The document discusses online advertising for retailers based on an analysis of econometric studies. It finds that online advertising currently receives a low share of media spending compared to other channels like TV and print. It also finds that online advertising provides a higher return on investment than TV, and is the most efficient medium for online retailers. Increasing online advertising spend can improve the performance and return on investment of not just online advertising but other media channels as well. The analysis recommends that retailers increase their online advertising spend to maximize overall marketing efficiency and return on investment.

1. For Retailers:
The Impact of Online Advertising
Based on a meta-analysis of econometric studies by BrandScience

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
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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
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“You only get out of
something what you
put into it.”

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
Calculating Revenue Return on Investment
Revenue Gained Through Marketing Activity
Cost of Marketing Activity
= RROI

7. 7
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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. 9
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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. 10
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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. 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. 12
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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. What can be gained from increasing the weight of online spend?
Improved online ROI

13. 14
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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. 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. Varying online spend can also affect the performance of other media
Improved ROI for TV & Press

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. 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. 20
Print ads often have an offline call to action

19. Varying online spend can also affect the life of a campaign

20. 22
Ad Stock – Life of Campaign
AdStock
Time
Carryover rate 90% Carryover rate 50% Campaign Activity
100%
5%
100%
5%

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. 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. 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. What should the media mix be for the industry?

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. 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. 29
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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