Analysis conducted by Gain Theory

Why this is important?

In the last decade, marketing has changed beyond all comprehension.

The rise of digital, big data, programmatic, addressable et al have given marketers a multitude of opportunities, the number of which continues to dramatically grow.

Like an all you can eat buffet, the choice can be both exciting and overwhelming; it’s very easy to make rash, regrettable decisions.


There has been a similar rise in marketing analytics techniques. It has never been easier to see how well your marketing investment is performing, in clicks, likes, sentiment, web visits, phone calls, applications, sales, profit. But too many of these techniques focus on easily measurable metrics, which often give an alarmingly short-term view.

To counter this, Gain Theory has run a study which looks at the long-term impact of marketing, across a range 7 key categories and 29 brands. The aim is two-fold: to show how marketing impacts business revenue and profit in the long term; and to show how marketers can make the right decisions to drive long-term growth.

We believe this is key to the future success of the advertising industry. If we continue to focus on short term metrics, we miss the full picture.

For instance, across the brands Gain Theory analysed, digital attribution was shown to measure only 18% of the full long-term impact of marketing on sales. Econometric techniques bridge the gap, but only get us 42% of the way there.

Only by looking at marketing through a long-term lens can we truly understand the full impact.


The aim of Gain Theory’s Long Term analysis is to measure and understand the Long-Term Multiplier (LTM) to short term impact. To understand how it works, let’s run through an example, and say that a brand ran a £5m TV campaign. Econometric analysis could measure its short-term impact at (for example) £10m in value sales, thus giving a short-term ROI of £2 (£10m value sales divided by £5m spend). The LTM tells us how much this impact grows in the long term. If we measured a LTM of 3x, then this would be because the long-term impact of the campaign was £30m. Please note, this is total so the £30m includes the initial £10m short term impact. The overall long-term ROI is £6 (short-term ROI of £2 multiplier by 3).

The LTM is measured by analysing the base – i.e. the level of sales return in the long-term if a brand ran no marketing, which can be seen as a measure of a combination of mental and physical availability, or brand strength. Standard econometric practise is to use a flat base, which does not move over time. However, one of marketing’s functions is to change tastes and preferences in the long term. So if we allow the base to change in the long term, we can reflect these long term movements in tastes and preferences. And if we can understand how marketing impacts the base then we can show how many long-term sales were driven by marketing, giving us the long-term multiplier.

Gain Theory has run this analysis across 29 brands to understand the trends at a macro level. How do advertisers drive long-term sales? What media channels have the biggest impact on long-term sales, and thus the highest LTM? How can marketers use this information to their benefit, to drive long-term business health?


1. TV has the greatest long term multiplier of all media channels

Across all categories, TV has an average LTM of 2.35. The only other channel with an LTM over 2 is Out of Home:

This persists across categories:

TV also has the highest efficacy, with its 25% point (e.g. the point at which 25% of LTMs are higher, and 75% are lower) being higher than all other media at 3.87; the next highest is VOD at 3.52.

2. Activation and direct response media can drive stunning ST ROIs but lack LT impact; whereas brand media have the best LTMs

As seen above, the LTMs for Search, Display, and Radio are at the lower end of the spectrum, whereas TV, VOD, Print, and OOH are in the top 4 across categories.

There is clearly important for CMOs and CFOs alike. If certain media are driving high short-term returns but have a limited long term impact, and if we’re only measuring the short-term impact, we are likely to be missing out on large potential long term revenue drivers, potentially causing harm to the business.

​3. What drives LTM?

The strongest drivers of LTM are levels of brand media investment, and the number of bursts of activity. Where we have seen brands invest in media such as TV, VOD, Print, and OOH, at a level which is over and above their competitive set, we have seen higher LTMs than where investment has been under that seen in the competitive set.

Additionally, there are benefits to persisting with a campaign. The LTM from running three bursts is double that of a campaign which only has one burst of activity.

4. Which factors indicate long term effect? What tools can marketers use to understand if their marketing is having an impact in the long term?

The greatest indicator of long term effect from media is the level of base sales, as Gain Theory has modelled here. However, this can take time to observe as base shifts are measured in months and years, and can often require advanced statistical techniques.

In lieu of a base modelling approach, there are three key ways in which long term effect becomes apparent and can be observed:

  1. Impact on brand equity metrics
  2. Impact on price elasticity
  3. Impact on activation metrics
4.1 Brand Metrics

Brand metrics often give a guide to long term brand strength. While the choice of brand metrics can be overwhelming, with many advertisers running surveys with hundreds of questions, it is normally a small range of metrics which provide this guide. In 65% of cases, consideration forms the closest link to base sales, where growth in consideration causes growth in the base. The level of impact form consideration differs from industry to industry and brand to brand, but a guide is that a 1%pt increase in consideration can be expected to drive a 0.5 – 2% increase in base sales.

A slightly more advanced method is to observe a small basket of metrics, generally comprising awareness, consideration, and those brand metrics which have a close link to base sales. These will differ by brand and industry, but commonly used brand metrics include value for money, trust, and service. Tracking a basket can give a business a ‘campfire’ number – easy to track and observe whilst indicating long term success. Indeed, for a number of large advertisers, while growth in brand metrics is always welcomed, a lot of advertising spend is aimed at maintaining the brand, the base sales, and ultimately the business. (see next section).

4.2 Price elasticity

Another way in which long term health can be measured is by analysing price elasticity over time. The theory is that consumers will overlook price differences for a brand which they believe is higher quality, or a brand in which they have more trust – e.g. Boots own-brand Ibuprofen vs Nurofen; the products are the same, the price points are vastly different.

This has been shown in a number of Gain Theory case studies. In one FMCG case study, the price elasticity went from -1 (e.g. a 10% rise in price causes a 10% drop in units sold) to -0.4 (a 10% rise in price causes a 4% drop in units sold). This happened over a three year time period in which the brand went from minimal brand advertising to a relatively consistent presence on TV & VOD.

It takes a significant amount of spend to shift price sensitivity, and this level of spend will depend on the category, the brand, the competition levels, and the quality of product. As a rule of thumb, share of voice is the best metric to consider – for every 10%pt of share of voice increased, we can expect a between 5%pt -20%pt reduction in price elasticity. However, there are diminishing returns to scale – if SOV is already at 50% there is a minimal impact of increasing to 55%, for example

5. If brand investment stops, things can go quickly wrong

It is rare, but not impossible, for brands to stop investing in brand media to save money. Below are three cases where this has happened and the warning signs advertisers can take from each case.

5.1 A retail bank stopped TV advertising

A retail bank had been advertising on TV & VOD consistently for two and a half years. In March 2013, they stopped and went dark for two years. There was an immediate short term impact as sales caused by TV dropped. But the long-term base impact was stark. Over two years their base dropped from 20,000 quotes a month to 11,000.

They were still able to generate quotes using other channels – but their efficiency reduced: e.g. generic paid search cost per quote increased by 20%, reflecting findings from section 4.3.

5.2 A financial services brand stopped TV advertising, when they returned it took 3 years to rebuild their base

A different financial services brand had been advertising on TV & VOD consistently, then stopped. They started advertising again after 2 years off air. Short term results were good: they saw the same cost per application and the same % uplift from TV. But their base had halved. It took 3 years to rebuild their base to pre-dark levels, using a continuous level of brand media to do so.

5.3 A travel brand went off air to protect profit; this had deleterious effects in the long term

A US-based travel brand took $3.4m out of their TV budget to save money. They lost 41,200 transactions in the short term, equivalent to $3m of profit. So the net impact was $0.4m profit added to the bottom line.

However, this brand did not account for the long-term impact. Taking base deterioration into account, the total long term transaction loss was 81,600, equating to a $4.5m loss in profit. The net loss from going off TV was -$1.1m.


As has been shown above, brand advertising can have a significant long-term impact, which is often missed by short-termism in marketing measurement. There are ways to understand the long-term impact, either by modelling, or by analysing brand metrics, price sensitivity, or activation media.

When undertaking this analysis, it can be shown that the media channels which drive long-term impact are those which have the time and space to tell a story and to embed themselves in consumer minds. Gain Theory’s analysis shows that, due to these features, TV is likely to be the best channel to drive long-term impact and, alongside it, business success.

In this world of multiple metrics and big data it can be easy to retreat into short-termism and easy to measure metrics. We encourage all advertisers to take a longer view to represent the full impact of marketing – otherwise we are doing the whole industry a disservice.


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