Commentary
Study Finds Magazines Offer Highest ROAS to CPG Brands But TV Still Highest With Incremental Sales
- by Richard Whitman , Columnist, June 15, 2016
A recent study from Nielsen Catalina Solutions which took a look at 1,400 campaigns from 450 CPG brands in seven categories spanning 11 years and compared it to in-store sales data found that good old magazines delivered the highest return on advertising spend. The average rate of return for magazines was $3.94 per dollar spent.
The average rate of return for display ads was $2.63. Digital video was the lowest at $1.53. And while magazines shined on the ROAS front, it was TV that delivered on sales. The study found the medium garnered the highest incremental sales per household at $0.33 with display delivered the least at $0.19.
In a separate metric, mobile advertising delivered the highest sales per 1,000 impressions at $26.52 with display delivering $19.96.
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It's difficult to interpret such findings, which seem to fly in all directions. The critical issue is a function of media mix and scale. Numerous ROI studies--all flawed to some extent by lack of relevant data----nevertheless have shown that when one medium---usually TV---dominates an advertiser's spending, it lags well behind other media in incremental returns per dollar. The explanation for this is obvious. If TV generates 75% of an ad budget's GRPs while magazines account for only 10%, the latter is at the beginning of its effectiveness cycle while the former is suffering the effects of the diminishing return principle. As each dollar is added to the already huge TV budget, it buys redundant "exposures" which have less incremental impact than a magazine campaign which the reader has noted only two or three times over an extended period. But what if TV's share of the budget was 10% and magazines got 75%, wouldn't we expect to see TV winning handily in incremental sales or awareness effects?