New Study Says Sitcoms Give TV Advertisers the Best Return on Their Investment

That comes from an ongoing study about the impact of context on advertising effectiveness. David Poltrack, chief research officer for CBS Corp. and president of CBS Vision, will be discussing the findings during a panel today at the Advertising Research Foundation’s annual conference.

The study was part of three years of research by the CBS Campaign Performance Audit, or CPA, program, which examined how the five CPA components create an effective TV advertising campaign: test your message, maximize your weekly reach, get the most of out “recency” (timing close to purchase), precisely target potential customers and consider context (i.e., the surrounding programming).

For the context portion of the study, Nielsen Catalina looked at the TV schedules for six consumer-packaged-goods, or CPG, brands in the second quarter of 2016 across multiple genres in broadcast and cable—no news, sports or kids’ programming—to find out which ads sold more products.

The conclusion: Ads that appeared in sitcoms had the highest ROI followed by variety shows. Overall, high-rated prime-time shows give brands’ advertising a context that yields the highest ROI results.

“Context does have an impact—8 or 10 percent for some of these CPG brands,” said Poltrack. “That translates to a lot of money, and it does make a difference.”

However, while context does have importance on its own, it’s less important than the other CPA components that contribute to driving sales. Having effective creative is the most important overall, followed by high reach, precise targeting, recency and then context.

This study will “absolutely” be a part of CBS’s upfront message this year, said Poltrack, who added that the results reinforce what the network has been telling CPG advertisers for the past three years: As CPGs spend less money in prime time, they are reducing the reach and effectiveness of their campaigns.

“The research shows that if you have an effective advertising campaign, your No. 1 priority should be to reach as many people with that campaign as possible,” said Poltrack. “When you take money out of television and move it into digital, and you cut your prime time down to marginal levels, you’re going to be at a net loss, because you’re wasting effective advertising by not exposing it to as many people as possible.”

The percentage of broadcast prime-time spend in top CPG categories had been falling since 2000, when it was 40 percent, to 2013, when it bottomed out at 22 percent for next three years. But in 2016, the percentage of broadcast prime-time spend for those CPG categories increased to 25 percent, the first increase in the 21st century.

“This message started to resonate with marketers,” who are moving their money back from digital to television again, said Poltrack. “If you have an effective television campaign, you want to reach as many people as possible. You can’t do that if you’re going to exclude premium product from that schedule.”

Millennials are getting older and spending more

During this morning’s ARF panel, Poltrack will also be discussing new data about millennials, a demographic that is older than many people think. “If you talk to people in the ad side of the industry now, they say, ‘I’m targeting millennials.’ We say, ‘How are you doing that?’ ‘Well, I’m buying 18-34,’” said Poltrack.

However, the age range of millennials is now 22 to 40, stretching outside the 18-34 demo, and the median age of a millennial today is 30. TV viewing in that demo, and especially broadcast network viewing, will increase each year, while millennials’ economic value will also grow substantially in the coming years.

CBS is looking at the concept of “delayed adulthood,” in which most millennials now say they don’t become adults until they’re 30. “All previous generations would have probably said 22 or 23,” said Poltrack.

As millennials delay major lifestyle events, they are waiting longer to purchase homes, major appliances and new cars or trucks as compared to the same demo in previous years. But Poltrack noted that they will be moving into their peak consumption period, which rises from 40 to 50, over the next decade. “Because of their delayed purchasing patterns and their delayed lifestyle, their purchasing is going to accelerate more than that of previous generations as they move into their 40s and 50s,” said Poltrack.

By 2025, millennials will represent the bulk of the 18-49 demographic, said Poltrack. “This is where the action is going to be in our economy. This is going to drive our economy for the next 10 years.”

And as millennials age, buy homes and have kids, said Poltrack, they will begin to watch more television and more broadcast TV.

Nielsen looked at how TV viewing among the four big broadcast networks increased as viewers aged from one demo into the next during three “base years”—1990, 2001 and 2006—and compared those results to 2016. During the base years, adults in the 25-34 demo on average watched 60 percent more broadcast TV than they had when they were in the 18-24 demo. But last year, that average jumped to 67 percent. The shift is even more pronounced in the 35-39 demo, whose broadcast TV watching increased 40 percent from the 25-34 demo last year, compared with a mere 3 percent increase during the previous base years.

“We’re seeing a greater acceleration of TV viewing as people age than we have historically,” said Poltrack.