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The Value of Advertising?

The Value of Advertising?. Low Value? Empirical studies - Fournaise (2013) survey of 1,200 CEO’s: - 80% ‘Marketing not connected to business’ - 78% ‘Marketing focus on wrong areas’ - 65% ‘Marketing stuck in ‘La-La’ land’. High Value? Empirical studies - PIMS data-base - Byron Sharp

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The Value of Advertising?

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  1. The Value of Advertising? Low Value? Empirical studies - Fournaise (2013) survey of 1,200 CEO’s: - 80% ‘Marketing not connected to business’ - 78% ‘Marketing focus on wrong areas’ - 65% ‘Marketing stuck in ‘La-La’ land’ High Value? Empirical studies - PIMS data-base - Byron Sharp - Peter Doyle - Binet & Field

  2. The Data Set N • IAPI AdFx Awards cases 2006-2014 106 • Creative Awards 2005 – 2014 38 • Media Spend Data 2007 – 2014 78 • Change in Market Value Share 47 • Attempted ROMI 36 • ESOV 37 • Campaign Type 106

  3. Strengths and Limitations of the Data • Award winning ‘best practice’ • Primary metric ‘share-of-market-value’ • Size of database • Key media metric share-of-voice • Analysis is correlational

  4. 3 ChallengesProvide empirical evidence that: 1) Advertising works in terms of commercial pay-back 2) Mediainvestment works in terms of commercial pay-back 3) Creativity worksin terms of commercial pay-back?

  5. N=106

  6. The Time Frame of the IAPI Case Studies is Short N=106

  7. N=106

  8. Objectives employed by winning campaigns N=106

  9. Media Usage by winning campaigns N=78 * This does not include data for digital, social or inshore media source: AdDynamix all Media advertising expenditure data

  10. 1. What evidence is there that advertisingpays back?

  11. This equates to a value share gain of 0.8% per month vs 0.5% N=47

  12. All approaches are effective

  13. Advertising Payback

  14. Advertising Payback: Key learnings • Average of almost 6% increase in value share in winning cases vs 3% in non-winning cases (0.8% / 0.5% monthly increase) • All campaign types equally as effective • Support for both short-term and long-term campaigns • Need more cases for long-term evidence

  15. 2. What evidence is there that media investmentpays back?

  16. Media usage in the data set

  17. Media Investment Payback ESOV 9.63% Value Market Share Gain: 5.28% *Based on average data – future analysis would need to look at change in data over time N= 37

  18. Media Investment Payback: Key Learnings • Share-of-voice being in excess of share-of-market works well as a budgeting strategy • Awarded campaigns are almost twice as effective as average campaigns • These are campaigns that have employed strong measureable commercial objectives at the outset • TV was the dominant medium in 62% of awarded campaigns

  19. Additional Deep Dive Analysis • 4 Sectors • Supermarkets, Lagers, Motor and Ham • Eight Years: 2008-2014 • Key Brands • Losers and Winners

  20. Long-term

  21. Long Term Supermarkets

  22. Long Term Lagers

  23. Long Term Motors

  24. Long Term Premium Ham

  25. Long Term The role of TV with challenger brands

  26. Long Term Change in category Media mix

  27. Media Investment Payback

  28. Media Investment Payback: Key Learnings • To build market share long-term: • The budget should be based on the share-of-voice being in excess of the share-of-market • A long-term consistent strategy works best • This approach works across multiple categories regardless of the economic climate • Size of brand and sector type also matter

  29. Growth depends on share and excess SOV

  30. 3. What evidence is there that creativitypays back?

  31. N=39

  32. Summary • The IAPI AdFx awards are related to strong increases in commercial value. • 6% increase in share vs 3% for non winning cases = 0.8% value share gain per month for winning cases • Strong relationship between media spend and market share in dataset. • Very significant relationship between media spend and market share long-term • Directional support for creativity delivering 10 higher levels of campaign SOV efficiency

  33. Next Steps • Share/workshop these findings • Greater involvement/debate with Boardroom • Adfx 2016 - focus on long term evidence • Adfx 2016 – collect & analyse more data • Best practice evidence sharing across marketing, agencies & media

  34. References • Ambler, T. (2004). ‘ROI is dead, now bury it’, Admap, (September), Issue 453, pp. 43-45. • Ariely, D. (2007). Predictively Irrational. Harperluxe. • Ariely, D. & Carom, Z. (2000). Focusing on the Forgone: How Value can appear so different to Buyers and Sellers. Journal of Consumer Research, 27 (3), pp. 360 – 370. • Armstrong, J.S. & Schultz, R.L. (1993). Principles Involving Marketing Policies: an empirical assessment. Marketing Letters, 4 (3), pp. 253-265. • Barden, P. (2013). Decoded – the Science behind what we buy. John Wiley & Sons. • Barwise, P. (1999). ‘Advertising for long-term shareholder value’ Admap (October), 399, pp. 40-43. • Binet, L. (2008). Measuring Payback: a Best-practice Guide. IPA & ISBA. • Binet, L. & Field, P. (2007). Marketing in the era of Accountability. WARC Ltd. • Binet, L. & Field, P. (2013). The Long and the Short of it: Balancing Short-term and Long-term marketing strategies. WARC Ltd. • Buck, S. (2001). Advertising and the Long- term success of the Premium Brand. WARC Ltd. • Buzzell, D., & Gale, B. (1987). The PIMS Principles, The Free Press, New York, USA • Deloitte (2013). Advertising : An Engine for Economic Growth • Doyle, P. (2000). Value Based Marketing – Marketing Strategies for Corporate Growth and Shareholder Value. John Wiley & Sons • Earls, M., & Bentley, A. (2013). Big Data, not Magic Data. Admap, September, 2013. • Ehrenberg, A., Goodhardt, G, & Barwise, P. (1990), Double Jeopardy Revisited, Journal of Marketing, 54 (3), pp. 82-91.

  35. References • Hurman, J. (2015). The case for creative companies. Chapter 7.The Case for Creativity. AUT Media. • Feldwick, P. (2015).The Anatomy of Humbug – How to Think Differently about Advertising. Matador. • Feldwick, P. & Heath, R. (2007) ‘50 years using the wrong model of TV advertising’ MRS conference paper, Brifton, UK (March). • Heath, R & Naim, A. (2005). Measuring Affective Advertising: implications of low attention processing on recall, Journal of Advertising Research. Cambridge University Press. • Hurman, J. (2015). The case for creative companies. Chapter 7.The Case for Creativity. AUT Media. • Jones, J.P. (1990) ‘Ad spending: maintaining market share, ‘ Harvard Business Review, 68, 1 (January/February). • Gordon, J & Perry, J. (2015)- ‘The Dawn of Marketing’s New Golden Age’. McKinsey Quarterly, February, 2015. • O’Malley, L., Story, V., & O’Sullivan, V. (2011). Marketing in a Recession : Retrench or Invest? Journal of Strategic Marketing, 19 (3), pp. 285-301. • Sharp, B. (2010). How Brands Grow – what Marketers don’t know. Oxford University Press. • Shiv, B. Carmon, Z & Ariely, D. (2005). Placebo Effects of Marketing Actions: Consumers may get what they pay for. Journal of Marketing Research, 42 (4), pp. 383-393. • Thaler, R. & Sunstein, C. (2008). Nudge. Yale University Press. • Verhoef, P, & Leeflang, P. (2010). Getting Marketing Back in the Boardroom: The Influence of the Marketing Department in Companies Today. Journal of Marketing Intelligence, 2 (1) pp- 34- 41.

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