Study: TV Package-Goods Brands Lose Sales With Less TV Ads
- by Wayne Friedman , March 7, 2016
For every dollar saved on reduced TV spending, some advertisers could lose three times the amount in sales. A study by TiVo Research, and customer engagement consultancy, 84.51°, says a study of 11 of 15 package-goods brands that cut their TV advertising budgets, lost a combined $94 million dollars in year-over-year (2014 to 2013) spending.
The study was sponsored by A+E Networks and Turner.
The average lower TV advertising spending for the 11 brands was $3.1 million; with the average sales loss $8.6 million.
The average decline in household quarterly reach was 14 million -- 79% in 2014 to 60% in 2013. All 15 brands posted quarterly reach declines.
Average on-air brands reached only 25% of its purchasers in 2013, down from 35% in 2014.
The study refers to Standard Media Index estimates that overall TV advertising spend dropped 2% year-on-year in the final quarter of 2014 -- national broadcast dropped 2% to $4.8 billion, cable networks slipped 1.6% to $6.8 billion.
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Research was based on 84.51°’s in-store sales data with TiVo Research’s viewing for over 2 million TV homes. Both data panels are combined to create an anonymized matched panel of over 400K households with both exposure and purchase data, providing a single-source view of the consumer.
The problem here is that the study was paid for by two companies with substantial TV interests, creating a possibility of bias.
The other problem is that people with TiVo devices, and I don't care how many of them there are, are not typical TV viewers.
Quite right, Darrin. Also, brands that make significant reductions in their TV ad spending tend to be those that are in trouble in the marketplace and are losing sales momentum anyway. It's likely, though this is not a certainty, that these sales losses---or most of them---would have ocurred even if the level of TV spending remained constant. Perhaps the sponsors of the study could provide a five year share-of-market track for the average brand in the study, correlated with their ad spending and GRP weight. Were they trending downward? Were they stable in SOM? What about GRP delivery, what variations were there, due to varying daypart and network type allocations? These are some of the questions I would ask were I an agency media researcher or media director.
As you suggest Ed, the validity of the study really depends on the identity and relative health of the brands involved.
There are always big, difficult factors behind a CPG brand's decision to decrease their TV spend, because the effects (as the study suggests) can be massive. Without understanding more of these its hard to take much from the study, other than "advertising works".
@Darrin - Thanks for the comment - Our anonymous second-by-second viewership data comes from more than 2.3 million households that include TiVo and other MSO providers in more than 190 US DMAs, weighted to the US population.
Ed the study is Flawed. Its the same for companies that spend more on print marketing in business publications see their stock price go up, do you want to know why....