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The power of advertising:Understanding the long term impact of advertising investments
The power of advertising2
We are Ebiquity
Advisors to 70 of the top 100 advertisers worldwide
Measure and analyze >$40bn of marketing spend
Global independentmarketing and media consultants
The power of advertising3
1. The pressure towards short termism2. Misleading metrics lead down the wrong path3. Defining the correct measurement framework 4. Understanding the impact of media channel and creative5. Applying these principles at Direct Line Group
Today’s topics…
The power of advertising4
1. The pressure towards short termism2. Misleading metrics lead down the wrong path3. Defining the correct measurement framework 4. Understanding the impact of media channel and creative5. Applying these principles at Direct Line Group
Today’s topics…
The power of advertising5
Lack of impartial
advise from many media
agencies
Brand building giving way to short-
termism
Companies are investing in data-driven, measurable
channels
Increased corporate pressures
Changing consumer dynamics
1. The Industry pressure to think and plan more short term
Mainstream advertising is at a crossroads
The power of advertising6
We know that the majority of advertising’s potential to drive sales is in the long term
Source: IPA The long and short of it
18%
42%100%
HOURS/ DAYS (via Digital Attribution)
WEEKS/ MONTHS(via Marketing Mix Modelling)
MONTHS/ YEARS(via Brand Equity Modelling)
SHARE OF SALES IMPACT CAPTURED BY TIMEFRAME:
The power of advertising7
“The more we move towards real-time, the more we move towards deal-time and this is harming brands’ profitability”
PETER FIELD, ADVERTISING EFFECTIVENESS EXPERT
The power of advertising8
1,2
1,3
1,4
1,5
1,6
1,7
1,8
1,9
2,0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Key
Busin
ess E
ffect
s
And as a result, marketing effectiveness has fallen
Source: Marketing Effectiveness in the Digital Era, Binet & Field (2017)
Key business effects tied to marketing spend
The power of advertising9
1. The pressure towards short termism2. Misleading metrics lead down the wrong path3. Defining the correct measurement framework 4. Understanding the impact of media channel and creative5. Applying these principles at Direct Line Group
Today’s topics…
The power of advertising10
“Brands should spend 24% of TV budgets on our
platform”
“We have a SuperBowl every day
on Mobile”
“Our video ads generate better ROI
than TV”
Blanket claims can lead us down the wrong path…
The power of advertising11
The power of advertising12
ROI should capture the cost of reach and the scale of reach
12
ROI = ( Incremental Sales x Margin ) / Cost
….fundamentally a function of:cost per point of reach x effectiveness per reach point
The power of advertising13
On average, TV delivers both reach & volume at scale
UK DATA
The power of advertising14
And highly effective reach…
Enhanced ability to
target
Emotional Ties
100% screen coverage
100% human activity
Extremely low CPM
100% View-ability
Highest verified reach
Brand Safe
The power of advertising15
Consumers see things differently from Adland
Source: Adnation 2017: the story so far…, ThinkTV
Where do you see advertising you like?
Peop
le’s
Answ
ers
Marketers’ Answ
ers
The power of advertising16
Despite increased data and press coverage of ad avoidance Adland often neglects it in its thinking….
The power of advertising17
…and typically chooses to overlook the measured evidence, in favour of more modern on-trend channels
The power of advertising18
The current measurement of channel ROIs globally, and in the US, demonstrate that online and search do not typically deliver the best results
Source: Neustar 2017
TV
Onl
ine Paid
Sea
rch
Prin
t
Radi
o
0
0,5
1
1,5
2
2,5
3
3,5
4
Auto Financial services CPG Retail Telecom
US ROIS
The power of advertising19
Ebiquity Global CPG client where TV is the foundation of the media plan
Source: Ebiquity: 2018, 14 country study
0,0
0,2
0,4
0,6
0,8
1,0
1,2
1,4
0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000
Mar
gina
l RO
I
General Rule: TV 80%+ of budget
TV
VOD
The power of advertising20
1. The pressure towards short termism2. Misleading metrics lead down the wrong path3. Defining the correct measurement framework 4. Understanding the impact of media channel and creative5. Applying these principles at Direct Line Group
Today’s topics…
The power of advertising21
The problem with digital attribution…
The power of advertising22
The power of advertising23
Digital media
Broadcast media
Econometric Modelling Macro Digital
Attribution Micro
Internetsale
PaidsearchSocialDisplay
Credit allocation
Digital customer journey
Combining techniques helps avoid the pitfalls of digital attribution
Base
Base Decomposition
Brand Health
Brand Equity Modelling
The power of advertising24
Digital media
Broadcast media
Econometric Modelling
Digital Attribution
Internetsale
PaidsearchSocialDisplay
Credit allocation
Digital customer journey
Different industry techniques measure different timeframes…
Base
Base Decomposition
Brand Equity Modelling
Short-to-medium term (6 months)
Short-term (hours/days)
Long-term (years)
The power of advertising25
Broadcast communications typically have a direct impact on sales and an indirect impact through search
BaseSales Media 1,2,3,4…
Generic Search
We can identify the indirect effect of media in making search more efficient,
this can be a greater effect in price driven PPC categories
= f + + + …..
BaseGeneric Search
Media 1,2,3,4…= f + + …..
The power of advertising26
TV DM Press PPC Social Display
Digital Only Total View
A combined and correctly measured ‘Total View’, the world typically looks very different to what you see through digital-only attribution
CPA by Channel
The power of advertising27
1. The pressure towards short termism2. Misleading metrics lead down the wrong path3. Defining the correct measurement framework 4. Understanding the impact of media channel and creative5. Applying these principles at Direct Line Group
Today’s topics…
The power of advertising28
Advertising ‘Adstock’ or ‘Memory Effect’ continues to have an impact on sales beyond the end of a campaign
100
8572
6152
4438
32
0
20
40
60
80
100
120
1 2 3 4 5 6 7 8
TVC
GRPs
Weeks
Memory Effect
85% of the advertising power from week 1 is retained in the subsequent week
The power of advertising29
A higher memory effect has a marked impact on incremental volumeand ROI
0
50
100
150
200
250
300
350
400
450
500
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55
TVC/
GRP
s
Weeks
TVC GRPs 90% Memory80% Memory 70%Memory60% Memory 50% Memory
1,0
0,5
0,30,3
0,20,1
90% Memory80% Memory70% Memory60% Memory50% Memory0% Memory
Volu
me
Inde
x
A 50% memory effect will generate only 20% the volume a
90% one
Memory Effect & Volume Memory Effect & Volume
The power of advertising30
Campaigns with strong distinctive assets have longer memory effects
Weaker brand asset Distinctive brand asset
(Low memory effect) (High memory effect)
The power of advertising31
Wk 1Wk 2
Wk 3Wk 4
Wk 5Wk 6
Wk 7Wk 8
Wk 9Wk 10
Average weekly Memory Effect Average Memory Effect
TV 70%
OOH 40%
Print 35%
Online Display 20%
Radio 20%
Search 20%
Online Video 20%
Adve
rtisi
ng a
ctiv
ity
TV lasts longer on average and good content lasts much longer
The power of advertising32
Which digital metrics you look at influences views of effectiveness
Source: MOAT Analytics, Ebiquity FMCG Client
2 072K1 795K
933K617K
237K
5 259K
133K 105K 57K 35K
807K508K
25K 21K 17K
Impressions Valid & Viewable Audible & Reached 1/4 Audible & Reached Half Way Audible And Completed
Default Reporting Metrics What drives brands
Publ
isher
1
Publ
isher
2
3
Client Example
The power of advertising33
By focusing only on short-term you undervalue the true role that advertising plays; different channels have different long-term multipliers
0,00,51,01,52,02,53,03,54,04,5
TV Print OOH Online Video Radio Online Display
ROI
Short term vs Long Term ROI
Short Term Long Term
The power of advertising34
1. The pressure towards short termism2. Misleading metrics lead down the wrong path3. Defining the correct measurement framework 4. Understanding the impact of media channel and creative5. Applying these principles at Direct Line Group
Today’s topics…
The power of advertising35
Do your CEO and CFO understand the value of a shift in your brand tracking metrics?
The power of advertising36
The power of advertising37
Brand Advertising
Brand Advertising
DirectComms
Brand Advertising
Consideration
Brand Image
Brand Personality
Word of Mouth
AdvocacyNPS
Quality
Typical econometrics measurement Typical brand tracking measurement
Short Term Sales or Loyalty
Brand Advertising
The power of advertising38
Long term consideration
and sales
Short term sales
Changes in consumer perceptions
Increasingly we are looking beyond short-term sales
Advertising investment
The power of advertising39
Base
Long term media
The brand metrics which really matterBase
Short term mediaPrice
Promotions
Our Brand Equity Modelling involves two phases to explain how shifts in key brand metricsimpact long-term sales
Short-term model Long-term model
Base
Dynamic model
The power of advertising40
Long term equity model links your campaigns to the long term growth of your business
65%
42%
18%
5%
35% 35%
Econometrics Brand Equity
Base Consumer Metrics
Long Term Media Short Term Media
Propositions
Product Discount
Range Discount
Brand Led
Brand Led - Reboot
Propositions -Reboot
Short Term Long Term
Resolves Claims Fairly
Cares for Customers
Easy to Deal With
Offers right cover
Integrity
Trustworthy
Awareness
Postive Buzz
NPS
Consideration
KPIs Do the Right Thing Honest Customer centric
Decompose(baseline)
Long Term(efficiency by message)
Rank(most valuable metrics)
Sales Return per Brand PointVolume Return per £m
Client Example
Illustrative
The power of advertising41
Campaign Brand Advertising Direct Comms Product 1 Advertising Product 2 Advertising SponsorshipInvestment £8.0M £0.3 M £5.4 M £3.7 M £2.0 M
Likeability 4.10% 0.02% 0.20% 4.20% 5.10%Satisfaction 0.30% 2.10% 0.90% 0.50% 1.80%Consideration 2.50% 0.01% 2.40% 4.50% 5.20%Advocacy 0.80% 0.70% 1.40% 1.50% 4.00%
Volume Sales 5,500 500 4,000 2,700 3,000Volume/£1M Spend 688 1,667 741 730 1,500Short Term ROI £0.69 £1.67 £0.74 £0.73 £0.00Long Term ROI £1.24 £0.33 £0.89 £1.02 £2.25Total ROI £1.93 £2.00 £1.63 £1.75 £2.25
KPIs
Sales or LoyaltyImpact
Campaign Investment Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecBrand Advertising £8.0M
Direct Comms £0.3 M
Product 1 Advertising £5.4 M
Product 2 Advertising £3.7 M
Sponsorship £2.0 M
The approach enables a strategic balance of investments for both short term sales goals and long term brand objectives
41
Understand what your Annual Media Plan is going to deliver
Then adapt the investments in each communication to drive both your
short term and long term objectives
Brand Equity KPIs
Long Term Sales or Loyalty
Client Example
Illustrative
The power of advertising42
2018 IPA Channon Awardfor best new learning in advertising research
The power of advertising43
…it is also the subject of independent critical review
Mark Ritson, Marketing Professor
The power of advertising44
Key Take Outs
- Adjust your measurement framework to base your planning on facts- Classic Byron Sharp ‘Distinctive brand assets’ thinking is borne out in Econometrics
- Understand your assets well!
- Digital attribution alone will create a huge and misleading bias towards short term comms and digital
- Link your campaigns through to shifts in consumer perceptions and other key brand metrics, and then to long term sales
About Ebiquity
We are a leading independent marketing and media consultancy
Our focus is on helping brands make better informed marketing investment decisions
Thank you for your time.
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