Tv advertisements are the easiest way to spend your marketing budget. Just call an advertising agency and tell them you have $10 million to spend for advertising. They’ll take care of it in no time.
And they wouldn’t have a job unless it was effective, right? Unfortunately, TV advertising is usually a waste of money.
We’ll look at the exceptions that generate a profit (and how you can become one of those exceptions) later on. But let’s start by going through the issues you need to avoid.
The 3 biggest issues of TV advertising
If you can beat all these issues, you can make a consistent profit with TV ads.
Can you track the results?
If you can’t track the results, you can’t know if your ads are working. Just seeing an increase in sales doesn’t help much.
Let’s say you run 3 ads on TV and a few more on various online platforms. And you see an increase in sales.
Which ads do you keep running?
It’s unlikely they’d all be profitable. Not impossible, but very unlikely.
So, how do you keep getting positive results? All you can do is keep those ads running and create more somewhat similar ads. And most importantly, cross your fingers and hope for the best.
You know you’re wasting at least a significant chunk of your advertising budget, but you have no way to improve.
As an aside, this is true of all untraceable advertising.
Can you afford the learning curve?
You can’t ever expect to get great results immediately, no matter what advertising method you use. If you use the most consistently effective way to create ads, you have a high likelihood of good results. But still not 100%.
So, you have to be able to afford the learning curve when you start using a new advertising platform.
TV ads have perhaps the highest cost of entry (cinema ads come close). Cost of producing an ad and getting it to air takes a lot of budget.
Can you create 3 ads (or 20 ads) without making a profit? If you get really lucky, you make a profit with your first ad. But it would be terrible planning to expect that.
How accurately can you target your target customers?
This might seem like a non-issue—and it might be that for you. But if there are no shows that are only interesting for your target customers, you’re going to show your ads to a lot of uninterested people.
I’ve seen a lot of tampon ads, which has clearly been a complete waste of the advertisers’ money. TV stations don’t charge you based on how many of your target customers will see your ads. They charge you based on viewers, regardless of how they are.
And if your target customer isn’t “everyone who eats breakfast,” you’ll waste a lot of your budget right off the bat.
Why TV advertising can work
Unless you’re advertising during the Super Bowl, almost no one wants to see advertisements.
When the ad break starts, people run to the fridge or toilet or start talking with friends. They’re more likely to take out their phone and check social media than they are to pay attention to ads.
The point of TV ads is often to just make people more familiar with your brand of products. Even if people don’t pay attention to your ad, if they see your logo and/or products, there’s still a positive effect.
When they go shopping and see 75 types of cereal, they’re a little more likely to favor your brand if they’ve seen your ads (even if they don’t remember seeing your ads).
But that makes TV ads sound better than they are.
Competition ruins your ROI
Let’s say people seeing your ads makes them 5% more likely to buy your cereal because they see it as more familiar.
What if 5 other cereal companies also run as many ads. You’re then sharing that 5% with all those competitors.
Sure, the math isn’t that simple. But you get the idea. The more your competitors advertise on TV, the less effective it becomes for you.
Ad agency reps would here argue, “If your competitors advertise on TV, you must do it too because otherwise you definitely lose.”
But you can use your ad budget in many other ways. And at least some of those offer much more consistently good results than TV ads.
When should you use TV advertising
As I said earlier there are situations where TV advertising can create a good ROI.
- A lot of your target customers watch a specific TV show. So, if you sell fishing equipment, it might be a good idea to advertise during a fishing TV show.
- Your profit margin is large enough to cover a small conversion percentage. Real estate agencies use TV advertising quite often. They can get a good ROI because even a single sale is worth a lot to them and being a well-known brand helps them get a lot more customers.
- A well-known brand is especially valuable in your industry. The marketers of car manufacturer’s now how valuable it is to have a strong brand. And that’s how they can justify a pitiful ROI.
- You want to win a marketing award in the TV advertisement category. If you win, you’ll be able to tell your boss and/or potential customers that you won an award. So creating TV advertisements for your boss/clients is a really good idea if you’re in the business of creating TV advertisements :)
The examples above are flawed
As compelling as the examples may sound, they’re not thought through. It’s true the ROI could be positive (you make a profit from your investment). But you’re still wasting your money because you could use it so much more effectively.
- The fishing equipment company would likely get a significantly better ROI by advertising in fishing magazines or online.
- Some major real estate agencies have already stopped using TV advertisements because of the poor ROI. They’ve realized they get a better ROI if they concentrate their marketing online. They use traditional advertising methods with content marketing methods. And most importantly they reach their potential customers at the exact time when they’re looking for a home. One company I know of uses ads that say, “Click to see the most viewed home at *your city/country*”. I’m sure most people don’t want that house, but they’ll remember the website and go there when they’re actually looking for a home.
- I have to admit that car manufacturers need a strong brand and a TV advertisement is a good way to accomplish that. I’d still spend much of the marketing budget in direct response marketing (as opposed to branding ads). Direct response ads (= you ask people to take some action right away that you can track) can be equally effective at creating a positive brand image, so it’s really a no-brainer.
- If your goal is to win a TV advertising award, you need to create TV ads. Nothing to add to that…
So in short: spending your TV advertising budget in other types of marketing usually creates a better ROI. That’s because TV ads are rarely as focused and targeted as online marketing. But to be perfectly honest, I do believe TV advertising isn’t always a waste of your money. But the odds are on my side: only a small percentage of the readers of this post can justify a TV advertising campaign.
As an aside, here’s my analysis of the best branding ad (which was shown on YouTube and TV) from 2020.