A new study of advertising effectiveness has proven that advertising is a profitable driver of business growth and that all forms of advertising pay back, especially when their sustained effects are measured.
The study – ‘Profit Ability 2: the new business case for advertising’ – was commissioned by Thinkbox from Ebiquity, EssenceMediacom, Gain Theory, Mindshare, and Wavemaker UK and brings together their vast econometric databases of client data. It is an update and expansion of Ebiquity and Gain Theory’s Profit Ability study from2017.
Profit Ability 2 analysed the profit generated by advertising at different stages as its effects build over time. It examined four speeds of payback:
· Immediate payback – within one week
· Short-term payback – up to 13 weeks – i.e. includes immediate payback
· Sustained payback – week 14 through to 24 months
· Full payback – total payback 0-24 months
The study found advertising has an average short-term profit ROI of £1.87 per pound invested which increases to £4.11 when sustained effects are included. Advertising impact occurs over an extended period of time because very few people are in the market in the next three months. 24% of advertising pays back in the same week, 18% of advertising profit impact occurs between week two and week thirteen and 58%of advertising return occurs between week fourteen and two years.
Of the ten media measured, audio ranks second in short-term return on investment (ROI) and third in overall ROI, beating all digital platforms. Audio ranks third in conversion of investment to profit generated, beating all digital platforms.
The study involved:
