O A A Brand Science Econometric F M C G & Retail Studies 2009

Findings on the effectiveness of Outdooradvertising from Econometric studiesconducted by BrandScience

- Retailers (and highlights from FMCG study)21 September 2009

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Background & Objectives

Highlights from the FMCG study

Results of the Retailer Meta analysis

Agenda

Overview of the BrandScience Results Vault

Summary and Conclusions

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Retailer Meta Analysis: Key questions to be answeredQuestionanswered

How effective is Outdoor advertising for Retailers? ��

How does the efficiency of Outdoor compare with other media? ��How does the efficiency of Outdoor advertising change at different levelsof spend? ��

How does Outdoor advertising impact on the performance of other mediachannels? ��

Is Outdoor advertising becoming more or less efficient over time? ��

What are the implications for budget allocation by media? ��

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Agenda



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BrandScience Results Vault

• The BrandScience Results Vault collates data from over 400econometric studies conducted by BrandScience to provide a uniqueinsight into how different media drive sales independently, and incombination with other media.

• The Results Vault contains:– 71 Retail studies– 57 of the Retail studies have Outdoor advertising spend– 34 of the Retail studies have a measured Outdoor effect

• The Results Vault allows for detailed examination of media performanceby channel and sector and contains lots of findings on how Outdooradvertising works:

● Absolutely● Relative to and in synergy with other media● Over time

• Partly due to poor data quality, the impact of Outdoor could not bemeasured in 40% of studies. The comparable figure is 4% of studies forTV and 10% for Print

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Retailer ATL Media Mix:Studies in the BrandScience Results Vault are fairly representative of theUK: Outdoor makes up 9% of ATL media spend for Retailers in the ResultsVault compared to the UK Norm of 6%

BrandScience Results Vault*:ALL Retail Studies

Nielsen Media ResearchTop 100 UK Retailers

*Sample Set: Retail Results Vault studies as at 15th May 2009

The average UK retailerspends £6.4m pa on ATLadvertising with this media split

The average retailer in theBrandScience Results Vaultspends £5m pa on ATLadvertising with this media split

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Retailer TOTAL Media Mix:Studies in the BrandScience Results Vault are fairly representative of theUK: Outdoor makes up 6% of total media spend for Retailers in the ResultsVault compared to the UK Norm of 5%BrandScience Results Vault*:ALL Retail Studies

Nielsen Media ResearchTop 100 UK Retailers

*Sample Set: Retail Results Vault studies as at 15th May 2009

The average UK retailerspends £7.5m pa on advertisingwith this media split

The average retailer in theBrandScience Results Vaultspends £7.1m pa on advertisingwith this media split

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What types of Retail clients are we studying?

• 57 of the 71 retailers spend on outdoor• The majority of the cases are UK firms with 80% being top 5 in their

category

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Agenda



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Recap: How effective is Outdooradvertising for FMCG brands?

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FMCG: TV is only 5% more efficient than Outdoor advertising

Sample Set: All FMCG Results Vault studies (2002 -2008) with measured Outdoor RROI

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FMCG: If production costs are included, Outdoor becomes the mostefficient medium


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FMCG Results VaultHow does ROI vary accordingto proportion of outdoor spend?

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FMCG: Outdoor ROI increases with proportion of spend


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FMCG: Increasing share of spend on Outdoor boosts the ROI onother main media

Sample Set: All Results Vault studies (2002 -2008) with measured Outdoor RROI

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FMCG Results VaultCarryover rates – the mediumterm effect of media spend.By proportion of outdoor spend

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Higher Outdoor spend drives higher carryover rates (lagged effectof advertising). 1) For Outdoor 2) for TV


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FMCG Results VaultROI trends over time by medium

Our models categorised by yearof evaluated campaign

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Outdoor is becoming more efficient, whereas TV is becoming lessefficient

Sample Set: All FMCG Results Vault studies (2002 -2008)

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Given different ROIs bymedium and changes inROI over time, FMCGadvertisers should increasetheir share of spend onoutdoor

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Outdoor optimal share of spend should be 16%We can apply ROI by medium by year figures to determine optimal mediasplit for the average FMCG brand

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Agenda



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How effective is Outdooradvertising for Retailers?

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Outdoor performs just as well as TV and both media are second only toPrint

IncrementalSales revenuegenerated foreach £1 ofmedia cost

Sample Set: Retail Results Vault studies as at 15th May 2009

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RROI calculations are often based on media space costs andexclude production costs which can be a sizeable percentage oftotal ad spendTV production costs make up for a larger share of spend than any othermedium

Source: WARC

ATL Media Production Costs as apercentage ofmedia/production total

TV 14.4%Print 8.1%Outdoor 7.8%Internet 7.6%Radio 7%

Incorporating production costs into the RROI calculation changes theranking of the media channels

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RROI calculations are based solely on media space costs andexclude production costs - which can be a sizeable percentageof total spend

IncrementalSales revenuegenerated foreach £1 ofmedia andproductioncost


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The Print, DM and Radio RROIs are far higher when Outdoor isused


+34%

+61%

+84%

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How does the efficiency ofOutdoor advertising change at

different levels of spend?

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Outdoor RROI increases slightly as spend increases, implyingthere is room for retailers to increase their share of spend onOutdoor


+22%

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Outdoor Carryover rate increases significantly as spendincreases, implying there is room for retailers to increase theirshare of spend on Outdoor


+145%

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“Life”of campaign vs. Outdoor spend

Based on time taken for advertising to have 95% of its “total” effect


+131%

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How does Outdoor advertisingimpact on the efficiency of other

media channels?

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Increased spend on Outdoor boosts the RROI on TV and Print


+19% +28%

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Higher spend on Outdoor is associated with a higher carryoverrate on TV and Print


+18% +50%

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Higher Outdoor spend elongates the life of TV and Printcampaigns

Based on time taken for advertising to have 95% of its “total” effect


+30% +62%

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Is Outdoor advertisingbecoming more or less efficient

over time?

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Trends in RROI over time: 1) Major Media vs Outdoor

*Two year moving average


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Trends in RROI over time: 2) Support Media vs Outdoor

*Two year moving average


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What are the implications forbudget allocation by media?

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By calculating diminishing returns curves and projecting trendsin ROI over time, we suggest that overall Outdoor investmentshould increase, and on average should be doubled.

The Retailer category includes brands with very disparate mediastrategies.

Television, radio and cinema should be reduced.

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Agenda


Results of the Retailer Meta Analysis

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Summary of findings for Retailers and FMCG study

Outdoor delivers High ROI for both FMCG brands and Retailers

Above average Outdoor spend increases the medium term/brandeffect of Outdoor AND TV

Outdoor ROIs are increasing over time whereas TV is decreasing

When production costs are taken into account, Outdooroutperforms TV by 3% for FMCG brands & by 8% for Retailers.

Findings on the effectiveness of Outdooradvertising from Econometric studiesconducted by BrandScience

Retailers and highlights from FMCG study

21 September 2009

O A A Brand Science Econometric F M C G & Retail Studies 2009

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Transcript of O A A Brand Science Econometric F M C G & Retail Studies 2009