The Impact of Online Advertising for Retailers

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Research shows that print is the most effective media for retail

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The Impact of Online Advertising for Retailers

  1. 1. For Retailers: The Impact of Online Advertising Based on a meta-analysis of econometric studies by BrandScience
  2. 2. 2 Online Currently Receives a Low Share of Media Spend 27% 27% 23% 10% 7% 6% 0% 0% 10% 20% 30% TV Print DM Online Radio Outdoor Cinema ShareofMediaMix Current Media Mix Allocation for Retailers TV Print DM Online Radio Outdoor Cinema Source: Nielsen Media Research/BrandScience Estimates – UK Retailers who spend £1m+ on advertising p.a. Only includes retailers who spend online. Includes Search.
  3. 3. 3 The Section Key helps your audience track where you are in the presentation. It should live at the bottom of every page in your presentation. It is, of course, optional. But worth the trouble. THE SECTION KEY DOES NOT AUTOPOPULATE. If you move slides around within a deck, you’ll have to redo it. Facts about online advertising for retailers: • More efficient than TV • The most efficient medium for online retailers • Return on investment is yet to peak • The performance of other media can be improved by spending more online
  4. 4. 4 The Section Key helps your audience track where you are in the presentation. It should live at the bottom of every page in your presentation. It is, of course, optional. But worth the trouble. THE SECTION KEY DOES NOT AUTOPOPULATE. If you move slides around within a deck, you’ll have to redo it. “You only get out of something what you put into it.”
  5. 5. Sales Market Share Customer Acquisition Brand Perception 5 Econometric Modelling Applying Maths to Marketing • 26 UK retailers who spend online • 24 of those in top 100 retailers ranked by media spend Marketing Activity Pricing Weather Competitor Activity Drivers Performance
  6. 6. 6 Calculating Revenue Return on Investment Revenue Gained Through Marketing Activity Cost of Marketing Activity = RROI
  7. 7. 7 The Section Key helps your audience track where you are in the presentation. It should live at the bottom of every page in your presentation. It is, of course, optional. But worth the trouble. THE SECTION KEY DOES NOT AUTOPOPULATE. If you move slides around within a deck, you’ll have to redo it. Online is More Efficient than TV for Retailers £1.85 £5.01 £3.44 £2.15 £1.62 £1.11 £0.00 £1.00 £2.00 £3.00 £4.00 £5.00 £6.00 Radio Print Online TV Outdoor DM RROI Total Retail* % Media Mix 2% 41% 19% 16% 7% 14% * Includes all 26 studies that were included as part of this analysis Based on a meta-analysis of econometric studies by BrandScience
  8. 8. 9 The Section Key helps your audience track where you are in the presentation. It should live at the bottom of every page in your presentation. It is, of course, optional. But worth the trouble. THE SECTION KEY DOES NOT AUTOPOPULATE. If you move slides around within a deck, you’ll have to redo it. Bricks & Mortar (“Offline”) Retailers 17 Studies Brands featured in this presentation are for illustrative purposes only and may or may not be included as part of the study - BrandScience Confidential
  9. 9. 10 The Section Key helps your audience track where you are in the presentation. It should live at the bottom of every page in your presentation. It is, of course, optional. But worth the trouble. THE SECTION KEY DOES NOT AUTOPOPULATE. If you move slides around within a deck, you’ll have to redo it. Online is the Second Most Efficient Media Behind Print Bricks & Mortar Retailers £2.50 £6.41 £2.84 £2.43 £2.21 £0.91 £0.00 £1.00 £2.00 £3.00 £4.00 £5.00 £6.00 £7.00 Radio Print Online TV Outdoor DM RROI Revenue Return on Investment % Media Mix 4% 40% 16% 20% 9% 12% Based on a meta-analysis of econometric studies by BrandScience
  10. 10. 11 Online Retailers 9 Studies Brands featured in this presentation are for illustrative purposes only and may or may not be included as part of the study - BrandScience Confidential
  11. 11. 12 The Section Key helps your audience track where you are in the presentation. It should live at the bottom of every page in your presentation. It is, of course, optional. But worth the trouble. THE SECTION KEY DOES NOT AUTOPOPULATE. If you move slides around within a deck, you’ll have to redo it. Online is the Most Efficient Medium Online Retailers £0.71 £1.48 £3.75 £1.02 £0.23 £1.06 £0.00 £0.50 £1.00 £1.50 £2.00 £2.50 £3.00 £3.50 £4.00 Radio Print Online TV Outdoor DM RROI Revenue Return on Investment % Media Mix 1% 47% 29% 8% 4% 12% Based on a meta-analysis of econometric studies by BrandScience
  12. 12. What can be gained from increasing the weight of online spend? Improved online ROI
  13. 13. 14 The Section Key helps your audience track where you are in the presentation. It should live at the bottom of every page in your presentation. It is, of course, optional. But worth the trouble. THE SECTION KEY DOES NOT AUTOPOPULATE. If you move slides around within a deck, you’ll have to redo it. Introducing Above and Below Median 10 50 70 200 450 Median AboveBelow • An equal number of campaigns above and below the median • More accurate than mean average – less skew to higher or lower spending campaigns 500
  14. 14. 15 Increase Online Share to Increase Online ROI Online ROI vs Online Spend £1.42 £2.24 £0.00 £1.00 £2.00 £3.00 £4.00 £5.00 £6.00 Below Median Above Median OnlineRROI Online Spend +58% £2.51 £5.69 £0.00 £1.00 £2.00 £3.00 £4.00 £5.00 £6.00 Below Median Above Median OnlineRROI Online Spend +127% ROI Curve Based on a meta-analysis of econometric studies by BrandScience
  15. 15. Varying online spend can also affect the performance of other media Improved ROI for TV & Press
  16. 16. 18 Increase Online Share to Increase TV ROI £1.59 £3.91 £0.00 £0.50 £1.00 £1.50 £2.00 £2.50 £3.00 £3.50 £4.00 Below Median Above Median TVRROI Online Spend +146% £0.46 £1.63 £0.00 £0.50 £1.00 £1.50 £2.00 £2.50 £3.00 £3.50 £4.00 Below Median Above Median TVRROI Online Spend +254% Based on a meta-analysis of econometric studies by BrandScience
  17. 17. 19 Print ROI Does Not Follow Suit £9.98 £3.10 £0.00 £2.00 £4.00 £6.00 £8.00 £10.00 Below Median Above Median PrintRROI Online Spend £0.65 £2.43 £0.00 £2.00 £4.00 £6.00 £8.00 £10.00 Below Median Above Median PrintRROI Online Spend +274% Based on a meta-analysis of econometric studies by BrandScience
  18. 18. 20 Print ads often have an offline call to action
  19. 19. Varying online spend can also affect the life of a campaign
  20. 20. 22 Ad Stock – Life of Campaign AdStock Time Carryover rate 90% Carryover rate 50% Campaign Activity 100% 5% 100% 5%
  21. 21. 23 Increase the Life of Online Campaigns with More Online Investment 9 10 0 3 6 9 12 15 Below Median Above Median OnlineLife-Days Online Spend 7 11 0 3 6 9 12 15 Below Median Above Median OnlineLife-Days Online Spend Based on a meta-analysis of econometric studies by BrandScience
  22. 22. 24 Make TV Campaigns Work Harder with Extra Online Spend 38 49 0 10 20 30 40 50 60 70 80 Below Median Above Median TVLife-Days Online Spend 49 73 0 10 20 30 40 50 60 70 80 Below Median Above MedianTVLife-Days Online Spend Based on a meta-analysis of econometric studies by BrandScience
  23. 23. 25 Print Life Can Be Extended for Online Retailers 35 28 0 5 10 15 20 25 30 35 40 45 Below Median Above Median PrintLife-Days Online Spend 31 40 0 5 10 15 20 25 30 35 40 45 Below Median Above Median PrintLife-Days Online Spend Based on a meta-analysis of econometric studies by BrandScience
  24. 24. What should the media mix be for the industry?
  25. 25. 27 £2.50 £2.88 £3.26 £2.00 £2.20 £2.40 £2.60 £2.80 £3.00 £3.20 £3.40 10% 15% 20% TotalRROI Level Of Online Investment Increasing Online Investment Increase Overall Return on Investment Through Increased Online Spend Based on a meta-analysis of econometric studies by BrandScience Current Industry Spend +30%
  26. 26. 28 27% 27% 23% 10% 7% 6% 0% 17% 37% 13% 20% 7% 6% 0% 0% 5% 10% 15% 20% 25% 30% 35% 40% TV Print DM Online Radio Outdoor Cinema MediaSpendAllocation Reallocating Spend for Maximum ROI £2.50 RROI £3.26 RROI Reallocate Money to Online and Print from TV and Direct Mail Based on a meta-analysis of econometric studies by BrandScience
  27. 27. 29 The Section Key helps your audience track where you are in the presentation. It should live at the bottom of every page in your presentation. It is, of course, optional. But worth the trouble. THE SECTION KEY DOES NOT AUTOPOPULATE. If you move slides around within a deck, you’ll have to redo it. Recommendations: • Retailers should increase the weight of online spend in order to: • Increase online ROI • Make TV and press work harder • Improve efficiency of the entire integrated campaign • In order to increase retention rates, retailers should explore more creative online executions and new messaging • Based on this evidence we believe better creatives and more brand driven advertising will lead to better retention rates and therefore improved ROI

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