Cutting TV ads has ‘disproportionate’ effect on sales

Cutting TV advertising budgets has a disproportionate negative effect on sales, according to the research arm of TV technology giant TiVo.

According to a study carried bout by 84.51 in partnership with TiVo Research and media companies A+E and Turner, consumer packaged goods brands that cut their advertising budgets between 2013-14 saw a much greater reduction in sales year-over-year.

According to the study, for 11 of the 15 consumer packaged goods brands analysed, sales returns dropped by a combined US$94 million (€86 million) when TV spend was cut year-over-year. This accounted for 69% of the 2013 incremental sales attributed to TV advertising.

In 2014, the average on-air brand was reaching only 25% of its purchasers in an average week, down from 35% in 2013, leaving 75% open to competition.

According to the survey, all 15 brands posted reach declines, and nearly all brands that decreased spending also saw a decrease in return. For the 11 brands that reported a loss in sales, for every dollar decline in ad spend, they lost three times that amount in return. The correlation was disproportionate in favor of higher TV spend.

The TiVo Research study was based on a combined data stream of 84.51’s in-store sales with TiVo Research’s viewing data for over two million households.

“In today’s multi-screen content universe, consumer brands are reallocating advertising dollars to digital spend, however, our research found that TV advertising is more effective than ever. This study confirms a direct link between TV advertising spend and ROI for brand advertisers,” said Betsy Rella, vice-president, research, TiVo Research.

“We see marketers constantly struggling to find the most effective advertising media, with many cutting their TV advertising efforts,” said Nishat Mehta, Head of Brands, 84.51. “We wanted to better understand the effects of changes in TV spend. These results will help the industry make more informed decisions about optimising their media planning.”