Over the next two months, television networks will make their pitch to advertisers about why they should continue spending on TV. The annual upfront season comes as brands allocate more dollars to digital in an attempt to keep up with consumer behavior.
But a new study from TiVo Research reveals there can be an adverse effect. TiVo teamed up with engagement consultancy 84.51° (a wholly-owned subsidiary of The Kroger Co.) and found that for some consumer packaged goods, spending less on TV led to a decrease in sales.
A+E Networks and Turner sponsored the study, which analyzed 15 random brands that had reduced TV spending between 2013 and 2014. The brands came from a variety of categories—beverage, snack, candy and ingredient—which had each reduced their TV ad spend anywhere from 29 percent to 75 percent from the prior year.
The study found that for 11 of those brands, sales dropped by a combined $94 million dollars, or roughly 69 percent of incremental sales that those brands could attribute to TV advertising from 2013. Essentially, for every dollar less those 11 brands spent on TV, they lost three times that amount in sales. TiVo estimated those brands spent an average of $3.1 million less on TV advertising and lost an average of $8.6 million in sales.
Overall TV advertising spending dropped 2 percent during the fourth quarter of 2014.
As for the four brands that didn't see sales declines, the study found that for two of those brands, their decreases in spending were against the backdrop of a greater decline in spending from their competitors. The other two brands shifted their TV spending by buying highly-targeted networks.
"While advertisers are evaluating new and different ad tools and platforms, some TV budgets have shifted without the benefit of fully understanding the effects and quantifying the value of those shifts," said Mel Berning, president and CRO, A+E Networks. "Among all the platforms in which media companies can engage and integrate advertisers, this study has further proven that television continues to provide both better return on investment and accountability for our ad partners."
The findings will be presented at the Advertising Research Foundation's (ARF) Re!Think conference on March 14.
However, TV had a bit of a comeback in 2015, buoyed by an unusually strong scatter market. Standard Media Index indicates that while broadcast TV ad spending was down 3 percent in 2015, it jumped 13 percent in the fourth quarter; overall TV spending was up 9 percent in the fourth quarter but remained flat for the full year.