A $1 million study has shown that TV creates the biggest return on investment for automotive brands in Australia, almost twice as much as the nearest competitor, radio, and almost three times as much as the next, search.

The second wave of the “Payback Australia” study by Ebiquity, a leading, independent marketing analytics firm, found that every dollar invested in TV advertising generated a sales return of $8.90, easily beating every other media including social, online display and out-of-home. The return for all media in the automotive sector was far more dramatic than FMCG as reported late last year.

Ebiquity was given access to three years of raw sales and campaign data by four automotive advertisers, from small spenders to the very largest. Collectively these four brands spend more than $150 million on advertising per annum.

The results of Ebiquity’s econometric modelling research* provide unprecedented quantitative insights into the effectiveness of the local automotive category’s $700 million-plus annual media spend.

“The study highlights the power of advertising in the automotive sector, with all major forms of media delivering a positive return on investment. Leading the way on ROI was TV,” said Richard Basil-Jones, Managing Director of Ebiquity – Asia Pacific. “Radio also drives a strong ROI of $5, though investment is much lower down the diminishing returns curve than TV.

“With over $700m invested in advertising in 2016, it is a crucial growth lever for the car manufacturers. When the marketing world is placing greater focus on business outcomes, this extensive econometric modelling for the auto category has proven how critical TV is within the media mix. When it comes to the Australian automotive sector, TV is a critical factor in driving sales.”

Basil-Jones added: “We have worked hard to understand the return on ‘digital’ media in more detail. We were able to provide an ROI measurement for online display and social activity as we had both impressions data and spend.

However, we were unable to provide an average online video ROI as this same level of detail was not made available by all participants.”**

Kim Portrate, Chief Executive of ThinkTV, said: “Marketers need to create growth in tough conditions and media continues to be a significant contributor to sales. Ebiquity’s findings show this to be true in the automotive sector with media contributing 12% to sales of new cars which was even more significant than the 3% uplift identified for FMCG brands in the first phase of Payback Study released late last year. Media also plays a greater role than short term price promotions in the automotive sector, contributing twice as much revenue.

“Ebiquity’s extensive econometric modelling shows that TV is the clear winner in terms of effectiveness for brands looking to grow sales. At $8.90 for every dollar invested, TV’s performance is head and shoulders above the average media ROI for other media, which is $2.37. When it comes to advertising driving sales the Australian Payback study and other global studies continue to prove that TV leads the way.”

*Econometric modelling attempts to estimate the relationship between sales and the factors that drive sales. Econometrics uses mathematical equations to isolate all of the different factors that can influence sales at any one time. For example: If an advertiser runs an advertising campaign and sees a big increase in sales, that increase may also have been influenced by dealer promotions. Without stripping out the impact of promotions, one would over estimate the impact of advertising. Using econometrics removes the risk of such errors, allowing one to accurately estimate the direct dollar impact advertising has had on sales.