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Iri growth summit_media and promotion effectiveness_v3

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IRI and Turner partnered in mining marketing-mix studies
across 62 brands representing $20 billion in sales and
$3 billion in marketing spend across food, beverages,
health care, beauty and home care aisles. The objective
was to help marketers determine the most efficient
marketing allocations and guide organizations to make
marketing investments that provide short- and long-term
growth.

Published in: Marketing
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Iri growth summit_media and promotion effectiveness_v3

  1. 1. TRENDS AND BEST PRACTICES IN ADVERTISING EFFECTIVENESS Presented by:
  2. 2. TODAY’S PRESENTERS Joy Joseph Practice Leader, Marketing Productivity IRI Strategic Analytics Howard Shimmel Chief Research Officer Turner Broadcasting Bhanu Bhardwaj Principal IRI Media Center of Excellence
  3. 3. TODAY’S AGENDA Introduction: Turner Research Summary The Un-building of Brands Executing High-performance Campaigns Right-sizing Media Spend
  4. 4. RESEARCH QUESTION BETTER UNDERSTAND AND QUANTIFY THE IMPACT OF TV ADVERTISING ON SOCIAL MEDIA TO HELP MARKETERS EFFECTIVELY ENGAGE WITH KEY AUDIENCES FINDINGS TV ADVERTISING HAS A SIGNIFICANT IMPACT ON SOCIAL MEDIA BRAND ENGAGEMENT – 1 out of 5 social engagements for brands is directly driven by television advertising
  5. 5. RESEARCH QUESTION FINDINGS BETTER UNDERSTAND HOW TV’S IMPACT IN DRIVING KPIs HAS CHANGED, AND HOW TV’S IMPACT COMPARES WITH OTHER MEDIA IN SPITE CHANGING CONSUMER BEHAVIOR, THE ROI FROM TV SPEND HAS NOT CHANGED OVER THE LAST 5 YEARS TV’S ROI IS DRAMATICALLY HIGHER THAN OTHER MEDIA
  6. 6. RESEARCH QUESTION FINDINGS MANY BRAND ADVERTISERS HAVE SIGNIFICANTLY CUT THEIR TV SPEND. WHAT IMPACT DOES THAT HAVE ON SALES ATTRIBUTED TO TV ADVERTISING? REDUCED TV AD SPEND YIELDS A $94M COMBINED LOSS IN SALES, REPRESENTING 68% OF THEIR ORIGINAL SALES AVERAGE SALES LOSS IS NEARLY 3X THE AVERAGE DECREASE IN AD SPEND WHILE BOTH REACH AND FREQENCY WERE DIMINISHED BY THE REDUCED BUDGET, THE LOSS OF EFFECTIVE FREQUENCY HAD A LARGER IMPACT ON REDUCED ROI
  7. 7. RESEARCH QUESTION FINDINGS FOR CPG, HOW DOES MEDIA ROI COMPARE AGAINST PROMO? HOW DOES TV ROI COMPARE AGAINST OVERALL MEDIA ROI? WHAT ARE BEST PRACTICES IN MEDIA AND TV ADVERTISING SPECIFICALLY FOR CPG? TODAY’S AGENDA
  8. 8. 10 Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. THE SOURCE Results Compiled from Marketing Mix Studies Conducted by IRI Marketing Productivity Practice Between 2013-2015 All Media (TV, Digital, Search, Social) and Promo (Trade, In-Store) Marketing Tactics Considered Comprehensive Marketing $3 Billion in Marketing Spend $3B Spend 62 Brands Representing $20B in CPG Sales Across Food, Beverages, OTC, Beauty & Home Care 62 Brands $20B Sales
  9. 9. TODAY’S AGENDA Introduction: Turner Research Summary The Un-building of Brands Executing High-performance Campaigns Right-sizing Media Spend
  10. 10. 12 Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. STOP YOUR BRAND
  11. 11. DIFFERENTIATION BUILDS BRANDS AND ADVERTISING ENHANCES DIFFERENTIATION Consumers choose brands that represent the best combination of features that address their unique needs- highlighting benefits over cost. Advertising reinforces this process. Breakthrough Resonance Recall Brand Differentiation BrandSalience Advertising
  12. 12. PROMOTIONS HIGHLIGHT COST OVER BENEFITS $1.09 $1.09 $1.09 3/$2 $1.09 $1.09
  13. 13. AND YET… Media, 34% Promo, 66% CPG Share of Investment Media vs. Promo IN SPITE OF… $1.14 $0.88 Media Promo CPG ROI Comparison Media vs. Promo
  14. 14. MEDIA ROI OUTPERFORMS PROMO ROI ACROSS CATEGORIES IN THE SHORT TERM $1.01 $1.21 $1.03 $1.00 $1.26 $0.82 $0.96 $0.78 $0.74 $1.17 Beauty Beverages Food Home Care OTC ROI Comparison Short Term Media vs. Promo Media Short Term Promo
  15. 15. AND THERE’S A DOUBLE WHAMMY… $1.20 $1.15 $0.70 $0.61 $1.92 $1.91 $0.99 $1.30 Beverages Food Home Care OTC Brands with Higher Trade:Media Spend Ratio Brands with Lower Trade:Media Spend Ratio 60/40 Trade:Media Cut Off for Beverages, Food, Home Care; 40/60 Cut Off for OTC Media ROI Comparison High Investment Share in Media vs. High Investment Share in Promotion Media ROI underperforms for Brands that focus a higher share of their budget on promotion
  16. 16. BRANDS ARE BEING UNBUILT BECAUSE OF A VICIOUS CYCLE OF BRAND COMMODITIZATION Margin Erosion leading to declining profits Budget Shift From “Above The Line” To “Below The Line” Marketing Diminishing Brand Differentiation Increasing Shift of Consumer Choice From Brand Perception to Value Perception Share loss to Discount Brands, Marketing Effectiveness Erodes Brands rely on Deeper Discounting to offset share losses
  17. 17. TODAY’S AGENDA Introduction: Turner Research Summary The Un-building of Brands Executing High-performance Campaigns Right-sizing Media Spend
  18. 18. AUDIENCE ATTENTION HAS FRAGMENTED, NO DOUBT …but TV still dominates audience reach and share of time…
  19. 19. LARGE AND HIGHLY PENETRATED BRANDS SHOULD INCREASE MEDIA ALLOCATION Media ROI By Brand Size and Penetration >10% Penetration vs. <10% (2015) $1.25 $0.88 Large Brands Small Brands $1.42 $0.65 High Penetration Brands Low Penetration Brands Above Study Average vs. Below Study Average: 2015 Base Unit Sales
  20. 20. FOR SMALL BRANDS, BALANCE MEDIA INVESTMENT WITH FOCUS ON EFFICIENCY 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 BrandCAGR Media ROI Media ROI vs. Brand Growth Among Smaller brands with positive growth Better media performance (ROI) for smaller brands helps to fuel their growth Invest in efficiency best practices including Purchase Based Targeting & Programmatic Buying Leverage cross-media integration to enhance engagement
  21. 21. INVOLVEMENT DRIVES MEDIA ROI $1.04 $1.25 Brands from Low-Involvement Categories Brands from Mid-Involvement Categories Media ROI By Brand Involvement Level Note: High-Involvement brands such as those coming from the Auto and Travel categories were not a part of this study. Brands can create Involvement..
  22. 22. DIFFERENT CREATIVE MESSAGES INFLUENCE VARIOUS POINTS IN THE CONSUMER JOURNEY Equity or Branding creative influences consumers higher up in the consumer journey Call to action creative influences consumers farther down on the consumer journey Having both types running at any given time drives higher short and long term ROI. Image Source: McKinsey Quarterly
  23. 23. DEVELOPING SUCCESSFUL TV CAMPAIGNS IPSOS, “10 RULES FOR TV STRATEGY”, ADMAP, 2014 (WE FOCUS ON THE 3 MOST IMPORTANT ONES) Proposition #1 & #2: - 75% of TV cut-through is due to creative - Half of all TV ads fail to achieve objectives due to weak branding IRI Norms: More closer to 60% actual sales impact vs. survey-based breakthrough and recall measured by IPSOS ASI. Proposition #3 - Campaigns with fewer executions tend to be more effective. IRI Norms: Too many creatives are indeed sub-optimal, generally 3 is optimal
  24. 24. DIGITAL VIDEO CAN EFFICIENTLY ENHANCE THE EFFECTIVENESS OF TRADITIONAL MEDIA CAMPAIGNS Digital is a great Creative Incubator Creative can drive over half of the overall campaign lift, but finding the right creative is not easy, Digital makes ad-testing a much more iterative process Successful TV Campaigns that started out as viral videos
  25. 25. INCREASING CABLE WEIGHT IN THE MIX DRIVES EFFICIENCY 0.70 Cable $0.57 Cable Cable Effectiveness Index Vs. Broadcast Cable Cost Index Vs. Broadcast Although Broadcast TV drives more volume, often times it does not justify the associated cost premiums
  26. 26. PRIMETIME TV CONTINUES TO DRIVE MORE SALES VS. NON-PRIME 179% 100% Prime Non-Prime Effectiveness Comparison* Prime TV vs. Non-Prime TV
  27. 27. DIGITAL VIDEO HAS DEMONSTRATED STRONG RETURNS RELATIVE TO TV $1.06 $1.50 $2.45 TV Only Digital Video Only Tv+Digital Based on a 70/30 Average Mix of TV and Digital Video …that said TV & Digital together are even better $0 $10 $20 $30 $40 $50 $60 $70 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 TVSpend($MM) Digital ROI
  28. 28. TODAY’S AGENDA Introduction: Turner Research Summary The Un-building of Brands Executing High-performance Campaigns Right-sizing Media Spend
  29. 29. A 10% SHIFT IN SHARE OF SPENDING FROM PROMOTIONS TO MEDIA CAN SUBSTANTIALLY IMPROVE MARKETING ROI Promo Effectiveness Incremental Subsidized Share of Marketing Spend $1.14 $0.88 $1.25 $1.09 Media Promo Optimized ROI
  30. 30. FINDINGS • Media ROI beats Promo ROI in both the short and long term but spending is heavily tilted towards trade - Trend is consistent across CPG categories - High Promotional investment also negatively impacts brand equity • Larger brands and brands with higher penetration generate the most Media ROI however Media is important for smaller brands as improvement in Media ROI is related to better growth for them • As expected Media generates higher ROI among more involved categories where the messaging resonates more • TV is highly synergistic to digital and more investment in TV helps boost digital performance
  31. 31. THANK YOU Bhanu Bhardwaj, IRI bhanu.bhardwaj@iriworldwide.com Joy Joseph, IRI Joy.Joseph@iriworldwide.com

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