A study into advertising effectiveness has found that most (58%) of advertising’s total profit generation for clients happens after the first 13 weeks of a campaign.
Commissioned by Thinkbox, the Profit Ability 2 study brings together client data from Ebiquity, EssenceMediacom, Gain Theory, Mindshare and Wavemaker UK.
It examined four payback ranges – immediate (within one week), short-term (up to 13 weeks), sustained (from week 14 through to 24 months) and full (total across the full 0-24 month period).
It found that all forms of advertising – TV, pay-per-click, paid social, audio, print, out of home, online display and cinema – produce a return on investment.
On average, advertising returns £4.11 in profit per pound invested over a sustained payback period from week 14 to 24 months.
By medium, TV (both linear and broadcast video on demand) advertising accounted for over half (54.7%) of advertising-generated profit by the end of the full 24-month payback period studied.
It also accounted for the lion’s share of adspend, at 43.6% of investment.
Linear TV was shown to return 46.6% of all ad-generated profit at the full payback term, whereas BVOD was 8.2%.
Generic pay-per-click was the second highest investment (18.9%) and showed the second-highest return after TV, generating 14.6% of profit.
Where PPC had the edge over TV was in immediate payback – it represented 30.5% of ad-generated profit within one week of a campaign launch, compared with TV’s 27.8% in this timeframe.
Thinkbox research and planning director Matt Hill said: “Despite the upheaval the world has been through, the fundamentals of advertising effectiveness still apply.
“It’s great to see TV performing so strongly at whatever speed you want to drive profit, but this is about the strength of advertising as a business investment that grows the bottom line and grows the economy. I hope business acts on these findings.”
The study is an update and expansion of Ebiquity and Gain Theory’s Profit Ability study from 2017, which examined the performance of advertising post-pandemic and Brexit.
The 2017 study looked at data over a three-year period, rather than two, to determine the percentage of profit generated, it didn’t include generic PPC, cinema or social and was run with a different set of brands, so it is not directly comparable to this year’s findings.
At the time, it found TV advertising was responsible for 71% of total advertising-generated profit at an average profit ROI over three years of £4.20 for every pound spent.
This article originally appeared on Campaign UK.
