April 17, 2016 — Videology— a leading software provider for converged TV and video advertising – today announced the findings of an independent, commissioned study conducted by Gain Theory, a global marketing foresight consultancy, on the behalf of Videology entitled, “Video Works”. The study was designed to analyse the impact of video in driving offline sales (in store purchases) for a number of brands over a significant time period and across multiple campaigns.
For this study, Gain Theory worked with a select group of advertisers across industries, using advertiser first party media spend and sales data, Videology campaign data, and Gain Theory econometric modelling methodology to get to these results. The objectives were to show the ROI of video, how this compared to TV, and to understand how inventory quality impacts ROI. The brands in this study had varying budget levels, target audiences and creative messages for their TV and video campaigns.
The results showed that all brands had a positive ROI on their video investment, with 95% of sales occurring offline. The gross revenue ROI of video relative to TV was, on average across our studies, 1.27x higher – so for a brand with a £2 ROI for TV, on average this would be £2.54 for video. To clarify, video does not unilaterally deliver a better ROI or scale than TV; however, when part of an appropriate AV mix, it does deliver a more effective ROI. Video certainly complements TV.
“Gain Theory looked at the current % of video as part of the planned AV budget for the brands in this study. This averaged at 5%, ranging from 3% to 8%. An optimal mix, i.e. the investment into video creating the greatest offline sales impact, is on average 12.8%, a huge 156% growth. To re-state this, brands are currently spending around 5-10% of their AV budget on video. To maximise the ROI from AV investment, the percentage of video, in most cases should increase”, said Matthew Chappell, Partner, Gain Theory.
Another interesting finding of this study is the impact on ROI by inventory quality. The study showed that clients who have higher percentages of video budget devoted to Broadcast content have a higher video ROI relative to TV. When broadcast content reaches 60% of the investment mix, the video ROI relative to TV can be as high as 250% (i.e. video ROI is 2.5x higher than TV). Broadcast video, the most premium environment, which in turn creates the most impactful ad opportunities, really matters. Depending on each brands’ KPIs, broadcast video should play a significant part of the video supply mix. In this case when looking to optimise to ROI, broadcast video has made a significant impact.
“Video certainly performs as a medium in driving sales activity offline - with every case study showing a positive ROI. Econometric modelling provides the closest we have to empirical evidence of the relationship between media consumption and purchase activity in bricks and mortar stores so its great to see the power of linear TV and video in combination. When you look at consumption trends it instinctively makes sense but this is the first time we’ve been able to really objectively prove it“, said Rich Astley, UK MD, Videology.
The full study is available for download here