Auto advertisers: How to spend $1 and make $8.90

Think TV ROI study delivered to advertisers and agencies at Melbourne breakfast event

A $1 million research study has shown that TV creates the biggest return on investment for automotive brands in Australia, almost twice as much as the nearest competitor, radio, and almost three times as much as the next, search.

The research was unveiled to auto industry marketers and media agencies at an event in Melbourne on Thursday morning.

Speaking before the event, Think TV CEO Kim Portrate said the TV industry marketing body chose Melbourne because it is home to many of the major auto groups.

The second wave of the “Payback Australia” study by Ebiquity, a leading, independent marketing analytics firm, found that every dollar invested in TV advertising generated a sales return of $8.90, easily beating every other media including social, online display and out-of-home.

Ebiquity was given access to three years of raw sales and campaign data by four automotive advertisers, from small spenders to the very largest. Collectively these four brands spend more than $150 million on advertising per annum. The results of Ebiquity’s econometric modelling research provide unprecedented quantitative insights into the effectiveness of the local automotive category’s $700 million-plus annual media spend.

“The study highlights the power of advertising in the automotive sector, with all major forms of media delivering a positive return on investment. Leading the way on ROI was TV,” said Richard Basil-Jones, managing director of Ebiquity – Asia Pacific. “Radio also drives a strong ROI of $5, though investment is much lower down the diminishing returns curve than TV.

“With over $700m invested in advertising in 2016, it is a crucial growth lever for the car manufacturers. When the marketing world is placing greater focus on business outcomes, this extensive econometric modelling for the auto category has proven how critical TV is within the media mix. When it comes to the Australian automotive sector, TV is a critical factor in driving sales.”

Basil-Jones added the total value of new car sales in 2016 was close to $41b.

He also presented data that indicated that while TV attracts 53% of auto ad spend, it contributes to 81% of auto sales.

Kim Portrate, chief executive of ThinkTV, said: “Marketers need to create growth in tough conditions and media continues to be a significant contributor to sales. Ebiquity’s findings show this to be true in the automotive sector with media contributing 12% to sales of new cars, which was even more significant than the 3% uplift identified for FMCG brands in the first phase of Payback Study released late last year. Media also plays a greater role than short-term price promotions in the automotive sector, contributing twice as much revenue.”

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