What you need to know:

• Thinkbox head of research Anthony Jones took to Sydney's Future of TV Advertising event last week to present the UK commercial TV body's latest advertising ROI study, Profit Ability 2. The study, he says, proves advertising remains a profitable outcome for advertisers, with UK brands earning an average of £1.87 ROI for every pound spent on advertising within 13 weeks – lifting to £4.11 over two years.

• The study tracked the immediate, short- and long-term return of various media channels, with generic pay-per-click PPC advertising over-performing in the immediate and short term, while more established channels – and linear TV in particular – generally drove the strongest returns beyond the 13 week mark. 

• Generic PPC accounted for 30.5 per cent of immediate advertising-driven profits within the first week, followed by linear TV (20.5 per cent), suggesting said Jones, that performance and brand-building channels both have near- and long-term value: "Every channel can do both... it's how you use it in combination". Though, per the research, linear didn't equalise share of profit ROI and share of spend until beyond the 13 week mark.

• But over the long term (two years) linear TV over-delivered significantly, driving 47 per cent of advertising-driven profit with only 35 per cent share of budget, with print, BVOD and audio also performing strongly, while digital channels like paid social, generic PPC and display under-delivered.

• An Australian replica of the research is underway, with early GroupM-Choreograph modelling showing the market bears striking similarities with its UK counterpart: TV remains a top performer, but spend in OOH, per the data, appears to be outpacing its returns. Also noteworthy, was that print was nearly absent from the Australian media mix.

The UK’s commercial television marketing body, Thinkbox, last year laid out a ‘new business case for advertising’ fit for a post-pandemic media landscape marred by privacy and data issues, fragmentation and an unhealthy dose of economic and political crises.  

The good news? Their data confirmed advertising continues to drive a return on investment (ROI) for brands. The better news – at least for Thinkbox’s British commercial TV shareholders, and perhaps their local counterparts – is that TV advertising has remained the greatest driver of profit volume. And that’s despite digital platforms capturing a growing chunk of UK media spend. Since 2017 – investment in social, native and search had soared 186 per cent by 2024, while established media was conservatively 13 per cent worse off.

Thinkbox head of research Anthony Jones outlined the research's key findings at last week's Future of TV Advertising event in Sydney,

While every market has its nuances, Jones reckons the data applies across the board – and an early look at localised findings from GroupM backs that view, though out-of-home businesses will no doubt be preparing data-led counterstrikes if the final analysis holds true.

The long and short of TV

Thinkbox’s 2024 research builds on the original Profit Ability study put out by advertising analysts Ebiquity and WPP-owned marketing effectiveness consultancy Gain Theory. The new iteration brought GroupM agencies EssenceMediacom, Mindshare and Wavemaker UK into the mix to conduct a meta-analysis of econometric studies of media investment from 141 brands – it covered £1.8 billion (A$3.7 billion) of spend across 10 media channels and 14 business sectors.

The task, per Jones, was to decipher whether the shift to performance channels had impacted the ROI of advertising within established media channels such as TV. Right up top, he established that little had changed in the post-Covid period. Though there was some nuance in how that looked across channels – and audio visual (AV) channels saw a bigger shift than others.

“The commentators will have you believe that the advertising world has changed dramatically since before Covid – I'm here to tell you there's not been much change. Boring as that sounds, basically, we're finding advertising is as effective as it has always been. There's been a small drop – about one per cent – in the ROI since 2017, 2018, but that's also come with a reduction in in spend," per Jones.

“In AV, what we have seen is the money's been following the eyeballs – money has moved as eyeballs have moved away from linear into video on demand and BVOD ... So over the last few years, BVOD specifically and online video got more profitable.”

Paid social, meanwhile, had gone the other way – more money has gone in, despite the channel becoming less profitable. Market Mix Modelling firm Mutinex has recently made similar directional observations – as have retailers such as Temple & Webster, outlining major performance ad cost increases and declining ROI via its most recent financial results.

“That's the double negative whammy – double jeopardy. The wrong way around: more money into paid social, and you're getting less,” said Jones.

Performance pluses and minuses

All up, Jones affirmed that the latest iteration of the research had again provided a “concrete case” for advertising – showing that UK brands on average earned £1.87 for every £1 spend on advertising in the short-term (within 13 weeks).

“We proved that despite all these changes that people perceived had occurred as a result of the Covid situation and all the changes, advertising was still a profitable occurrence for brands. Advertising delivers for brands,” he said. “Deep sigh – most of our jobs are therefore no longer at risk.”

But all important for Thinkbox and its UK shareholders was where TV sat in the media mix – and in particular, how it stood against digital giants.

Here, Thinkbox and its research partners plotted the findings on bubble charts – marking whether channels over or under performed on ROI. The ideal is that a channel contributes the same percentage of return as it receives of spend – i.e. an input of 25 per cent of media spend should ideally generate 25 per cent of the total advertising return.

PPC dominates short term ROI

While generic pay-per-click (PPC) advertising ranked as the top performing channel in terms of immediate ROI payback, accounting for around 30 per cent of advertising-driven profit in the first week, it was followed – perhaps counter-intuitively – by linear TV, with paid social, audio, and BVOD following.

“I think as an industry… we've got ourselves into a perception that established channels – things like television, broadcast channels – are only for brand [building], and digital is what you want for performance,” notes Jones. “And what this data has shown us very clearly is that every channel can do both. It's how you use it in combination.”

Extend the window out to the short term – i.e. within 13 weeks – PPC held its lead, over-delivering with 22.5 per cent of total profit ROI with against only 19 per cent share of spend.

Audio also over-delivered in the short, with 8.2 per cent share of profit ROI versus around 6 per cent share of spend, while most other channels fell below or on par – linear TV included. The channel was almost line-ball (34 per cent) of the 35 per cent share of spend it received. 

But track that out into the longer term – up to two years – and linear TV took a clear lead.

Across the board, profit ROI soared beyond the 13 week mark from £1.87 to £4.11 – nearly 60 per cent of total advertising-driven profit volume was delivered in the long term (from 14 weeks to two years).

“What we were seeing here is, across the complete data set, 24 per cent of the total profit is returned in the week of advertising, about 42 per cent across the first 13 weeks, but nearly 60 per cent of the profit advertising delivered is beyond the first the first 13 weeks,” said Jones. “And if you've got the ability to harvest and build over time, the channels that can deliver that, like TV, become more and more powerful over time.”

For linear TV, it was a huge leap to 47 per cent of total advertising-driven profit volume when sustained (up to two years), against approximately 35 per cent of total spend. Print, BVOD and audio, all performed just about on par, with ROI output equal to share of spend, while digital channels saw their share of profit ROI eroded overtime.

Generic PPC accounted for around 19 per cent of spend, but only 15 per cent of return, and paid social was around 13 per cent of spend and 9 per cent of return. Online display drove around half as much return (3 per cent) versus its share of spend (approx. 6 per cent), and OOH took 3 per cent of returns against approx. 5 per cent of spend.

The outlook for TV was even more positive when BVOD and linear were brought together, equating for 55 per cent share of advertising-driven profit against 45 per cent of spend. 

Australian data: OOH overcooked?

Attendees on the day got a first look at a similar study GroupM and Choreograph have been working on for the Australian market – though Jones stressed they were only “interim results”.

“The final results might change,” he warned. “But for you today, this is what it looks like in Australia.”

The market's lack of print investment, per Jones, was a clear takeaway, as well as the widespread use of econometric modelling.

“You're obviously doing econometric modelling, because basically, what happens if you do lots of econometric modelling and then apply it, you regress the mean. In other words, you follow you what you've been finding in the modelling, which means you get closer and closer to the line. So, you're pretty close in terms of what the modelling is saying in terms of investment – and TV is up there.”

But he suggested the data may be indicating out-of-home investment may be overcooked. 

“The one that jumps out at me, and this is a really dangerous thing for me to say – and I don't know your market too well – [but] out-of-home isn't performing,” said Jones.

The modelling, he said “seems to be suggesting there's more money going into out-of-home in this market than profitability is suggesting it should”.

Though he added further caveats.

“I have no idea why that would be the case. I have no idea whether that will be the case when the final results come in, but I watch with interest, and I'm sure the GroupM and Choreography team will be talking to you about that at some point fairly soon.”

The OOH industry will no doubt robustly counter any such findings with its own data set – forewarned is forearmed.