Advertising in focus: the business case for investment

Advertising decisions are rarely made in isolation, and the influence of key stakeholders across the business often shapes how much a brand invests in different advertising channels. Their perspectives, priorities and whether they’re focusing on short-term or long-term profits can heavily impact where a brand spends its budget.

Unfortunately, though, misconceptions persist about the power and effectiveness of different advertising methods, which can skew how brands allocate their budgets. 

The new Profit Ability 2 report by Ebiquity, EssenceMediacom, Gain Theory, Mindshare and Wavemaker UK, commissioned by Thinkbox, debunks some of the key myths around advertising and proves that it is a profitable driver of business growth rather than just a cost.

In this article, we explore some of the key findings from this huge econometric analysis of existing client data, and clear up some of the misconceptions about the power of different advertising approaches and channels.

The temptation to invest in ‘quick wins’

Short-term business pressures, quarterly reporting, and narrow payback time frames often cause organisations to overlook the benefits of long-term thinking. Many make the mistake of prioritising short-term wins, while sacrificing long-term success. 

In reality, this isn't always the best strategy for sustained growth. Advertising can yield far better results from investments in media that have sustained profit effects – media that deliver and keep delivering over the long-term – rather than a choosing a narrow focus on media that only deliver immediate results.

In an environment where there's constant pressure to demonstrate clear ROI, many organisations are drawn to ‘quick wins’ regarding advertising. It can also be a tempting way to satisfy stakeholders, offering real-time data points to prove effectiveness.

In particular, organisations with smaller budgets are often drawn to short-term strategies, which can appear less risky. They typically require smaller upfront investments, and if something isn’t working, they can make adjustments quickly.

However, chasing these quick wins can divert attention from the more sustainable and normally much larger returns of thinking beyond the instant impact.

Splitting channels into ‘brand building’ and ‘performance’

There’s a common belief that certain channels are for ‘brand building’, while others are for ‘performance’. For example, well-established advertising channels such as TV are often seen as tools for long-term brand building, while online forms of advertising are associated with delivering strong short-term results.

“We want to see this concept die a slow and painful death because it doesn’t help anyone trying to use advertising to drive returns to their business,” says Matt Chappell, global client success officer at Gain Theory. “ There’s an idea that performance media is digital, highly targeted and all about the here and now, while brand media is long-term and you can’t see the immediate impact. It’s just not true.”

This narrow view limits the potential of advertising strategies that can drive long-term success. Instead, Profit Ability 2 suggests that brands can invest their budgets better by optimising scale, efficiency and time.

Another key finding from the report is that linear TV ranks second after generic PPC in terms of immediate profit impact (return in the week of the advertising). “ Generic PPC and paid social have really big immediate effects, which you would expect because they're the ones that get labelled as performance media,” says Jane Christian, executive vice-president of analytics at Choreograph UK.

“ But actually linear TV, which is widely considered as brand media, also has a significant, immediate effect. So does broadcaster video on demand (BVOD) and audio.”

This suggests that for brands looking to achieve optimal returns from short-term strategies, a balanced media mix that extends beyond the obvious online channels may be required.

The power of sustained investment in driving long-term value

Profit Ability 2 shows that advertising invested in ‘year 1’ has an average short-term profit ROI of £1.87 per pound invested, which increases significantly to £4.11 after two years. These effects will be compounded by year on year investment in advertising.

“One aspect of long-term advertising that people don't often talk about is that sometimes you need to have done something for a while to see its full impact,” says Chappell.  “You're building up familiarity and people expect to see you. They get to know the jingles and distinctive assets and slogans that make for effective advertising.”

Chappell also notes the importance of ensuring creative content resonates with a brand’s audience. “If you’ve got rubbish creative, it can mean whatever channel you're using won't work particularly well,” he says.

Moreover, long-term advertising strategies allow brands the flexibility to adapt to changes in consumer behaviour and evolving media consumption patterns, helping them to remain effective and relevant. 

By prioritising long-term advertising investments, brands can build a foundation for growth and resilience. This approach ensures they stay competitive, maintain relevance and cultivate lasting brand loyalty, which drives sustained revenue growth over time.

The power of established channels such as TV

At the heart of this strategy is TV advertising, which, as revealed in Profit Ability 2, provides both immediate and long-term value, making it a key pillar in any effective advertising plan. 

While all advertising channels can generate profitable returns, the degree of those returns varies significantly. TV stands out with a full Profit ROI of £5.61, far exceeding online video (mostly YouTube) at £3.86, and generic PPC at £3.52. TV also delivers 46.6% of all advertising driven profit.

Ian Maybank, head of connections planning, media and insights at Specsavers, says there’s a wide misconception that TV advertising is “dead.”

“ TV is definitely not dead,” he says. “It's just evolving. We're seeing declining numbers in linear viewing, but we're seeing huge growth in areas like Broadcaster VOD, so that’s a big shift. We're also seeing the likes of Netflix, Disney and Amazon launching ad-funded tiers. So there's a whole new ecosystem and a lot more choice for us as an advertiser.” Featuring TV, in all its formats,  as the heart of the media mix can provide brands with a powerful tool for growth.

TV is widely regarded as a long-term advertising strategy, primarily due to its ability to build trust over time. TV is highly regulated, and people know it to be a credible source of information, which leads to greater trust in the brands featured on it. 

This trust grows as customers repeatedly see a brand on TV, keeping it top of mind when the time comes to make a purchase. A memorable TV ad can continue to influence consumers for months, even years, after it airs.

While online channels are often seen as a go-to for driving short-term results, thanks to their direct response design and the speed at which they can be launched and adjusted, the Profit Ability 2 report – conducted by Ebiquity, EssenceMediacom, Gain Theory, Mindshare and Wavemaker UK and commissioned by Thinkbox – reveals that TV advertising also has remarkable short-term power. 

TV’s reputation as a long-term strategy

Profit Ability 2 shows that, of all forms of advertising, linear TV ranks second for immediate payback (return within a week of the advertising), just behind generic PPC. However, TV is primarily recognised by brands for its ability to deliver substantial long-term value.

“ TV has in the past produced brilliant long-form brand-building adverts that make people go ‘wow, this is fantastic,’” says Matt Chappell, global client success officer at Gain Theory. He cites the John Lewis Christmas ads as a prime example of an advertisement that has become a highly anticipated part of the UK holiday season, thanks to its focus on storytelling, memorable music and beloved characters.

Chappell adds, “Because of this, brands sometimes lose sight of TV’s ability to also drive fantastic short-term returns.”

How the rise of streaming has impacted the TV advertising opportunity

The rise of streaming and the growth of streaming platforms have also expanded the TV advertising opportunity by shifting the way audiences consume content.  Most subscription video on demand (SVOD) companies have now introduced ad-supported tiers, which has increased the potential for TV advertisers within high-quality programming. 

Chappell says that, in most cases, advertisers should consider TV, SVOD, broadcaster video on demand (BVOD) and online video as part of a unified strategy. “It's 30-second advertising viewed on a TV screen, regardless of whether it's ITV, ITV2 or ITVX,” he says. 

He notes that one key advantage of linear TV is the ability to create a “water cooler” moment, where everyone watches at once. “This can drive increased impacts through social media or through old-fashioned word of mouth,” he says.

Brands are over-relying on social media

Many brands rely heavily on social media, attracted by its promise of precise audience targeting and often lower cost compared to other advertising forms. This makes it especially appealing to small- and medium-sized businesses with limited budgets. However, this reliance may not always be beneficial in the long run.

“There's a lot of eyeballs on social media,” says Jane Christian, executive vice-president of analytics at Choreograph UK. “But an eyeball on something isn't the same as an increase in sales and ROI. Marketers need to use studies like Profit Ability 2 to better understand what channels are delivering actual financial return, not just eyeballs.”

Social media's flexibility is another reason brands gravitate toward it. “It's easier to plan things more quickly in social. If you’re booking a TV campaign, you've got to do it well in advance,” explains Christian. Social media platforms provide real-time campaign performance tracking, giving brands immediate insight into their ads' effectiveness. TV advertising currently lacks this level of real-time insight, although there is a new industry initiative, known as Lantern, that aims to address this. 

Chappell also notes many brands also use social platforms for brand building. He refers to Currys’ TikTok channel as a notable example, where colleagues engage in popular trends to connect with audiences.

Looking beyond social media

While social media certainly plays a role in brand building, the most successful strategies often blend the strengths of both traditional and digital platforms. 

Insights from Profit Ability 2 emphasise that linear TV advertising, alongside print, offers the lowest ROI variation, positioning it as a stable and lower-risk investment. Perhaps one of the most notable reasons for this is that it’s harder for brands to do TV ads badly. “There are well-known rules of how to do TV well,” says Christian. 

In contrast, she points out that social platforms like Facebook offer multiple ad formats, which can make achieving optimal results challenging. “For social, you probably could deliver a higher return than TV, but there's a high risk that it could be a lot lower because it's just much more variable,” she says.

How brands can reassess their media mix to optimise their TV spend

Many brands that rely heavily on digital advertising often focus on digital tracking. However, Christian suggests that brands should reconsider relying too heavily on this. This is because a focus on tracking may mean they miss out on the broader and longer-term impact that other forms of advertising can have.

“It gives you a false view that you understand exactly what's driving all of your business,” she says. “The reality is when you invest in TV, there's no click. But that doesn’t necessarily mean that TV wasn’t a key influencer on the customer decision journey.”

For brands considering the switch to TV advertising, Chappell emphasises that it typically takes more time to see the full impact of their efforts. “If you launch a six-week TV campaign with a completely new brand on TV, even if you're following best practices with lots of distinctive assets, you’re going to see more of a relative impact at 26 weeks than you will at 6,” he explains.

He says: “In pretty much every single case we see, the second or third time that someone runs something works a lot better than the first time, because you're building up familiarity.”

He gives the example of Aldi’s Christmas ads, which feature Kevin the Carrot, the brand’s now-iconic holiday mascot. The ad has been running since 2016 and, like the John Lewis ad (cited above), has become a cornerstone of the holiday season for many.

“They've learned from the past. They've got this character now, he's in people's brains, and that seems to work really well for them,” Chappell says. “Sometimes you do need to stick at it to reap the rewards."