Findings on the effectiveness of Outdoor advertising from

Findings on the effectiveness of Outdoor advertising from Econometric studies conducted by Brand. Science - Retailers (and highlights from FMCG study) 21 September 2009

Agenda Background & Objectives Overview of the Brand. Science Results Vault Highlights from the FMCG study Results of the Retailer Meta analysis Summary and Conclusions

Retailer Meta Analysis: Key questions to be answered Question answered 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 levels of spend? How does Outdoor advertising impact on the performance of other media channels? Is Outdoor advertising becoming more or less efficient over time? What are the implications for budget allocation by media?

Agenda Background & Objectives Overview of the Brand. Science Results Vault Highlights from the FMCG study Results of the Retailer Meta analysis Summary and Conclusions

Brand. Science Results Vault • The Brand. Science Results Vault collates data from over 400 econometric studies conducted by Brand. Science to provide a unique insight into how different media drive sales independently, and in combination 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 performance by channel and sector and contains lots of findings on how Outdoor advertising works: ● Absolutely ● Relative to and in synergy with other media ● Over time • Partly due to poor data quality, the impact of Outdoor could not be measured in 40% of studies. The comparable figure is 4% of studies for TV and 10% for Print

Retailer ATL Media Mix: Studies in the Brand. Science Results Vault are fairly representative of the UK: Outdoor makes up 9% of ATL media spend for Retailers in the Results Vault compared to the UK Norm of 6% Brand. Science Results Vault*: ALL Retail Studies Nielsen Media Research Top 100 UK Retailers The average retailer in the Brand. Science Results Vault spends £ 5 m pa on ATL advertising with this media split The average UK retailer spends £ 6. 4 m pa on ATL advertising with this media split *Sample Set: Retail Results Vault studies as at 15 th May 2009

Retailer TOTAL Media Mix: Studies in the Brand. Science Results Vault are fairly representative of the UK: Outdoor makes up 6% of total media spend for Retailers in the Results Vault compared to the UK Norm of 5% Brand. Science Results Vault*: ALL Retail Studies Nielsen Media Research Top 100 UK Retailers The average retailer in the Brand. Science Results Vault spends £ 7. 1 m pa on advertising with this media split The average UK retailer spends £ 7. 5 m pa on advertising with this media split *Sample Set: Retail Results Vault studies as at 15 th May 2009

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

Agenda Background & Objectives Overview of the Brand. Science Results Vault Highlights from the FMCG study Results of the Retailer Meta analysis Summary and Conclusions

Recap: How effective is Outdoor advertising for FMCG brands?

FMCG: TV is only 5% more efficient than Outdoor advertising Sample Set: All FMCG Results Vault studies (2002 -2008) with measured Outdoor RROI

FMCG: If production costs are included, Outdoor becomes the most efficient medium Sample Set: All FMCG Results Vault studies (2002 -2008) with measured Outdoor RROI

FMCG Results Vault How does ROI vary according to proportion of outdoor spend?

FMCG: Outdoor ROI increases with proportion of spend Sample Set: All FMCG Results Vault studies (2002 -2008) with measured Outdoor RROI

FMCG: Increasing share of spend on Outdoor boosts the ROI on other main media 1. 80 1. 60 0. 80 TV RROI vs Outdoor % Spend £ 1. 44 £ 1. 55 0. 70 1. 40 0. 60 Average Print RROI Average TV RROI £ 0. 74 Print RROI vs Outdoor % Spend 1. 20 1. 00 0. 80 0. 60 0. 50 £ 0. 42 0. 40 0. 30 0. 20 0. 40 0. 20 0. 10 - - Below Median Above Median Outdoor % Spend Sample Set: All Results Vault studies (2002 -2008) with measured Outdoor RROI Below Median Above Median Outdoor % Spend

FMCG Results Vault Carryover rates – the medium term effect of media spend. By proportion of outdoor spend

Higher Outdoor spend drives higher carryover rates (lagged effect of advertising). 1) For Outdoor 2) for TV Sample Set: All FMCG Results Vault studies (2002 -2008) with measured Outdoor RROI

FMCG Results Vault ROI trends over time by medium Our models categorised by year of evaluated campaign

Outdoor is becoming more efficient, whereas TV is becoming less efficient Sample Set: All FMCG Results Vault studies (2002 -2008)

Given different ROIs by medium and changes in ROI over time, FMCG advertisers should increase their share of spend on outdoor

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

Agenda Background & Objectives Overview of the Brand. Science Results Vault Highlights from the FMCG study Results of the Retailer Meta analysis Summary and Conclusions

How effective is Outdoor advertising for Retailers?

Outdoor performs just as well as TV and both media are second only to Print Incremental Sales revenue generated for each £ 1 of media cost Sample Set: Retail Results Vault studies as at 15 th May 2009

RROI calculations are often based on media space costs and exclude production costs which can be a sizeable percentage of total ad spend TV production costs make up for a larger share of spend than any other medium ATL Media Production Costs as a percentage of media/production total TV 14. 4% Print 8. 1% Outdoor 7. 8% Internet 7. 6% Radio 7% Incorporating production costs into the RROI calculation changes the ranking of the media channels Source: WARC

RROI calculations are based solely on media space costs and exclude production costs - which can be a sizeable percentage of total spend Incremental Sales revenue generated for each £ 1 of media and production cost Sample Set: Retail Results Vault studies as at 15 th May 2009

The Print, DM and Radio RROIs are far higher when Outdoor is used +34% +84% +61% Sample Set: Retail Results Vault studies as at 15 th May 2009

How does the efficiency of Outdoor advertising change at different levels of spend?

Outdoor RROI increases slightly as spend increases, implying there is room for retailers to increase their share of spend on Outdoor +22% Sample Set: Retail Results Vault studies as at 15 th May 2009

Outdoor Carryover rate increases significantly as spend increases, implying there is room for retailers to increase their share of spend on Outdoor +145% Sample Set: Retail Results Vault studies as at 15 th May 2009

“Life”of campaign vs. Outdoor spend +131% Based on time taken for advertising to have 95% of its “total” effect Sample Set: Retail Results Vault studies as at 15 th May 2009

How does Outdoor advertising impact on the efficiency of other media channels?

Increased spend on Outdoor boosts the RROI on TV and Print +19% Sample Set: Retail Results Vault studies as at 15 th May 2009 +28%

Higher spend on Outdoor is associated with a higher carryover rate on TV and Print +18% Sample Set: Retail Results Vault studies as at 15 th May 2009 +50%

Higher Outdoor spend elongates the life of TV and Print campaigns +30% Based on time taken for advertising to have 95% of its “total” effect Sample Set: Retail Results Vault studies as at 15 th May 2009 +62%

Is Outdoor advertising becoming more or less efficient over time?

Trends in RROI over time: 1) Major Media vs Outdoor *Two year moving average Sample Set: Retail Results Vault studies as at 15 th May 2009

Trends in RROI over time: 2) Support Media vs Outdoor *Two year moving average Sample Set: Retail Results Vault studies as at 15 th May 2009

What are the implications for budget allocation by media?

The Retailer category includes brands with very disparate media strategies. By calculating diminishing returns curves and projecting trends in ROI over time, we suggest that overall Outdoor investment should increase, and on average should be doubled. Television, radio and cinema should be reduced.

Agenda Background & Objectives Overview of the Brand. Science Results Vault Highlights from the FMCG study Results of the Retailer Meta Analysis Summary and Conclusions

Summary of findings for Retailers and FMCG study Outdoor delivers High ROI for both FMCG brands and Retailers When production costs are taken into account, Outdoor outperforms TV by 3% for FMCG brands & by 8% for Retailers. Above average Outdoor spend increases the medium term/brand effect of Outdoor AND TV Outdoor ROIs are increasing over time whereas TV is decreasing