Why TV Is Still the Most Effective Advertising Medium
Key findings from MarketShare study
With competition from Netflix and a host of new digital video providers, the television industry has undergone seismic changes over the last five years. But one thing has remained constant: TV is still by far the most effective advertising medium.
That’s the finding of a new study Turner Broadcasting and Horizon Media partnered on with marketing-analytics company MarketShare, which meta-analyzed thousands of marketing optimizations used by major advertisers from 2009 to 2014.
MarketShare’s analysis found that TV advertising effectiveness has remained steady during that time period and outperforms digital and offline channels at driving key performance metrics like sales and new accounts. The study also showed that networks’ premium digital video delivered higher than average returns when compared with short-form video content from nonpremium publishers.
Among the study’s key findings:
- MarketShare analyzed advertising performance across industry and media outlets like television, online display, paid search, print and radio advertising and found that TV has the highest efficiency at achieving key performance indicators, or KPIs, like sales and new accounts. When comparing performance at similar spending levels, TV averaged four times the sales lift of digital.
- TV has maintained its effectiveness at driving advertiser KPIs over the last five years. In a study using data from a luxury automaker, TV was the only medium to maintain its effectiveness (a 1.5 percent decrease in five years) while the other advertising media—both online and offline—declined more than 10 percent.
- TV marketers can optimize their spend by leveraging data sources, including high-frequency consumer interactions like website visits and inbound calls, to improve TV advertising performance.
- Premium online video from broadcast and cable networks out-performs video content from other publishers.
“We really wanted to do the study to better understand how TV’s effectiveness—not average rating, but effectiveness—at driving key KPIs for advertisers has changed over time,” said Howard Shimmel, chief research officer at Turner Broadcasting. Shimmel added that when he sees reports about advertisers moving “big-budget shares out of television, we think that might be driven by the assumption that TV’s effectiveness is being diminished.”
On the agency side, Eric Blankfein, chief of Horizon Media’s Where group, said that while many clients want to migrate their budgets to video, “because of that lack of consistent measurement, we’re not sure how effective those dollars are performing in the digital space. So, it was very important from our perspective to start to quantify business performance relative to TV advertising.”
The study found that “TV is the giant megaphone,” said Isaac Weber, vp of strategy at MarketShare. “When you want to get a message out, that’s still really the most powerful means to do it. The way that people view and consume television has changed … but I think the question is less about what has changed with television and more about what are some of the underlying issues with some of these other vehicles.”
Added Shimmel, “We’re not saying that digital is bad, but digital just can’t make up the reach that TV delivers. And digital, used in a way that’s complementary to TV, is a more effective strategy.”
Even the companies involved in the study were surprised to learn of TV’s dogged resilience. “I thought, because we’ve seen a shift in ad dollars migrating from linear to broadband, or just to [digital] in general, that we would see more of an impact on television, but we didn’t. That was eye opening for me,” said Blankfein.
Noted Shimmel, “Five years ago, Netflix wasn’t a streaming service, really. You didn’t have things like Roku, and you didn’t have smart-TV penetration, and you didn’t have tablets at this penetration. So, the fact that TV has held its own under years of such dramatic change, was surprising but obviously very pleasing for us.”
The study is the latest addition to Turner’s “dossier of research that supports the strength of television and talks about potentially how TV is working and can be made better,” said Shimmel. “TV really works, and there are ways to make it work better in challenging times.”
Horizon Media will share the new data with clients as it helps them settle on a media mix. “That’s very valuable, because the assumption is more data means better insights, and that’s generally true. So, by us continually providing that data, we establish higher credibility with clients and we have a high level of confidence in putting out the media mix that we recommend,” said Blankfein.
While MarketShare’s study bodes well for television, Weber said marketers will benefit most from its conclusions: “By focusing on KPIs like sales, we’re able to make sure that we’re really optimizing a marketer’s budgets.”