Market Summary - Television Advertising Effectiveness

At a Glance

Television Advertising Effectiveness

Thinkbox is the marketing body for commercial TV in the UK, in all its forms. Its shareholders are Channel 4, ITV, Sky Media, Turner Media Innovations and UKTV who represent over 90 per cent of commercial TV advertising revenue through their owned and partner TV channels. Thinkbox works with the marketing community with a single ambition: to help advertisers get the best out of today's TV.

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There are all sorts of reasons why television advertising is so brilliant at creating success for brands and businesses both in the short-term and the long-term.

• TV advertising creates the most extra profit; an average return of £1.70 for every £1 invested
• TV advertising’s return on investment (ROI) has increased by 22% in the last five years
• TV advertising is 2.5 times more effective at creating sales uplift per equivalent exposure than the next best performing medium (press)
• TV advertising has a ‘halo effect’ across a brand’s portfolio. 38% of TV’s sales effect is felt by products not directly advertised
• TV’s ‘halo effect’ also makes other forms of advertising work harder
• TV is responsible for 71% of attributable sales in Ebiquity’s database, but only accounts for 55% of spend

PwC Payback 1 (published 2007)
An econometric analysis of over 10 years of data for over 700 brands in seven different market sectors aimed at understanding the 'value added' payback of advertising.

• TV delivered the highest sales return of any medium; £4.5m per £1m spent
• TV delivered value for longer. The first year’s TV investment was still delivering at 80% of the Year 1 level in Year 2, and even Years 3 and 4 benefited from TV investment in Year 1
• TV also demonstrated the highest correlation between brand value (based on willingness to pay) and investment using an innovative research technique to evaluate how consumers value brands
• With one exception, TV was the dominant medium used by the brand leaders in each sector and all of them were above-average TV investors compared to the average for their market. TV investment almost perfectly correlated with brand value, far more so than for any other marketing channel

Marketing in the Era of Accountability, by Les Binet and Peter Field (published 2007)
A thorough and impartial examination of the last 27 years of IPA Advertising Effectiveness Awards case studies.

• 66% of campaigns which used TV reported very large business effects vs. only 49% of non-TV campaigns
• Campaigns which used TV as the lead medium gained more than 3 times market share per 10% points of ESOV (Excess Share of Voice)
• TV is getting more effective over time and is now about 42% more effective pound for pound than in the '80s
• TV creates emotion better than other media
• Fame (which TV advertising excels at) is at the heart of the most effective advertising
• Liking an ad (which TV advertising performs best at) is the best predictor of business success

PwC Payback 2 (published 2008)
An update on Payback 1 which included in-depth analysis of 10 different sectors and additional focus on consumer ‘willingness to pay’ for brands.

• Brands have a 3:1 chance of losing brand value (WTP) within 12 months if they reduce their TV spend and a 2:1 chance of increasing brand value if they increase TV spend
• Those making heaviest ads cuts are losing most brand value – especially those cutting TV
• The damage from a year off TV can take up to five years to undo, says Data2Decisions
• TV advertising has a far stronger correlation (.82) with brand value than any other medium (the nearest is press with .47) – and over double the correlation of the average for all other media

The link between creativity & effectiveness, by Peter Field (1st published 2010, updated 2011)
An analysis of 435 campaigns over a sixteen year period (1994-2010) which fuses the Gunn Report database of creatively-awarded campaigns with the IPA Effectiveness Databank to examine the link between creativity and effectiveness.

• Creatively-awarded campaigns are 12 times more efficient at increasing market share
• Creatively awarded campaigns are much more likely to be ‘emotional’ than ‘rational’ (47% vs. 35%)
• Creatively-awarded campaigns are becoming more efficient over time, whilst non-awarded campaigns are becoming less so
• Investing in creativity is a powerful way to achieve fame (i.e. buzz)
• TV constitutes the largest element of Gunn Report scores used in this analysis (77%), followed by press and online

What is Television Advertising?

TV is also one of the most accountable media channels. An independent household panel administered by The Broadcasters Audience Research Board (BARB) measures television viewing in the UK, with its audience figures used as a trading currency by the whole advertising industry (TV impacts / ratings). 

TV is available to advertisers of all budget levels as the arrival of digital television has pushed costs down and created far more commercial opportunities.

How Does Television Advertising Work

TV is without doubt the most effective medium for launching brands.  It combines the scale and reach that a new brand needs with impact and persuasiveness.  No other medium can offer both these qualities.

Changing perceptions about a brand is one of the hardest tasks an advertiser has to address.  They have to erase current associations, beliefs and feelings about a brand and replace them with new ones. This task demands a medium that can create powerful new associations and rewire the brain, like TV.

TV is also brilliant at changing behaviour through powerful persuasion and can also be used as a highly effective response generator.

TV is truly innovative. One of the biggest myths surrounding TV is that it only offers 'traditional opportunities' to advertise. But with new technologies and imaginative developments in programming, there are now more opportunities than ever to innovate on TV.

For instance:

• 3 second blipverts (eg. O2)
• live ads (eg. Honda) 
• mini films (eg. Mini) 
• themed breaks (eg. in Grand Designs on Channel 4) 
• branded station idents 
• ad-funded programmes (eg. Pedigree Petfoods and Pet Rescue on ITV) 
• reality TV ads (eg. Nike FreeStyle) 
• real time messages (eg. London Pride)

Key Features & Benefits of Television Advertising

TV is taken so completely for granted that it is possible to overlook its power and potential. A quick reminder:

TV gets brands talked about
When a TV ad ignites people's imaginations, it becomes as much a part of the current culture as any programme. At their very best, TV ads can live far beyond the moment of viewing. The fact that good TV ads are often talked about years after their last appearance indicates the lasting power of television, unmatched by all other media. Recent example is Cadbury's drumming gorilla

TV gives brands stature
Media choice is a crucial element in any communications strategy. To have enough self-assurance to pitch to an audience on TV suggests an absolute faith in what you are talking about. "As seen on TV" reflects a unique pride in TV ads and is key to TV's ability to add value to brands.

TV builds brand awareness quickly
When it comes to coverage and frequency for delivering a message, TV is hard to beat. UK adults watch an average of 3-4 hours of TV every day, and commercial viewing is ever-increasing.

TV can steer a change in brand direction
Brands are in a permanent state of evolution. TV can effectively communicate changes in the dimensions of a brand, from the most subtle to the more fundamental. TV's linear nature means it can lead viewers through persuasive arguments step-by-step.

TV can extend the life of brands
As part of everyone's everyday life, TV can engage audiences with brands over long periods of time. TV can be used to periodically revitalise a brand's appeal, so that it can connect with each new generation of consumers. TV's ability to remind consumers consistently of brand presence cannot be underestimated.

TV can accelerate sales growth
Although TV can achieve long term brand tasks, it is also highly effective for driving sales in the short term. TV's ubiquity and its potential to make an impact several times an evening if necessary can catapult sales.

TV can capture large audiences
Everyone knows this: TV is the biggest, most potent and omnipresent medium. Whilst it is true that in today's multi-channel environment, individual programmes don't deliver the vast audiences they once did, ads can still enjoy huge audiences (at different times and across many channels).

TV is versatile
Whatever a brand's marketing objectives, TV can be proven to deliver in commercially accountable terms. And the fact that TV is constantly innovating in all areas means that there are always new and exciting ways of connecting with people both on air and also by leveraging powerful programme properties through the communication mix in other environments.

Key Audience Strength of Television Advertising

Everyone watches TV, more or less. Virtually every target audience can be addressed using TV, with forensic precision at one extreme to blanket coverage at the other and everything in between. With over 87% of homes in the UK now digital and therefore receiving 20 or more channels, today's TV provides programmes aimed at every conceivable interest, foible or fascination.

Moreover, because we don't all watch TV in the same way, clever media planning insights can be used to target consumers even better, in a particular mood or viewing environment. i.e. the fragmentation of channels and the increased specialisation of programming content mean that TV is now able to reach as many specialist interest audience groups as can print, radio or online - if not more.

Audiences can be targeted on the basis of:

• where they live
• their retail habits 
• their lifestyle, their attitude or their mindset

Whilst some media can deliver numbers, some deliver target audiences, some build cover quickly and some effectively captivate people, only TV can do all of these things powerfully and simultaneously.