Inspiring Results: Lindsey Clay

Profit Ability: the business case for advertising

Marketing effectiveness is in crisis NUMBER OF VERY LARGE BUSINESS EFFECTS

2.0 1.9 1.8 1.7 1.6 1.5 1.4 1.3 1.2 1.1 1.0 2006

2008

2010

2012

10 YEARS ENDING Source: ‘Effectiveness in the digital era’, 2016, Binet & Field, IPA

2014

2016

Profit Ability: the business case for advertising Objectives: — Evidence for short and long-term effects — Understand the role of TV within these effects — Language of the board room: profit return and risk — Advocate the responsible use of ROI

To increase ROI, simply reduce spend 40

ROI = 8:1 ROI = 10:1

RETURN

30

20

10

0 0

1

2

3 INVEST

4

5

6

What’s the average return delivered by advertising?

Independent econometric study short-term return 10 categories 150+ advertisers 1,900 campaigns long-term return 29 advertisers 500 campaigns

Short-term profit return Campaign period + 0-3 months

TV creates 62% of short-term profit at the highest efficiency (all categories) SHORT-TERM PROFIT ROI EFFICIENCY

£2.50

Bubble size represents % of short-term return

TV: 62% £2.00 Radio: 5%

Print: 22%

£1.50 Online Video: 5% £1.00

BREAK EVEN

Online Display: 2% OOH: 3%

£0.50

£0.00 0%

10%

20%

30%

40% % OF BUDGET

Source: ‘Profit Ability: the business case for advertising’, November 2017 Ebiquity ROI campaign database (Feb’14-May’17). Campaign obs: 1954

50%

60%

70%

NB: Online Video includes Broadcaster VOD, YouTube, Facebook video & online programmatic video

Scale is fundamental to high profitability £18,000,000

TV Radio

INCREMENTAL PROFIT RETURN

£16,000,000

Press

£14,000,000

Online Video Online Display

£12,000,000

OOH

£10,000,000 £8,000,000 £6,000,000 £4,000,000 £2,000,000 £0 £0

£2,000,000

£4,000,000

£6,000,000

£8,000,000

£10,000,000

SPEND LEVEL Source: ‘Profit Ability: the business case for advertising’, Nov 2017 Ebiquity ROI campaign database. Financial Services example

NB: Online Video includes Broadcaster VOD, YouTube, Facebook video & online programmatic video

Data science helps us optimise channels £4.00

TV

£3.50

Radio

MARGINAL PROFIT RETURN

Press £3.00

Online Video Online Display

£2.50

OOH

£2.00 £1.50 £1.00 £0.50 £0.00 £0

£2,000,000

£4,000,000

£6,000,000

£8,000,000

£10,000,000

SPEND LEVEL Source: ‘Profit Ability: the business case for advertising’, Nov 2017 Ebiquity ROI campaign database (Feb’14-May’17). Financial Services example. Campaign obs: 371

NB: Online Video includes Broadcaster VOD, YouTube, Facebook video & online programmatic video

SHORT-TERM PROFIT ROI

Understanding the level of short-term risk by channel

£2.50

£2.50 Upper 25% £2.00

£2.00

£1.50

Middle 50% of profit ROIs with removal of outliers (inter-quartile range)

£1.50 £1.00

£1.00

£0.50

£0.50

Lower 25%

£0.00

£0.00 ALL

TV

RADIO

Source: ‘Profit Ability: the business case for advertising’, November 2017 Ebiquity ROI campaign database (Feb’14-May’17). Campaign obs: 1954

PRINT

OOH

ONLINE DISPLAY

ONLINE VIDEO

SHORT-TERM PROFIT ROI

TV is the safest investment in the short-term

£2.50

£2.50

£2.00

£2.00

£1.50

£1.50

£1.00

BREAK EVEN

£0.50

£0.50

£0.00

Inter-quartile range

£0.00 ALL

TV

RADIO

Source: : ‘Profit Ability: the business case for advertising’, Nov 2017 Ebiquity ROI campaign database (Feb’14-May’17) Campaign obs: 1954

PRINT

OOH

ONLINE DISPLAY

ONLINE VIDEO NB: Online Video includes Broadcaster VOD, YouTube, Facebook video & online programmatic video

Long-term profit return Up to 3 years post campaign

The proportion of total profit revealed by attribution modelling and econometrics

18%

Attribution modelling

42% The majority of advertising returns occur in the long-term Source: ‘Profit Ability: the business case for advertising’, November 2017 Gain Theory long-term ROI study

58%

Short-term econometrics

Long-term studies

TV has the largest long-term multiplier (all categories) 3.50 Average longterm multiplier

LONG-TERM MULTIPLIER

3.00

2.50

2.00

1.50

1.00 ALL

TV

RADIO

Source: ‘Profit Ability: the business case for advertising’, Nov 2017 Gain Theory long-term ROI study. 29 Advertisers, 504 campaigns

PRINT

OOH

ONLINE DISPLAY

ONLINE VIDEO

There are no examples in the data of PPC driving long-term response

NB: Online Video includes Broadcaster VOD, YouTube, Facebook video & online programmatic video

TV is the safest investment in the long-term (all categories) 3.00 2.80 2.60 long-term MULTIPLIER

2.40 2.20 2.00

Inter-quartile range (25% to 75% of LTM)

1.80 1.60 1.40 1.20 1.00 ALL

TV

ONLINE VIDEO

Source: ‘Profit Ability: the business case for advertising’, Nov 2017 Gain Theory long-term ROI study. 29 Advertisers, 504 campaigns

DISPLAY

PRINT

OOH

RADIO

There are no examples in the data of PPC driving long-term response

NB: Online Video includes Broadcaster VOD, YouTube, Facebook video & online programmatic video

Brand health: an aggregate view

uplift in sales consideration

+1%pt

0.5 - 1.5 %pt

Brand health: an aggregate view

10% SOV increase

5-20% decrease in price sensitivity

Total profit return Campaign period + 3 following years

Proportion of advertising-generated profit by medium

TOTAL PROFIT ROI EFFICIENCY

£5.00

Bubble size represents % of total profit

£4.50

Total profit = all return (short + long-term) generated over 3 years

£4.00 £3.50

TV: 71%

Print: 18%

£3.00

Online Video: 4%

£2.50 Radio: 3%

£2.00

OOH: 3%

£1.50 £1.00 £0.50

BREAK EVEN

Online Display: 1%

£0.00 0%

10%

20%

30%

40%

50%

60%

70%

% OF BUDGET Source: ‘Profit Ability: the business case for advertising’, Nov 2017 Ebiquity ROI campaign database (Feb’14-May’17) & Gain Theory. Campaign obs: 1,954

NB: Online Video includes Broadcaster VOD, YouTube, Facebook video & online programmatic video

Including the long-term effect reveals the true impact of advertising INCLUDING LONGER TERM

£20.0

£20.0

£15.0

£15.0

£10.0

£10.0

£5.0

£5.0

£0.0 FMCG -£5.0

FS

RETAIL

MILLIONS

NET PROFIT (PER YEAR’S SPEND) MILLIONS

short-term ONLY

£0.0 FMCG

FS

RETAIL

-£5.0 ASSUME AVERAGE ANNUAL SPENDS FMCG (£3.1m), Financial Services (£4.8m), RETAIL (£6.5m)

Source: ‘Profit Ability: the business case for advertising’, Nov 2017 Ebiquity ROI campaign database (Feb’14-May’17) & Gain Theory. Campaign obs: 1,602

NB: Online Video includes Broadcaster VOD, YouTube, Facebook video & online programmatic video

Summary Advertising works - £3.24 profit per £1 spent Responsible ROI focusses on profit volume Plan & evaluate across the short and the longer term TV is a fundamental driver of effectiveness — Most efficient channel in the short-term — Delivers the highest long-term multiplier — The safest investment — Biggest contributor to volume of profit