Not dead yet: why TV advertising is still vital for grocery

The latest data on where fmcg and retail brands should invest their advertising budgets is pretty clear: it is mainly TV.

If that surprises you, it is because some of the narrative around TV and TV advertising has become a bit warped. But the evidence is not warped.

In fact, TV advertising is responsible for 75.7% of fmcg advertising-generated payback. For large retailers that figure is 52.3%. For smaller retailers it is 56.3%.

This all means it remains the main profit driver for both fmcg and retail businesses. And we’ve got the evidence to prove it, with a giant, multi-award-winning study of advertising effectiveness, based on analyses from 141 brands and covering £1.8 billion of media spend across 2021 to 2023.

The study, Profit Ability 2, is based on solid, verifiable data – it’s a fairly clear reality. Hard to argue with you might think.

So reading the recent whodunit article in The Grocer – “Who killed the traditional TV ad?” – was a little disturbing.

There is clear, robust, publicly available market evidence that shows the value TV advertising creates for brands. So how do we end up with an article questioning the value of TV advertising? A question especially odd coming at a time of year when fmcg and retail brands have unleashed massive marketing campaigns with TV creativity front and centre.

The answer is a mixture of myth and misinterpretation. There is much in the article to chew over, but I’ll focus on two main themes: judging TV as a whole and the relationship between TV and retail media.

Judge TV as a whole

Questions over TV advertising’s continuing vitality can stem from the fact that people are watching less TV live – something The Grocer piece hinged on.

That’s entirely true – we are watching less live TV – and if live TV was the only programming we could watch or advertise around, that would be a big problem.

But TV is not a monoculture. The drop in live viewing is being compensated for by on-demand viewing.

In 2015, 95% of TV set viewing by people over the age of 16 was live TV. Now, 95% of TV set viewing is a combination of live and on-demand TV.

Read more: Top campaigns 2024: Who killed the traditional TV ad?

For perspective, and because The Grocer piece quotes Ofcom saying “the TV is fast becoming a device of choice to watch YouTube”, YouTube accounts for only a tiny amount of TV set viewing, just 5%. The TV remains the home of TV.

The truth is that commercial TV is growing as streaming expands and newer companies – the likes of Netflix – have welcomed advertising. This is good news for advertisers, who have been demanding more opportunities to invest in high-quality media environments.

When the figures come in for 2024, it is likely investment in TV advertising will have grown year on year – not at the hyper-speed of newer forms of media, but we’re talking about one of the most mature advertising markets around. TV’s resilience and continued high performance are remarkable given the competition it faces.

Don’t fund retail media by defunding TV

There is a lot of hype about retail media as it is rapidly growing. The Grocer’s article suggested retail media might be TV’s nemesis, and noted that investment in retail media may soon be bigger than TV.

That’s great for retail media. But who’s tallest is irrelevant. Retail media need media like TV.

Advertising is a team sport. Just as you can’t have a successful football team with 11 goalkeepers, you need a mutually supportive blend of media in your advertising.

But TV isn’t just a vital player in the team – it drives other players forward and enhances their performance. TV advertising has a proven multiplier effect on the impact of other media.

Yet there’s a notion that retail media investment should be funded by taking money out of TV – and worrying evidence that it’s already happening.

This urgently needs challenging, because it misunderstands what TV and retail media are for and overlooks the effectiveness evidence. Funding something new by undermining the thing that works best is a strange strategy.

As the influential marketing consultancy Magic Numbers argues, retail media spend – and search – is akin to paying rent to live online. In this world, media that sustain the brand familiarity that creates engagement in online environments are even more important, not less. Raiding TV to ramp up retail media is self-defeating.

The sensible strategy is to fund retail media from under-performing advertising investment (see Profit Ability 2) or, as Magic Numbers recommends, “the cost of retail media must be met by colleagues in distribution or merchandising”.

It’s often said the answer to any headline asking a question is no. Thankfully The Grocer’s article is an example of that.

The article ended with the suggestion that TV advertising’s role is diminished but not disappeared. The truth is that if brands disappear from TV – and other brand-building media – they risk being diminished.