Hamburg, 26 October 2016. Many start-ups in their initial growth phase are confronted with a challenge: having fully exhausted the possibilities offered by communication channels such as search engine marketing (SEM) and social media platforms, their rate of customer acquisition slows to a trickle while their brand awareness continues to remain low. This situation is prompting many of these young enterprises to utilise television advertising as a new marketing channel.
The Hamburg-based JOM Group has analysed these start-ups’ TV advertising expenditure in the years from 2013 to 2016 (first half-year period). Included in the survey were start-ups in the service, food, finance, trade/e-commerce, telecommunications and tourism sectors with a gross annual advertising budget exceeding one million euros.
The total TV advertising expenditure of the analysed start-ups has risen from 362 million euros in 2013 through 504 million in 2014, to 637 million euros in 2015. For 2016, JOM estimates spending of about 800 million euros. The observed start-ups did indeed witness the hoped-for boost to their website traffic, with an increase in direct visits of more than 100 percent (2013 and 2014) and more than 50 percent (2015) on average. It is not surprising, then, that 38 of the 46 start-ups that invested in TV communication for the first time in 2014 repeated their investment in the following year. This trend can also be seen in the time that followed.
“We assume that start-ups’ gross investment in TV advertising will break the billion euro barrier in 2017. One must, however, keep in mind that this is still a big gamble for advertising marketers, among others, who invest in start-ups, for example in the form of ‘Media for Equity’ deals. A look at these relatively small net investments highlights the extent to which the whole topic is being pushed. Based on this observation, we are assuming that the investment levels may peak in the near future. In the area of pure e-commerce start-ups, we are already witnessing a slowdown in growth in 2016 compared to 2015”, explains Henning Ehlert, Managing Director of the JOM Group.
Decisive for the success of a TV ad campaign are detailed, performance-oriented tracking and a continuous optimisation of the ads by adapting key planning factors such as the choice of channel and region, print advertising, and accompanying campaigns aimed at target-groups in other media.
The analysis is available for download under the following link: