Removing TV advertising from the media mix could reduce profits for a campaign by 24% within three months and 60% over more than two years, according to analysis by GroupM.
Considering a two-year impact, the UK ad industry could lose close to £28bn if TV is completely cut from advertising.
Speaking at Thinkbox’s Trends in TV 2025 event today (4 March), EssenceMediacom’s chief strategy officer, Richard Kirk and head of campaign and marketing analytics, George Gloyn shared new analysis on the financial impact of advertising budget allocation.
GroupM’s simulation of 7,488 brand examples and 52,416 different scenarios, based on Thinkbox’s Profit Ability 2 data, examined the impact of removing TV advertising versus making proportionate budget cuts across all channels.
For example, a large retail brand with a £10m media budget, 53% of which is allocated to TV, typically generates around £50m in profit. When budgets are optimally reduced, profit declines, but return on investment (ROI) improves slightly due to diminishing returns.
However, when budget cuts are concentrated on removing linear TV from the media mix entirely, the profit drop is far steeper than a balanced reduction across all channels.
This is a worst-case scenario; however, Gloyn explained that at “any given level of cuts”, there is a “significant drop” in incremental media-driven profit by removing TV from the mix compared to an optimally split budget cut.
From the numbers analysed, which looked at the biggest brands in the UK, equating to £16.2bn of ad spend, the average brand in the UK spends approximately £1m on advertising, with an expected incremental profit of £1.3m.
However, removing linear TV completely could put 24% of that profit at risk, leaving £300,000 worth of profit “on the table”. This reaches 60% after more than two years.
“So on average, we would expect that £16.2bn will be spent to deliver £21bn worth of incremental profits,” said Gloyn. In the short term, the potential lost profit due to reducing TV reaches £5bn.
“So taking that impact on the long term, applying that same scaling methodology, we’re no longer putting £5bn worth of risk, but essentially putting up to £28bn worth in profit at risk, far exceeding the Treasury’s £22bn black hole,” said Gloyn.
However, he acknowledged that the analysis makes some “dramatic assumptions” in terms of assuming that every brand would do a sub-optimal location. Kirk added that by “not taking the time to think about how these cuts should be processed through the plan properly, money is just being essentially burned on the table”.
Meanwhile, the analysis also finds that, on average, online performance channels see a 13.7% improvement in performance when TV is live – especially in social media, which sees a 15.4% improvement.
“TV is very good at driving halo effects into other channels,” said Kirk.
GroupM analysed 14 brands’ spend on TV and on lower funnel response-oriented channels, such as paid search, in any given week.
Kirk claimed that in 21 out of 30 instances, the brand’s presence on TV resulted in a “greater than 5% improvement” in the performance of lower funnel response media.
“If you’ve got TV on air and have a week where you’re being asked to drive significantly more performance targets, you can actually afford not to put so much money into these lower funnel channels because you can rely upon this effect helping you out.”
