The ROI study FMCG Sales return A metaanalysis

The ROI study - FMCG Sales return A meta-analysis of 500+ econometric models 2011 – 2016

The ROI study Analysis conducted by Sally Dickerson, managing director of effectiveness consultancy Part of the Omnicom Media Group A graduate in Mathematics from Oxford, Sally joined Mars UK as a market research analyst, later joining their Management Science division. She co-founded The Decision Shop, part of Bates/Cordiant then in 1999 joined then OMD group and set up ROI (Return on Investment) focused on market mix modelling, which became OMD Metrics, then Brand. Science, and is now Annalect Marketing Sciences. In 2016 Sally created a new consultancy business, Benchmarketing, running strategic quantitative consultancy projects using meta analysis. She has also contributed to over 30 IPA advertising effectiveness awards, been an IPA effectiveness award judge, and run marketing effectiveness masterclasses for the Marketing Society and Chartered Institute of Marketing. She was a judge on the inaugural Cannes Creative Effectiveness Lions panel, in 2011 and again in 2013.

3 key questions 1 How effective are campaigns that use print newsbrands versus those that do not? 2 What impact do print newsbrands have on the effectiveness of other media channels? 3 What proportion of the budget should be spent on print newsbrands to deliver optimum total campaign ROI?

The evidence 1 Print newsbrands boost overall campaign ROI by three times on average 2 3 Print newsbrands make TV twice as effective and online display four times as effective Spend on print newsbrands should return to 2013 levels, and can be boosted further by use of digital newsbrands Source: Benchmarketing analysis of 500+ econometric models

The study analysed six categories Retail Finance Automotive Combined services Travel & Transport FMCG

This document looks at FMCG - and for some analyses also Combined services FMCG

How has adspend evolved in the last five years?

SMI data provides a representative picture of actual media mix Actual media spend from booking data provided by 65% of UK agencies Data across all above the line media Detailed breakdown of digital spend across display, video and paid search Breakdown of newsbrand spend across print and digital Source: SMI (Standard Media Index)

Across all categories, total newsbrand spend has declined since 2011 15. 4% 14. 4% 13. 7% 11. 9% 9. 7% 2011 2012 2013 2014 2015 Source: Total available categories SMI 2011 -2015

Digital channels accounted for a third of media spend in 2015 50 % 31. 6% 43. 0% 9. 7% 12. 6% 11. 1% 9. 4% 1. 4% 0% TV Cinema OOH 3. 6% 3. 4% Radio Magazines 5. 8% 7. 6% 2. 1% Print newsbrands Online newsbrands Other digital display Digital video Search Source: Total available categories SMI 2011 -2015

Digital has grown from 21. 7% in 2011 to 31. 6% in 2015 % spend over the year - All categories TV Cinema OOH Radio Magazines Print newsbrands Online newsbrands 2015 7. 6% 2014 Other digital display 2. 3% 11. 4% 2012 12. 5% 2011 13. 7% 0% 10% 20% 30% 40% 50% 60% Search 2. 1% 9. 6% 2013 Digital video 70% 2. 3% 1. 9% 1. 7% 80% 90% 100% Source: Total available categories SMI 2011 -2015

FMCG digital spend % is increasing steadily TV Cinema OOH Radio Magazines Print newsbrands Online newsbrands 2015 Digital display 4. 7% 2014 2. 3% 7. 7% 2012 2. 1% 8. 8% 2011 1. 6% 9. 6% 0% 10% 20% 30% 40% 50% 60% Search 1. 9% 6. 0% 2013 Digital video 70% 80% 1. 4% 90% 100% Source: SMI 2011 -2015

Across all categories print newsbrand spend has declined since 2011 13. 7% 12. 5% 11. 4% 9. 6% 7. 6% 2011 2012 2013 2014 2015 Source: Total available categories SMI 2011 -2015

In FMCG, spend in print newsbrands has declined at a similar rate 9. 6% 8. 8% 7. 7% 6. 0% 2011 2012 2013 2014 4. 7% 2015 Source: Total available categories SMI 2011 -2015

Has the pendulum swung too far?

Our exploration

Econometrics – identifying and assigning a weight to the ingredients driving sales Advertising x medium and message PR, Media mentions, Buzz Pricing vs competitors Store universe changes Product/Range changes Brand awareness/perceptions Competitor marketing Competitor routes to market Technological change Seasonality Economic change

Calculating revenue return on investment (RROI)

Calculating revenue return on investment (RROI) Spend £m Sales £m due to spend RROI Channel 1 £ 2. 5 £ 3. 0 1. 20 Channel 2 £ 0. 5 1. 00 Channel 3 £ 1. 5 £ 3. 0 2. 00 Channel 4 £ 1. 0 £ 1. 50 Channel 5 £ 0. 6 1. 20 Total £ 6. 0 £ 8. 6 1. 43

A meta analysis of multiple econometric cakes

Defining the relationship between spend and revenue return £ 1. 6 Each dot on the graph represents a case in our Results Vault £ 1. 4 R 2 = 0. 9556 Revenue ROI £ 1. 2 £ 1. 0 £ 0. 8 £ 0. 6 Here the data suggests as the % of print newsbrands in the mix increases, so does effectiveness £ 0. 4 £ 0. 2 £ 0. 0 0% 10% 20% 30% 40% 50% 60% 70% Print newsbrands % of total communications spend This is an example chart, not real data 80% 90%

Creating tertile groups of cases shows the revenue return for low, medium and high spend levels £ 1. 6 £ 1. 4 Revenue ROI £ 1. 2 £ 1. 0 £ 0. 8 £ 0. 6 £ 0. 4 £ 0. 2 £ 0. 0 0% 10% 20% 30% 40% 50% 60% % of total communications spend £ 1. 2 £ 1. 0 £ 0. 8 £ 0. 6 £ 0. 4 £ 0. 2 £ 0. 0 Tertiles of % of total communications spend This is an example chart, not real data 70% 80% 90%

1 How effective are campaigns that use print newsbrands versus those that do not?

FMCG 2015 spend levels 4. 7% £ 0. 51 £ 0. 41 Print newsbrands boost total campaign ROI by 20% Total campaign revenue ROI £ 0. 40 £ 0. 33 No print newsbrand spend Low 2 -10% Medium 10 -12% High 12 -18% Print newsbrand % of total campaign spend in FMCG Source: Benchmarketing/Brand Science Results Vaults 2011 to 2015 – excludes outliers and incomplete models

2 What impact do print newsbrands have on the effectiveness of other media channels?

Combined services £ 12. 22 Print newsbrands make TV spend work twice as hard TV revenue ROI £ 6. 49 No print newsbrand spend £ 10. 82 £ 5. 72 Low 2 -10% Medium 10 -12% High 12 -18% Print newsbrand % of total campaign spend in combined services Source: Benchmarketing/Brand Science Results Vaults 2011 to 2015 – excludes outliers and incomplete models. Combined services includes: Finance, Retail, Telecoms, Travel & Leisure, Media, Government/Social/Political, Other Services(Online & Offline)

Combined services £ 55. 98 Online display revenue ROI £ 17. 42 Print newsbrands boost online display and video by up to four times £ 20. 96 £ 12. 46 No print newsbrand spend Low 2 -10% Medium 10 -12% High 12 -18% Print newsbrand % of total campaign spend in combined services Source: Benchmarketing/Brand Science Results Vaults 2011 to 2015 – excludes outliers and incomplete models. Combined services includes: Finance, Retail, Telecoms, Travel & Leisure, Media, Government/Social/Political, Other Services(Online & Offline)

Finance £ 40. 45 £ 55. 82 £ 11. 34 £ 4. 02 Low 2 -7% 7. 9% Combined services: print newsbrands boost radio revenue by up to 10 times Radio revenue ROI No print newsbrand spend Automotive Combined Finance services 2015 spend levels Medium 7 -22% High 22 -37% Print newsbrand % of total campaign spend in combined services Source: Benchmarketing/Brand Science Results Vaults 2011 to 2015 – excludes outliers and incomplete models. Combined services includes: Finance, Retail, Telecoms, Travel & Leisure, Media, Government/Social/Political, Other Services(Online & Offline)

3 What proportion of the budget should be spent on print newsbrands to deliver optimum total campaign ROI?

900 The data from the meta analysis allows us to build response curves for each channel and calculate the optimum split for any given budget Online Display TV Online Search Newspapers VOD Revenue £m Outdoor Magazines Radio TV Sponsorship Cinema 0 Media investment £m 80 Source: Brand. Science channel planning sales analysis 2015

Recommended spend in print newsbrands would be double current FMCG level of 5% for food and drink brands Recommended print newsbrand % for optimal campaign ROI 20% 16% 13% 1 2 3 12% 4 12% 5 11% 6 7 Annual spend £m 10% 10% 8 9 10

Food & drink Typical spend p. a. £m Print newsbrand spend % 2015 £ 10 m 6% Print newsbrand % spend for maximum campaign effect 10% Source: Benchmarketing/Brand Science Results Vaults 2011 to 2015 – excludes outliers and incomplete models.

The pendulum has swung too far for print newsbrands – and advertisers are missing out 9. 6% 8. 8% 7. 7% 6. 0% 2011 2012 2013 2014 4. 7% 2015 2016 2017 Source: SMI (Standard Media Index)

The evidence 1 Print newsbrands boost overall campaign ROI by three times on average 2 3 Print newsbrands make TV twice as effective and online display four times as effective Spend on print newsbrands should return to 2013 levels, and can be boosted further by use of digital newsbrands

35