Magazine Advertising in a Recession

1. Magazine Advertising in a Recession A summary of commercial behaviour in an economic downturn and brand and media recommendations for 2009

2. Why do advertisers cut back? Because its easy and its quick • Lower than expected sales lead to lower profitability • Reduced capacity means less volume to trade • Competitors reduce spend so Share of Voice is maintained with less • Direct costs of unit production increase • Marketing spend is unspent, uncommitted and vulnerable

3. Market Dynamics at q1 2008 House prices and share portfolios continue decade of increases Easy credit and joint incomes have created a marketplace of discretional spending - dining out, premium food ranges, fashion upgrades, multiple short breaks, technology, telephony Relatively inexpensive household essentials have been and over supplied. Multiple ownership of brown and white goods, cars, and holidays

4. Market Conditions at q1 2009 Discretional spending cut back Renewal of essentials delayed Employment decreasing Value of assets reduced

5. Market Conditions at q1 2009 Need for brands to remain strong and front of mind to secure revenue from smaller pool [Price Waterhouse Coopers]

6. We believe cutting back marketing spend is not the answer 79% believe marketing is no longer dispensable. It is key part of the business plan Marketing is seen as more of a solution to help than a budget line to cut Strategy first: We set our advertising strategy to take advantage of opportunities in the downturn, then try to come up with a budget to achieve the strategy 61% 27% Budget first: We reduce our budget, then come up with a strategy to do the most we can with that budget 12% Don’t know [Advertising on the Edge. Economist Intelligence Unit Survey]

7. The importance of not cutting back Because there are proven negative impacts on brand position and profitability if marketing expenditure is reduced during a downturn [Barwise,IPA,PIMS,Data2Decisions] It’s a short-term fix Brands that cut back emerge from the downturn weaker and less profitable Long term profitability means maintaining Share of Voice above Share of Market

8. The importance of holding a long-term view The benefits of advertising materialise in the longer term 50% achieved in year onewith the remaining 50% in years 2 to 4 The impact of advertising cuts may not be realised immediately. This may be misleading and harm the business in the long term [Date2Decisions.[ROI defined as the incremental revenue generated from advertising per unit of spend]

9. The importance of not ‘going dark’ 60% of brands which ‘go dark’ decline on at least one key brand metric Two key brand relationship metrics Usageand Image suffer when brands “go dark” for six months or more (See chart opposite) There is also a danger that by falling silent a brands buzz scorewill decline, with the brand more likely to be judged on-the-way-down increase 11 22 decrease (24) (28)

10. The importance of ‘bonding’ There is a strong link between market share and brand-to-consumer bonding, an aggregate of brand-consumer metrics Less investment in marketing communications leads to lower bonding and lower market share [Millward Brown]

11. The importance of maintaining share of voice Brands which cut their budget, relative to their competitors, have a higher chance of losing market share When share of voice minus share of market is negative, a much higher percentage of brands lose market share [IPA DataMine]

12. Because share of voice drives growth Analysis of 880 case studies shows a correlation between share of voice and share of market gain or loss As a rule of thumb, for every 10% points that share of voice exceeds share of market a brand can expect to gain one point of market share, per annum [IPA DataMine]

13. Evidence of brand value to advertisers Coke’s market Cap including brand value £120 billion Coke’s market Cap not including brand value £50 billion [The Brand Gap]

14. The old dynamic BrandRet ailerConsumer

15. The new paradigm BrandRetailer Consumer Direct supply, online shopping, alternative outlets, alternative products, consumer product review forums, e-bay …

16. Brand strategies for 2009 Re-examine the role of advertising for your brand Promote reasons for consumers to enter the market, before conveying your own brand attributes and benefits. Champion the categoryand be frontrunner in recovery Re-ignite consumer satisfaction with the brand Challenge consumer perceptions and behaviour toward the brand Use insight to identify and promote the simple, but forgotten, pleasures associated with your brand Focus on the personal connection through message and placement

17. Brand strategies for 2009 Reframe brand value Convince consumers that a change of brand behaviour is not a compromise on quality Find your brand’s compellingcentral truth and convey it. But consumers will shy away from brands which over claim

18. Communications Planning in 2009 Because despite the headlines its not all about … well, not in the long term

19. Because value to consumers is not based on price alone Bought goods … other 6% NOT price related 65% on strength of brand 59% Brand important 84% compromise of brand/price Price related 35% on price alone 10% [Millward Brown, Brandz UK 2007]

20. Communications Planning in 2009 Select media which enhance the communication themes of your brand and select an attentive and effectivemedium which delivers a breadth of proven ROI deliverables in sufficient size to provide the scale and economies for big brand media planning

21. Communications Planning in 2009 Does this support the brand?

22. Communications Planning in 2009 This does

23. Communications Planning in 2009 “Boosting search is key to our brands success” Magazines lead in getting consumers searching Which mediums influence you to start an online search? [MPA]

24. Communications Planning in 2009 “I need more consumers to buy from my website” Magazines excel at producing the traffic which converts to sales % made purchase after conducting online search Offline sources which drive qualified traffic to websites [MPA]

25. Communications Planning in 2009 “I want buzz around my brands” Magazines and web are key in reaching connectors Magazines work well with web in reaching social networkers Index based on Facebook & MySpace users [MPA]

26. Communications Planning in 2009 “I want to reach positive communicators” Magazines and web are key in getting to opinion formers Influentials use magazines and web the most Number of times medium ranked #1 among influentials across 60 categories [MPA]

27. Communications Planning in 2009 “I have to improve opinions about my brand” Magazines have a superior record in boosting brand favourability Brand Favourability Difference in exposed versus non-exposed consumers [MPA]

28. Communications Planning in 2009 “I want get my brand mentioned” Magazines and web are key in getting consumers talking Magazines are strongest influence on personal recommendations Percent saying magazines contributed to personal recommendations [MPA]

29. Communications Planning in 2009 Driving purchase intent is critical for our success in 2009 Magazines rank #1 in lifting purchase intent Media Impact on Purchase Intent Difference in exposed versus non-exposed consumers Cost per impact of Purchase Intent Indexed to TV $2.61 $1.77 $1.23 [MPA]

30. Communications Planning in 2009 Most things we ever buy, we buy regularly. Every week 22 million shoppers are in-market for fmcg products and in a mind-set to listen to advertisers in those categories. Small nudges replace big shouts Using NRS Readership Accumulation [to plan weekly print ratings] magazine advertisers can meet them there Needs fulfilled (out of the market) Have Week by week Have not Purchasing mode (in-market) [NRS.IPC]

31. Advertising in 2009 For more information and usable charts please contact james_papworth@ipcmedia.com 020 3148 3639