WHY ADVERTISERS NEED TO UNDERSTAND ‘CHANNEL RISK’

25. 11. 2024 When seeking to identify the optimal media mix for a campaign, advertisers need to be aware not just of the typical ROI of each channel, but also the likelihood that it will deliver to that level – that’s the risk element. What is channel risk? The Profit Ability 2 report from Thinkbox explains that every media channel has a different level of variation around its average ROI, which will depend on factors such as the range of formats available and the ability to get creative right. Channels like Linear TV and Print, for example, have low variation and so represent a lower risk investment. Channels such as Paid Social and Cinema, on the other hand, have higher variation and can therefore be regarded as a higher risk investment. While less predictable channels can yield a higher ROI than more predictable ones when they work well, they can also deliver a well-below-average return if they don’t. What it means Advertisers facing these trade-offs can run multiple optimal media mix scenarios, the report suggests: Thinkbox’s own Media Mix Navigator allows the choice of different levels of risk when assessing potential ROI.