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Articles - Media Buying - April 8, 2019

TV underrepresented in media budgets: Accenture study

Canadian advertisers are over-investing in flashy “long ball hitters” like search and social at the expense of reliable “get-on-base” media like TV, says a new study from Accenture Strategy.

The new study, The Moneyball Moment for Marketing in Canada, likens it to the baseball model espoused by Oakland A’s GM Billy Beane (popularized in the book and subsequent movie Moneyball), which favoured dependable everyday players over high-priced talent.

Accenture’s argument is that while both TV and digital contribute to wins (or in this case sales), advertisers are under-investing in TV and failing to take its “halo effect” on digital channels into account.

The study was commissioned by Thinktv, the organization tasked with promoting television as an advertising medium. “We know who sponsored the study,” said Craig Macdonald (picture above, right, with colleagues Brent Chaters, left, and Josef Herbik), managing director of communications and media and technology lead, North America for Accenture in Los Angeles. “[But] Accenture has tried to make this as objective as possible.”

According to Accenture, Canadian media investment is growing by an average of 2% a year, with much of the growth fuelled by double-digit increases in digital investment. That growth is coming at the expense of traditional media, including TV, which has experienced single-digit contraction during the same period.

Accenture has conducted four advertising effectiveness studies for U.S. broadcasters—three for ABC and another for NBCUniversal—over the past several years to understand what it describes as “dramatic shifts” in media allocation over the past decade.

The study’s findings are based on an analysis of Canadian sales data and more than $700 million in media spend for 105 brands spanning the telecommunications, automotive, CPG and over-the-counter pharmaceutical categories between January 2014 and June 2018.

Among Accenture’s conclusions:

  • Canadian companies can increase overall media investment

The Canadian companies tracked by Accenture are currently spending 1.7% of total revenues on media, compared with 3.1% for their U.S. counterparts.

“We’re under-investing in our marketing strategies and channels as a whole in Canada. Full stop,” said Chaters, managing director of Accenture’s digital customer and marketing practice.

However, Accenture also found that media investment in Canada generates approximately 20% of sales, compared with 19% for U.S. companies. Canadian companies are also seeing an approximately 10% greater ROI per dollar spent than their U.S. counterparts, said Macdonald.

  • Major brands are under-investing in TV in Canada

According to Accenture, Canadian companies in the four measured verticals are investing approximately 42% of their media budget in TV and 40% in digital. It says that the “optimal” amounts should be 47% and 37% respectively.

Automotive advertisers have the lowest investment in TV (28% of all media allocation) and the highest in digital (52%), while CPG has the highest investment in TV (61%), with 32% of its media budget is allocated to digital.

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Macdonald said that the 105 companies earned approximately $176 billion in annualized revenue in 2018, approximately $36 billion of which was directly attributable to media investment.

He said that simply shifting 5% of media investment to TV could have contributed an additional $1.4 billion in annual revenue across the 105 businesses.

  • TV has a material halo effect on digital media…

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