A Moneyball Moment for Canadian advertisers

This week’s egtabite puts the spotlight on a ground-breaking media attribution study commissioned by thinktv Canada and conducted by Accenture Strategy. A comprehensive analysis of more than C$3 billion in media spend across 105 national brands in four key categories; the research proves that while advertising consistently drives approximately 20% of annual sales, Canadian advertisers are overinvested in online and social platforms and underinvested in TV – and missing out on significant revenue as a result.

Aptly named The Moneyball Moment for Marketing in Canada, the study references Moneyball, the book by Michael Lewis, which documents how a professional baseball team used data and analytics to fundamentally change the way the team’s management evaluated players and executed strategies.

In the same way, the study delivers insights for sales houses and broadcasters to help marketers rethink their approach to evaluating media performance – while underlining the effectiveness and sales ROI of TV.

Key learnings from the comprehensive analysis

The study yielded five key takeaways:

• Canadian companies can justify an increase in their overall media spend. On average, Canadian companies spend 1.7% of their revenue on media. By comparison, US companies spend nearly twice the percentage of revenue in the industry categories evaluated. Given that both the US and Canada are expecting annual GDP growth a 3.0-3.5% over the next three to five years, Canadian companies should increase their overall media spend to capture this growth successfully.
  
  
• Major brands are underinvesting in TV in Canada. The study found that advertisers have underinvested in television and overinvested in online and social media to their detriment.   By increasing budget allocations to TV by 5% and reducing allocations to online and social media platforms by 3%, advertisers can maximise the yield on their media investments. Based on the most recent 12 months of sales data analysed, such a re-allocation would yield a 4% increase in the annual sales generated by media overall, amounting to C$1.4 billion in incremental revenue in the assessed industries. The gap between optimal and current TV advertising spend varies across industries and is more pronounced in Telecommunications and Automotive at 7% and 6% respectively.

• TV has a material Halo Effect on online media. The Halo Effect is the ability of TV advertising to amplify advertising effectiveness of all the media channels in multi-channel campaigns. This sales ROI boost from TV to online is often hidden when measuring ad effectiveness. The research shows that accounting for the Halo Effect increases TV’s sales ROI by 23%, giving it the highest attributed ROI of any media channel. Further, when the impact of TV is attributed correctly in an integrated campaign, TV amplifies the sales ROI of digital by 19%.

• TV provides a strong upside for the next dollar spent. The next dollar spent on TV will outperform the next dollar spent on any other media channel across each assessed industry. Given TV’s higher marginal return, the analysis found that for new investments in media, allocating slightly more than 50% of that incremental spend on TV would drive the highest yield for the media budget overall.

• The untapped value of Long-Form Digital Video Content (LFVC) in Canada. LFVC is defined here as advertising against broadcaster-owned digital video content greater than 15 minutes, viewed online or via mobile devices and often sold separately from TV. The research reveals that LFVC generates 2x the average sales ROI of online and social media. The dataset showed limited spend in LFVC in Canada despite its strong sales ROI. This disconnect creates a valuable opportunity for both marketers and broadcasters moving forward.

Methodology

For the study, Accenture analysed more than $3 billion in anonymised marketing and media spend data between 2014 and 2018 spanning 105 brands across four categories, including Automotive, Consumer-packaged goods, Telecommunications and Over-the-counter pharmaceuticals. Accenture leveraged proprietary econometric modelling techniques to attribute the impact of multiple marketing levers by relating them to shifts in sales volume, while simultaneously controlling for all other key variables that might impact sales volumes, such as macro-economic factors, seasonality, trends and competitive actions.

A call to action

Based on the findings which show that advertisers can improve their advertising investment yield materially by leveraging analytics more effectively, thinktv formulated concrete recommendations for Canadian marketers. The trade body advised marketers to re-evaluate their overall media spend and allocation to drive improved return; to continuously leverage comprehensive attribution analytics; and to take advantage of Long-Form Digital Video Content advertising opportunities.

The advertiser response to the study has been uniformly positive – with many advertisers commenting that the research confirms what they suspected about their media allocations – that an over-rotation to online and underinvestment in television was negatively impacting the bottom line.

“The study shows that when looking at the effectiveness of media in driving sales, traditional metrics do not always paint a clear picture. Our study is a call to action for marketers to take advantage of advanced analytics and attribution methods to allocate their media investments appropriately, with an appreciation for the important role that television plays in amplifying the effectiveness of all media platforms. This study demonstrates what a costly mistake it is for businesses who underestimate the power of TV’s Halo Effect to drive significant revenue growth in both the short and long terms”, said Catherine MacLeod, President of thinktv.

thinktv will continue to promote and share the study in different ways throughout the next few months and is confident that as a result of the study, advertisers will increase media allocations to TV.