Study: Increased TV Spending Yields Higher Sales For 12 Large Marketers
- by Wayne Friedman , June 9, 2016
The recent increase in TV spending -- after a period of decline -- was a key factor in driving sales for a dozen of large advertisers, according to a new study. Over a two-year period, seven consumer product group [CPG] brands and five non-CPG brands saw revenues jump by 14.6% on average, according to research from Standard Media Index (SMI) and Research Measurement Technologies [RMT].
These 12 advertisers averaged a 25.8% rise in their TV ad spend over the period. Three CPG companies averaged a sales increase of 4.6 times the incremental TV ad spend after they switched dollars back to TV.
Working with consumer research company IRI and public corporate financial earnings data, SMI and Harvey’s research analyzed media spend shifts among 100 major advertisers from the first quarter 2014 to first quarter 2016.
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The research confirms recent reports of advertisers that have seen declines in the return on investments from increasing digital media spending and lower TV spending. Many have now reversed their TV-digital media spending allocations.
SMI captures 70% of total national U.S. agency spend from the booking systems of global media holding groups, as well as leading media independents. RMT is a new media research consultancy, its chairman and co-founder is research veteran Bill Harvey.
Of course the question arises whether this is merely a selected sample of advertisers who increased their TV spending after reducing it or whether it represents what typically happens across many product classes and brands when this situation arises. Still, we are hearing the same kinds of reports from advertisers and agency contacts who have been "disappointed" by the results when some TV dollars were funneled into digital. Perhaps they expected too much? Who knows?
Research studies such as these need to account for all the variables that effect sales in order to be valid. For example, how do you know if someone made a purchase from impulse, habit, or convience as opposed to any specific Ad campaign? Rather than ad hoc sales research studies we prefer the Guaranteed Sales Increase or GSI Algorithms that calculate the exact number of sales that will increase before the Ads run.