Modern marketing is complex and it’s easy to lose sight of what really works. Advertising, often dismissed as an expense, remains one of the most powerful levers for driving growth—when done well. The recently released Profit Ability 2 report sheds light on this, offering marketers a fresh and detailed look at the effectiveness of advertising post-COVID.
For anyone in the business of brand-building, the findings are both insightful and actionable. From ROI benchmarks to lessons on media saturation, the report reaffirms a key truth: advertising is not a cost; it’s an investment. And like any good investment, its value lies in both immediate returns and long-term gains.
Advertising as Investment, Not Cost
One of the most striking takeaways from Profit Ability 2 is its emphasis on advertising’s dual nature: short-term activation and long-term brand-building. The numbers are compelling. On average, every £1 spent on advertising generates a short-term profit of £1.87. But when you account for sustained effects—the profits that continue to accrue for up to two years after the campaign—the ROI more than doubles to £4.11.
This finding highlights a critical point: short-termism in advertising strategy leaves money on the table. While the temptation to focus solely on immediate returns is understandable, it’s the long-term effects that truly unlock value. This is particularly relevant for SMEs, where budgets are often tight, and the pressure to see instant results is high. The evidence from the report should give business owners pause for thought. Investing in campaigns that not only drive immediate sales but also build lasting brand equity can transform a business’s trajectory.
Channel Performance: Breaking the Myths
The report challenges the simplistic categorisation of media channels as either “brand” or “performance” platforms. Instead, it argues that the effectiveness of any medium depends on the message. Linear TV, for example, is often seen as a brand-building tool, yet it delivers a robust sustained ROI of £5.94—one of the highest across all channels. On the other hand, Generic PPC, known for its short-term returns, offers a strong short-term ROI of £2.29 but lacks the enduring impact of traditional media like Print (£6.36).
This nuanced view of channel performance is essential for today’s advertisers. It’s not about choosing between “brand” and “performance” channels but about aligning the medium with the campaign’s objectives. For example, a campaign aiming to drive immediate e-commerce sales might lean on PPC and Paid Social. But for a business looking to build a trusted brand over time, investing in channels with sustained effects—like TV or Audio—is critical.
Diminishing Returns and Media Mix Challenges
Another important insight from the report is the concept of diminishing returns. As advertising spend increases, the incremental profit generated by each additional pound tends to decrease. This is particularly true for channels like Paid Social, where saturation points are reached quickly. Linear TV, by contrast, handles larger budgets more effectively, maintaining profitability even at higher levels of investment.
For marketers, this highlights the importance of strategic budget allocation. It’s not enough to simply increase spend across the board. The key is to identify which channels can scale effectively without sacrificing efficiency. This is where a well-planned media mix becomes invaluable. By balancing investments across channels with different strengths and saturation points, businesses can maximise their overall ROI.
Sector-Specific Insights: Tailoring Your Strategy
The report also underscores the importance of understanding sector-specific dynamics. Advertising payback varies significantly between industries due to factors like product value, operating margins, and purchase cycles. For example, sectors like FMCG and Financial Services often struggle to achieve short-term profitability but become highly profitable when sustained effects are included.
This variability underscores the need for bespoke strategies. As a Fractional CMO, I’ve worked with clients across diverse industries, and the one-size-fits-all approach simply doesn’t work. Understanding your sector’s unique challenges and opportunities is crucial for developing an effective advertising strategy. Whether it’s focusing on high-frequency channels for fast-moving consumer goods or leveraging long-term media for high-value products, tailoring the approach to fit the market makes all the difference.
The Evolving Media Landscape
Post-COVID, the media landscape has undergone significant shifts. The pandemic accelerated trends that were already in motion, such as the rise of online video and Subscription Video on Demand (SVOD). According to the report, household penetration of SVOD services has doubled since 2017, while work-from-home patterns have persisted, reshaping Out of Home (OOH) advertising opportunities.
For businesses, these changes require a flexible approach. Traditional media like Linear TV and Print remain effective, but newer channels like BVOD (Broadcaster Video on Demand) and Online Video are increasingly valuable. The challenge is to stay ahead of these shifts and adapt your strategy to meet changing consumer behaviours. This is where having a partner who understands the nuances of the media landscape can be a game-changer.
Scale, Efficiency, and Time: A Framework for Effectiveness
Ultimately, the report highlights three key dimensions of advertising effectiveness:
Scale – The total profit driven by advertising. Larger-scale channels like TV excel in this area.
Efficiency – The ROI of advertising spend. Channels like Print and Generic PPC offer high efficiency but may lack scale.
Time – The period over which advertising pays back. Sustained effects are where traditional channels shine.
Balancing these dimensions is the secret to a successful advertising strategy. For example, a campaign might start with high-efficiency channels to drive immediate returns, then shift to scale-oriented media to sustain growth over time. By taking a holistic view of these dimensions, businesses can make smarter decisions about where and how to invest.
What This Means for Your Business
For business owners and marketing leaders, the lessons from Profit Ability 2 are clear. Advertising works—but only when approached strategically and that means understanding your objectives, knowing your audience, and making data-driven decisions about your media mix.
At its core, effective advertising remains about balance: Balancing short-term and long-term goals. Balancing efficiency and scale. And balancing innovation with tried-and-tested approaches.
