A new study backed by Turner Broadcasting gives marketers reasons to shift spending to advertising from promotion.
According to the study, conducted with IRI, advertising can give a brand the same kind of short-term boost that promotion can. Advertising provides significant longer-term returns on investment as well.
The study studied 62 brands representing $20 billion in sales and $3 billion in marketing spending across multiple categories over the course of three years. The study also found that small brands benefit as well as large brands, but smaller, newer brands might have to wait a bit for ROI gains to kick in.
Marketers tend to spend more on promotion than advertising and Bhanu Bhardwaj, a principal at the IRI Media Center of Excellence, acknowledges a complete shift of funds in media from promotion to advertising is not possible.
But in simulations run by IRI, a shift of just 10% of promotion spending to media advertising will increase marketing ROI by 10% to 15%.
“With even a 10% shift, we’re seeing there can be significant upside for ROI for media and interestingly also for promotions,” Bhardwaj said.
“The more you promote, the more consumers get used to seeing those promotions” and will wait for price cuts or coupons before buying, she adds. When those promotions become less frequent, they become more effective.
For Turner, the emphasis on ROI and away from traditional age and sex demographic is an extension of its leadership in moving toward advertising that is more data driven and targeted.
“We have an initiative with our emerging consumers networks—truTV, Adult Swim, Cartoon Network, where the conversations we’re having directly with advertisers is all around ROI. It’s not around impressions, reach and frequency,” said Howard Shimmel, chief research officer at Turner.
“For every brand we’re having the conversation about what is the outcome metric they most care about. Is it sales? Is it brand awareness? Is it brand lift? And then we design research to support whatever it is they want to measure,” Shimmel said.
A 10% shift of promotion money to advertising would be a boost to TV programmers like Turner at a time when ad spending is flat.
“I think it’s up to us to be constantly reminding advertisers that it’s a new world,” Shimmel said. And Turner is among those working to improve TV advertising through technology.
“We are consciously trying to build products that drive greater ROI from our media and integrated marketing, and as we get better it’s going to make the tradeoff that advertisers have to think about making even more distinct,” he said. “Because an advertiser could do a great promotion with Conan, drive a lot of brand favorability, drive great ROI versus, ‘I can discount at stores and just train consumers to only buy me when I’m discounted.’”
The study found that in the beauty category, promotion had a short-term ROI of 82 cents for every dollar spent. Advertising generated an ROI of $1.01 short term, with another 81 cents in long-term ROI, for a total ROI of $1.82. Results were even more substantial in beverage, where promotions had a 96 cent ROI and advertising had a short-term ROI of $1.21 and a long-term ROI of $2.54.
During the study, advertising spending consisted mainly of TV and digital. But IRI’s Bhardwaj says there was also some radio and print in the marketing mix for some brands.
The study found that digital and TV can work together well.
By pairing TV and digital, advertisers capitalize on the advantages of each—TV provides reach and brand engagement, and digital video is about precision and optimized frequency, the report said. “Used in complementary fashion, TV and digital make a powerful statement. Brands with higher TV spend are able to generate higher digital ROI. However, caution must be taken not to overinvest in digital, as some brands have realized recently.”
And not all advertising is created equal. Better creative generates better results.
“Purchase-based targeting will ensure that the message hits the mark, reducing waste and elevating impact,” the report added. “Leveraging Turner’s audience targeting solutions allow clients to deliver their message to more of the customers who matter most.”
Branded content can also extend advertising storytelling.
“As a recent example, Snickers collaborated with TBS to develop a custom video that featured a comic book writer whose creativity humorously failed him when hungry, aligning with the brand’s global ‘You’re Not You When You’re Hungry’ campaign and sponsorship of Conan at Comic-Con,” the report noted. “To maximize the brand impact on television, the video took over full commercial pods via Turner Native Plus on TBS, providing a contextually relevant means to continue the storytelling experience during the advertising space.”
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Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.