How Brands Are Missing Out on an Improved 30% ROI for Their Advertising Spend

Brands often allocate significant portions of their budget to video for good reason – they’re effective, can impact buying decisions in multiple ways, and can be measured with the right analytic approach. As digital channels have evolved, traditional linear TV video advertising has been chipped away, with significant portions of advertising spend moving to digital marketing channels like Facebook, Google and Amazon. Still, brands are missing a huge opportunity – Analytic Partners’ ROI Genome shows that Streaming TV is massively underutilized, leaving millions of dollars of lost sales opportunities on the table.

Also known as Connected TV (CTV), streaming TV services such as Disney+, Hulu and Netflix have taken an increasingly dominant position in the consumer television market. They sit among Streaming TV platforms such as Roku, but without corresponding growth in streaming video advertising spend. Our research shows that spend on CTV has a massive 30% stronger return on investment than other advertising spend. And with ad-supported streaming services evolving to replace or supplement their subscription models, now is the time to grab this opportunity.

Adoption of CTV as a marketing channel has been slower than other digital channels for a number of reasons, but the perceived difficulty in measuring impact is a key one. Many digital channels offer the perception of immediate impact, based on click-throughs or other tools. This makes them appealing, because the spend can be justified and adjusted in real time.

However, with effective and comprehensive measurement programs, such as Analytic Partners’ Commercial Analytics, this concern can be easily addressed. We can demonstrate that CTV spend offers outsized ROI and does so over both the short- and long-term.

Streaming video has a high short term and long term ROI (even if there’s lower spend than other channels)

Video’s lasting impact is twice as long as non-video media tools. In fact, video advertising continues to impact buying decisions not just in the short term – this week and next week – but also in the medium to long term – i.e. next month and beyond. This effect is why CTV benefits are so often under rated. The use of simplistic attribution and “last-click” (the last touchpoint before a consumer makes a purchase) for measurement purposes does not take longer-term buying processes into account.

Another factor to consider when looking at CTV and video, in general, is that it impacts performance and lower funnel marketing channels. For example, ROI Genome shows that 30% of paid search clicks are driven by other forms of advertising – most of which are from video media budgets. This ultimately means that without video, a large amount of searching wouldn’t take place at the same level, and there would be a corresponding drop in purchases.

It’s all very well to say that brands should be using CTV and increasing their spend, but what will this look like? Currently, brands are dipping their toes in the CTV waters, but investment on streaming TV video is low, averaging just 7% of total spend. But on that 7% spend, they’re seeing ROI that is 30% higher than for other marketing channels and tactics. Analytic Partners recommends that CTV and streaming video spending should be at least 10% of total advertising spend, but preferably closer to 20% and, in some cases, could arguably go as high as 30%.

Of course, as with any marketing investment, it needs careful consideration and implementation. While there is improved ROI across the board, high consideration brands with longer purchase decisions will see an even higher impact from CTV spend than brands with lower considerations. It’s also true that consumers do not respond to bombardment, so your CTV dollars should be wide reaching and not concentrated on a single target, genre or streaming service. Wherever possible, leverage frequency caps.

And as with any marketing spend, it needs to be considered as part of a holistic commercial mix – replacing all linear TV spend with CTV spend, for example is likely to be counter-productive. This will exclude audiences and geographic areas for which this remains the primary viewing source.

Savvy scenario planning that takes historical measurements and results into account will help to ensure the mix is optimized for each brand.

Analytic Partners is the leading cloud-based, managed software platform which provides adaptive solutions for deeper business understanding and right-time planning and optimization for marketing and beyond. We turn data into expertise so that our clients can create powerful connections with their customers and achieve commercial success.

For over two decades, Analytic Partners has collected vast quantities of marketing intelligence across more than 750 brands, 45 countries, and hundreds of billions in spend across industries. ROI Genome presents that intelligence to help marketers understand the tactics, channels, and strategies that drive ROI and performance.