The Sales Impact of Radio

A Look at Radio Performance for Department Stores & Telecom

Nielsen 2015 ROAS study

ROAS: Return-On-Ad-Spend

For too long we’ve been dealing with anecdotal evidence of performance not empirical

data

We now have empirical data

We must be the evangelists!

Who conducted this research?Nielsen did

Largest global marketing research firm worldwideAlso measures TV, Online, VOD

So has no horse in this race---completely unbiased

Nielsen would never put their name on any research that couldn’t withstand the scrutiny of research experts worldwide

Background: DEMO A18+

RESEARCH OBJECTIVE

To measure the sales impact of radio advertising

Department Stores• 4 Brands• Test Period: Q3 2014• Pre Period: Same Time Prior Year

Telecom• 1 Brand• Test Period: Q1 2014• Pre Period: 3 months prior

Capable of measuring radio, television and Internet broadcasts, retail video and audio broadcasts.

Nielsen’s PPM Audio Technology: To record Listening

PPM encoding solution identifies broadcast and online audio content

1.The meter, worn all day, detects the watermark embedded in the audio broadcasts

2. Data collected by the meter are sent to Nielsen Audio3.

Meter automatically detects inaudible codes embedded in audio portion of broadcast program or commercial.

Proprietary codes identify media to which participant is exposed.

This listening data is then Matched to Media Monitors commercial occurrence data

(Was the listener tuned in when the commercial ran) Nielsen Audio Reporting

Nielsen Audio Panelist Exposures – Radio Commercials

Matched to Radio Commercial Occurrence Data*

This information is then fused with credit and debit card purchases

SINGLE SOURCE (Individual) DATABASE

PURCHASE BEHAVIOR: Credit & Debit Card Expenditures of 125 MM unique cardholders

• 80%+ US credit card transactions

• 30% of US debit card transactions

• 12B transactions accounting for $1.2 trillion spent annually

It boils down to this….

Comparing the purchasing habits of those exposed to the commercial and those not exposed to the commercial

They match Radio PPM listening with Media Monitors commercial occurrence data to determine if the participants were exposed to the advertiser’s commercial and if they were exposed they determine how purchasing behavior (via their credit and debit card records) differed

from those not exposed to the commercial

3 PILLARS THAT DRIVE ROAS- Return-On-Ad-Spend

BUYERS SPENDING MORE PER TRIP

BUYERS SHOPPING MORE OFTEN

MORE BUYERS

EXPOSURE TO RADIO CAMPAIGNS DROVE A +10% INCREASE IN SALES OVERALL

* Ad spend source is SQAD

RADIO BROUGHT IN MORE SHOPPERS AND THEY SPENT MORE EACH TIME THEY SHOPPED

6% increase in dollars spent per buyer

3% increase in total number of buyers

$356,966,946Incremental spend for customers exposed

to the Q3-2014 radio campaigns

$20,999,788*Total Q3 2014 radio ad spend

$17 ROASIMPACT OF RADIO EXPOSURE RADIO AD INVESTMENT

Q3 2014 - Four brands - Compared to same time prior year

DEPARTMENT STORES $17 OF INCREMENTAL SALES FOR EVERY $1 SPENT ON RADIO

Long term will be higher- residual effects

EXPOSURE TO RADIO CAMPAIGNS DROVE A 10% INCREASE IN SALES OVERALL

* Ad spend source is SQAD

RADIO BROUGHT IN MORE SHOPPERS AND THEY SPENT MORE EACH TIME THEY SHOPPED

6% increase in dollars spent per buyer

3% increase in total number of buyers

$356,966,946Incremental spend for customers exposed

to the Q3-2014 radio campaigns

$20,999,788*Total Q3 2014 radio ad spend

$17 ROASIMPACT OF RADIO EXPOSURE RADIO AD INVESTMENT

Q3 2014 - Four brands - Compared to same time prior year

DEPARTMENT STORES $17 OF INCREMENTAL SALES FOR EVERY $1 SPENT ON RADIO

Develop into loyal customers

EXPOSURE TO RADIO CAMPAIGNS DROVE A 10% INCREASE IN SALES OVERALL

* Ad spend source is SQAD

RADIO BROUGHT IN MORE SHOPPERS AND THEY SPENT MORE EACH TIME THEY SHOPPED

6% increase in dollars spent per buyer

3% increase in total number of buyers

$356,966,946Incremental spend for customers exposed

to the Q3-2014 radio campaigns

$20,999,788*Total Q3 2014 radio ad spend

$17 ROASIMPACT OF RADIO EXPOSURE RADIO AD INVESTMENT

Q3 2014 - Four brands - Compared to same time prior year

DEPARTMENT STORES $17 OF INCREMENTAL SALES FOR EVERY $1 SPENT ON RADIO

Radio advertising impacted behavior

EXPOSURE TO RADIO CAMPAIGNS DROVE A 10% INCREASE IN SALES OVERALL

* Ad spend source is SQAD

RADIO BROUGHT IN MORE SHOPPERS AND THEY SPENT MORE EACH TIME THEY SHOPPED

6% increase in dollars spent per buyer

3% increase in total number of buyers

$356,966,946Incremental spend for customers exposed

to the Q3-2014 radio campaigns

$20,999,788*Total Q3 2014 radio ad spend

$17 ROASIMPACT OF RADIO EXPOSURE RADIO AD INVESTMENT

Q3 2014 - Four brands - Compared to same time prior year

DEPARTMENT STORES $17 OF INCREMENTAL SALES FOR EVERY $1 SPENT ON RADIO

Long term will be higher- residual effects

EXPOSURE TO RADIO CAMPAIGNS DROVE A 10% INCREASE IN SALES OVERALL

* Ad spend source is SQAD

RADIO BROUGHT IN MORE SHOPPERS AND THEY SPENT MORE EACH TIME THEY SHOPPED

6% increase in dollars spent per buyer

3% increase in total number of buyers

$356,966,946Incremental spend for customers exposed

to the Q3-2014 radio campaigns

$20,999,788*Total Q3 2014 radio ad spend

$17 ROASIMPACT OF RADIO EXPOSURE RADIO AD INVESTMENT

Q3 2014 - Four brands - Compared to same time prior year

DEPARTMENT STORES $17 OF INCREMENTAL SALES FOR EVERY $1 SPENT ON RADIO

Develop into loyal customers Radio advertising

impacted behavior

Long term will be higher- residual effects

43%

HISPANICS 18+

10% 10%

PERSONS 18+ AFRICAN-AMERICANS 18+

DEPARTMENT STORES% Change TOTAL SPEND

DEPARTMENT STORESHISPANIC AND AFRICAN-AMERICAN INSIGHTS

Previous Nielsen study Q1 2014 also showed that Hispanic ROAS was larger than general market

Total Mkt Avg Hispanic Avg

5.87.1

+22%

2014 study: Hispanic consumers show higher response to campaign exposure

Hispanic radio dollar share point gains by advertiser

Source: Nielsen Catalina Solutions Studies of 3 radio ad campaigns, March 26, 2014 indexed to general market share point gains from study

Total Mkt Avg Black Mkt Avg

5.8

6.9+19%

Black radio average dollar share point gain by advertiser

Source: Nielsen Catalina Solutions Studies of 3 radio ad campaigns, March 26, 2014 indexed to general market share point gains from study

2014 Study: Black consumers show higher response to campaign exposure

* Ad spend source was Client Provided Budget

$210MIncremental spend on Telco Brand by customers exposed to radio campaign

$15.3M*Spend on radio

$14 ROASIMPACT OF RADIO EXPOSURE RADIO AD INVESTMENT

SOURCE: Nielsen Buyer Insights P18+ Telco Brand campaign (1/1/14-3/31/14)

TELECOM $14 OF INCREMENTAL SALES FOR EVERY $1 SPENT ON RADIO

The Telco company radio campaign reached almost 88 million people (P18+) in PPM markets

Telco company buyers exposed to radio campaign spent $8 more per month than consumers who were not exposed

TELECOMMILLENNIAL AUDIENCE INSIGHTS

During the campaign period, Millennials exposed to the campaign had double the increase in monthly spending for the Telco company’s products and services ($16 increase in monthly spending vs. $8 increase for A18+ exposed audience).

Not only do Millenials listen to Radio they respond to its commercials

RADIO DRIVES ROAS FOR DEPARTMENT STORES AND MANY OTHER CATEGORIES

RADIO PAYBACK PER $1 AD INVESTMENT

Q3 2014

Q1 2014

RADIO DRIVES ROAS FOR DEPARTMENT STORES AND MANY OTHER CATEGORIES

RADIO PAYBACK PER $1 AD INVESTMENT

Q2 +Q3 2013

Retail A +B average out to $17 as well

RADIO DRIVES ROAS FOR DEPARTMENT STORES AND MANY OTHER CATEGORIES

RADIO PAYBACK PER $1 AD INVESTMENT

A $3 or $4 ROAS is still strong and noteworthy

Retail and Department stores ROAS will always be higher for two reasons:

- Higher ticket items than chips, candy and soda

- Market basket potential: i.e. I go to purchase the product advertised in the department store but end up buying other products in various departments

Now let’s put these Radio ROAS results into

some kind of perspective

Below came from a recent Bloomberg article

Ron Amram works for Heineken“Late that year he (Amram) and a half-dozen or so colleagues gathered in a New York conference room for a presentation on the performance

of the online ads. They were stunned. Digital’s return on investment was around 2 to 1, a

$2 increase in revenue for every $1 of ad spending, compared with of at least 6 to 1 for TV.”

Makes Radio’s performance in both ROAS studies look pretty good!

Advertising Age

What Medium Scores Highest ROI? It May Be Radio

Nielsen Catalina Study Shows Big Returns for Small Outlays

Published on March 25, 2014

Brands averaged a sales lift of more than $6 for every $1 spent on radio ads – an ROAS double that of even the best results from many recent studies of digital or TV

media, including one from France and Coca-Cola that Facebook recently touted.

A little noted fact from the 2014 Nielsen studyFound that radio delivered a powerful sales lift when heard within a few days of purchase.

A consumer exposed to an ad within a day of purchasing increased the brand share by +9%, while messages delivered 28 days prior to purchase increased share by +3.4%.

Speaks to the importance of continuing brand presence- Being there!

Of delivering a message within the window of opportunity— one of Radio’s key strengths

Recency

Great Book written by Erwin Ephron: titled Media Planning

Ephron was named on of the 5 most influential people in media in the past 25 years

There are other benefits of Advertising beyond immediate ROAS• Neutralizing effect: No business competes in a vacuum.

• Maintaining a current customer base and revenues against competitive advertising “conquesting” designed to take what you’ve got

• Maintain share of mind: Share of mind= share of market • Share of mind is accomplished by maintaining a marketing share of voice

• Long term Brand building—establish a competitive “firewall”• Long term positive impact of “legacy” advertising- advertising just keeps giving• Impacts other non ROAS metrics necessary for short and long term success

• Awareness- only thing that grows in the dark is a mushroom. Business/revenue doesn’t• Intent• Consideration- can’t buy from if your not in their consideration set• Affinity• Advocacy- word-of-mouth- best type of advertising

Affinity / Likeability

Awareness

Average % Lift: Radio-targeted consumers vs. Control groups

Studies conducted while at Katz: Advertisers see lifts in 5 key branding metrics when Radio is used in marketing campaigns

Advocacy

Consideration

Purchase Intent

+ 17%

+ 23%

+ 19%

+ 38%

+ 37%

Source: Radio Advertising Effectiveness Program, Ipsos OTX, 2010-13; conducted for Katz Marketing Solutions.

Creative can account for as much as 75% of a campaign’s impactCreative can make 100 GRPs perform like 200 GRPs or 50 GRPs

Likeable Emotive Factual Informative Motivating DifferentiatingAverage of Top

Quintile 56% 45% 72% 69% 42% 43%

Average of Bottom Quintile

26% 15% 25% 20% 13% 14%

Buy Believable Soft Sell Share Talking 2 Me EntertainingAverage of top

ads70% 85% 50% 58% 69% 75%

Average of Bottom Ads

27% 52% 19% 25% 41% 35%

To be read: the top ranked commercials on average were ranked as likeable by 56% of the respondents vs the bottom ranked averaging 26%.

Need some world class creative ideas?

Good artists borrow, great ones stealGo to:

www.radiomercuryawards.com and search archives - you can search by category, advertiser, year, etc.

Summary$17:1 ROAS Department stores

$17: ROAS Retailers- Key local account$14:1 Telecom

Beats TVOther studies on the way

Additional benefit of Advertising: Neutralizing conquesting, SOV, SOM, branding

Dramatically impact 5 key brand health metrics- awareness, intent, consideration

Practice discussing and presenting this info. Any questions, just call

Questionsbob@uppingthevolume.com

Cell: 203-585-7815