Television has been a powerful advertising medium for many years. Since the first paid TV ad aired back in 1941, this marketing channel has reached millions of people, contributed to the rise and fall of several commercial empires, and shaped the thinking of consumers in ways both subtle and profound.
Some marketers may wonder if, in this Internet Age, television still packs the punch it once did. The answer is a resounding yes. In fact, television in the United States reaches 90% of adults over the age of 18. In addition, TV marketing has grown more and more sophisticated over the years in terms of segmentation and appeal.
Still, the question remains: What kind of ROI should a company expect from advertising with a TV station? The following information will discuss the answer to that question in more depth.
What is ROI?
First, let's discuss what ROI involves. ROI (or "return on investment") is a key measure of success in the world of advertising — and for that matter, in all business models. In marketing terms, ROI is sometimes referred to as "return on ad spend," or ROAS. Basically, it is a measure of how much "bang for your buck" you receive from a certain ad or marketing campaign.
There is a basic formula that marketers use to calculate ROI. It goes as follows:
(Sales growth - marketing cost) / Marketing cost = ROI
As an example of how this formula works, imagine that you buy a TV spot for $500. That TV spot generates $2,000 in sales. Thus, your formula to determine ROI would be: (2000 - 500) / 500. This would work out to an ROI of 3, or 300%. In other words, you gained back every dollar you spent on that ad, plus 3 more!
What Kind of ROI Can You Expect from TV?
Many marketers today are laser-focused on digital channels like SEO, PPC, and social media. However, TV advertising remains one of the kings of marketing ROI.
For example, a study released by the CEO of the Advertising Research Foundation found that out of 3,200 ad campaigns, TV advertising was "the most effective vehicle for driving ROI." Moreover, one of the senior executives at American Express stated his belief in TV as a powerful advertising medium by saying: "When we run a heavy TV schedule, we see a lift in sales and product awareness. We need to run two weeks of digital to get the reach of one day of broadcast."
While the combination of digital and television channels has proven to be a potent force, marketers that shy away from using the more traditional mediums like TV in favor of online-only campaigns may actually be hindering the growth of their companies and/or clients. The fact is, TV as an advertising medium offers advantages that no other channel can match, such as:
- Appeal to multiple senses like sight and sound
- Vast reach, sometimes to a huge percentage of the national audience
- Increased ability to segment target demographics - local ads vs. national commercials
Granted, there's no magic number at which to aim when it comes to expected ROI. A wide range of factors will influence the ultimate effectiveness of your TV advertising campaign. However, an experienced media consultant at your preferred TV station can provide you with the creative help and strategic thinking that you need to maximize the impact of your ad.
For instance, your media consultant may help you to analyze the answers to questions such as:
- What is your target demographic for this TV spot?
- What days and times will the greatest proportion of your audience be watching?
- What kind of brand voice or tone would positively resonate with your target audience, and does your ad convey that voice effectively?
- What level of production values can you realistically achieve within your marketing budget?
- Can you bring in an outside production company, or does this ad need to be produced in-house?
Clearly, these and other points will help you to not only maximize your TV ads reach but also optimize its effect on your audience.
Continue to Leverage TV Advertising for a High ROI
The fact is, TV remains an advertising powerhouse in terms of reach, appeal, and high ROI. If you're not already leveraging TV advertising for your business, perhaps now is the time to start. If you are, then you may be able to increase the effectiveness of your TV advertising campaigns by leveraging the help and advice of experts in the field. Whatever the case may be, TV advertising will no doubt be around for a long time and continue to yield a high return on investment for business leaders willing to take advantage of this medium.