profit ability 2: the new business case for advertising
profit ability 2: the new business case for advertising
At Media, Marketing & Effectiveness Vancouver, Rupen Shah, Head of Client Services at Thinkbox, shared their latest econometric research, Profit Ability 2, one of the best econometric studies we’ve seen. This meta-analysis of the drivers of advertising effectiveness shows how and why advertising is a profitable driver of business growth, and which media drives the biggest impact. The analysis includes 141 brands covering over $3 billion (£1.8 billion) of media spend.
Not every brand can undertake in-depth econometric analysis, but this comprehensive research offers valuable lessons that can be used in organizations of all sizes.
The full presentation is well worth a watch, but here are a few highlights:
- Advertising is profitable, especially if you include long-term effects. The Thinkbox analysis showed an advertising ROI of 1.87 in the short term, and 4.11 in the long term.
- Almost 60% of advertising’s effect is in the long term (post 13 weeks), while 24% of the effect falls within the first 7 days.
- Advertising ROI differs significantly depending on the sector. For example, Retail enjoys a high ROI in both the short and long-term, while the CPG and Financial Services category reap the rewards in the long term.
- We shouldn’t confuse ROI with Profit—just because something has a high ROI, that doesn’t mean that that ROI can be sustained when you put more spend through it. Linear TV’s advantage is its scale: it handles bigger spends much more effectively than many other channels, which hit diminishing returns sooner and plateau at relatively modest spends.
- Linear TV has the second highest ROI, but importantly, it also drives the most volume: Punching above its weight, TV delivered 47% of total profits, despite being only 35% of total spend.
Ultimately, the study confirms TV advertising’s remarkable impact, not just in long-term ROI but in short-term results and scale.
Rupen also shared compelling findings from Thinkbox’s Context in Advertising research, highlighting how setting, mood, and people influence advertising effectiveness. One key finding: the living room is unmatched in advertising recall compared to viewing in other rooms of the house.
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media, marketing & effectiveness Vancouver |
speaker
RUPEN SHAH
head of client services, Thinkbox
Rupen has been with Thinkbox for 6 years and as Head of Client Services, he helps educate marketers by sharing research on all aspects of TV advertising. He is a trainer in the award-winning TV Masters training course and boasts over two decades of media agency experience.