Decreased TV advertising spend hurts sales

Executive Summary

It may come as no surprise that TV ad expenditures for major consumer packaged goods companies are changing. Budget allocations across media are shifting, as advertisers attempt to mirror changes in viewing behavior. The net result is that CPG brands are often spending less within TV to make funds available for digital campaigns without understanding the full effects.

For every $1 saved in TV spend, the drop in sales return was $3.

Sponsored by media companies such as A+E Networks and Turner, this study, conducted by TiVo Research and customer engagement consultancy firm, 84.51° (a wholly-owned subsidiary of the Kroger Co.), addresses the short-term effects of reducing TV spend on brand sales. The study analyzed 15 random brands that had reduced TV spending by at least 25% between 2013 and 2014.

Key Findings

  • Reduced TV ad spend led to a combined $94MM loss in return for 11 of the 15 brands, accounting for 69% of the 2013 incremental sales attributed to TV advertising.
  • For every dollar decline in ad spend, the 11 brands lost 3x that amount in return.
  • Brands averaged a 25% weekly reach leaving 75% open to competition.
  • Reduced ad spend resulted in reach and frequency declines for 11 of the 15 brands, which led to the drop in sales/ROI.