In Allocating Spending on Digital-Video Advertising—A longitudinal Analysis Across Digital and Television, Nazrul I. Shaikh (Market Fusion Analytics) and Mahima Hada (City University of New York) studied investments in offline and online media for both a US restaurant chain and a food-and-beverage brand from the same country.
Using a dynamic model, the authors focused on the effectiveness, efficiency and saturation of digital video advertising compared with television advertising, with the same creative content deployed across both mediums.
One top-line result is encouraging to digital publishers: at lower levels of investment, digital video advertising was more efficient than TV advertising. But even as the digital messaging was “highly effective and efficient” it also demonstrated “quicker saturation”.
With smaller, more targeted ads, “their higher retention rates and lower execution costs” meant that the digital spots generated a higher return on investment (ROI) than the same investment in traditional TV.
“At the spend level that yielded the highest ROIs, digital video advertising provided a higher ROI than television advertising, because of its higher retention rates and lower execution costs,” the study said.
But, as the size of the placement increased, so did the results: “Digital video advertising had a much narrower and more targeted reach compared with television advertising.
“Because of the fragmented nature of the consumption of digital-streaming videos and shows, digital video advertising effectiveness is high, but reach is highly limited.”
The implication for marketers: “For marketing practitioners, there thus is an opportunity to readjust marketing spend by allocating higher spend on digital video advertising to drive optimal traffic and ROI, but with the caveat that the company soon will reach its maximum possible potential in digital video advertising.
“Media agencies and companies need to be cautious about a headlong plunge into moving dollars from traditional television to digital video.”
“Allocating Spending on Digital-Video Advertising” appears as a part of a special “What We Know About TV in The Digital Age” section of JAR.
Sourced from Journal of Advertising Research; additional content by WARC staff