue in the long term when it comes to television advertising? Is the long-term ROI as profitable as its short-term counterpart? According to Thinkbox, it shows a great long term effectiveness which could go up to 86%. Running an advertising campaign on television remains still very profitable.

And in the long-term, in the three years after ad campaigns had finished, 86% of TV advertising campaigns delivered a profitable return.

If you are thinking about starting an advertising campaign, the following data would be very helpful towards indicating which marketing channel should you choose to make the most of your budget. Print and radio channels are still very effective or at least some of their return on investment percentages show that, as for radio, 75% to deliver a profitable return as opposed to other digital media such as online display which is less likely to deliver a profit (40%).

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Roku’s ad revenue is expected to nearly triple between 2018 and 2021

Roku, the American streaming service provider, has experienced a large growth in the last three years, partly thanks to the digitalization of television services which are shifting towards streaming channels and on-demand services.

Even though most companies are starting to invest in this kind of platforms as they are as powerful as television when it comes to convey an engaging message but also allow advertising to have more control over their advertisements and a deeper knowledge of their audiences thanks to custom audience and cookies.

Streaming media will continue growing much more over the next few years helping television advertising to become more automated. According to Q· and eMarketer, it is expected that US TV will be transitioning to a programmatic format by 58%, an estimated of $2.77 billion

Mars spends most of its advertising dollars for its petcare brands — including Pedigree, Cesar and Whiskas — on television, according to the food group’s marketing chief

According to CNBC, Mars, the corporate group who owns multiple brands such as Pedigree, Whiskas, Cesar, Skittles and M&Ms are investing most of their advertising budget on television commercials. Andrew Clark, chief of marketing at Mars, “We really need to prove how our new digital platforms, our media partnerships (work),” Clarke said. “We need to prove that, so it actually does drive sales in the way that we know that sales are driven in a traditional media space.”

“I certainly believe a combination of the two (traditional and digital media) is always going to be relevant certainly in the CPG (consumer packaged goods) space,” he added.

Other companies such as Coca Cola, very well known for its TV ads, also remain as big spenders on the so-called traditional advertising channels including billboard advertising.

Digital and television. Blended strategy to achieve optimum results

Today most marketers and advertisers are turning their heads toward digital methods, however, in spite of their popularity, television advertising seems to be a more effective way to engage with customers. But if you are seeking to optimize your advertising budget, by integrating a television advertising campaign with a digital strategy, advertisers have experienced a higher return on investment from their online strategies. At Top Media Advertising, we believe that any successful campaign must be a multi channel integrated one, where combined channels and media reside under a whole strategy.