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What drives advertising ROI?

What drives advertising ROI?
One of the key roles of the IPA through the Effectiveness Awards is to shine a light on the most effective advertising campaigns in our industry. The awards create the case studies of the best our industry has to offer with respect to commercially effective advertising.

I asked Ebiquity’s effectiveness team what their point of view is with respect to ‘What drives ROI in the communications that support brands?’

The conclusions arrived at are based on a body of econometric work, from an independent team of econometricians, built from 15,000 models covering all of the main industry vertical represented in the IPA awards programme. Not all of the insights are based on the strength of the creative, albeit the team are in firm agreement with the IPA’s view that the creative itself is the biggest variable affecting ROI for any individual brand.

So what are the three most important findings that we believe are the fuel to efficient advertising?

Many of the findings can be linked to the key success criteria as penned in the well-read words of Byron Sharp, a piece of work probably read by all of us but with differing levels of acceptance to the points raised. 

Growing Brands through Media image 1

Ebiquity’s effectiveness models highlight three of Byron Sharp’s 7 rules:

The refreshment of memory structures and the importance of brand recognition

  1. Consistency
  2. The importance of reach

The Importance of Brand Recognition

Let’s first consider the creative. If we look below at our FMCG benchmarks on an axis of brand size and ROI we have highlighted some campaigns that ‘overscore’ versus the average ROI for a brand of that scale.

High recognition in pre-test score links to high ROI. Continuity of style links to strong TV performance. image 2 - Copy

Some of the highlighted campaigns have been previous IPA award winners and they all have one thing in common; exceptionally strong brand recognition. It is brand recognition above all other media tracking metrics that most closely correlates with ROI. It does not have to mean excessive branding but it does mean that as brand owners you need to know and exploit your distinctive brand assets, be they an end line, a monkey, a puppy or a celebrity. These can double the payback versus less recognised campaigns.

Consistency

Interestingly, some of the campaigns that top our ROI leader board have had many years of continuity of advertising style. It can be generated by a number of approaches but the key is to understand which assets are distinctive to your brand and which you could own in the future as your brand treads new territory. 

Media review – great creative builds effectiveness image 3

The Importance of Reach

The right creative can really drive ROI but often great creative ideas can be let down by poor media planning. Media reach, essentially the cost of reach, is fundamental to the success of media planning, supporting the creative efforts of the industry. It is sometimes easier to think of advertising ROI as a function of cost of reach x effectiveness per reach point. Using this calculation we can start to compare different media channels on the basis of cost per reach point. Media channels which have high reach and a low cost of reach score well. TV in particular scores exceptionally well as a high reach medium with a low cost per ‘000.

Keeping targeting as broad as possible helps ROI. While TV broadly scores well with the potential of reaching 90% of consumers each week at low cost, we have seen plenty of examples of targeting too tightly (over-targeting). Over-targeting serves to reduce reach, inflate costs and reduce ROI. Some 18-34 targeted brands could have doubled their ROI had they targeted all adults.

As consumers of media, we can agree that a fantastically crafted TV ad can convey a great and memorable message. But how does online video, display and social activity compare?

Digital display is currently at the bottom of this channel efficiency list. Perhaps no surprise considering the lack of viewability of most display ads (typically being less than 50%) even with a viewability metric that essentially means ‘blink and you miss it’. Coupled with tight or bad targeting, fraud and ad blocking, it starts to make sense.

Channels such as Social and You Tube also have a problem with campaign reach and we also need to factor in our knowledge that most people (85%) watch these ads on their mobiles without the sound on. But the main problem currently with these channels is the lack of effective reach, except for the odd exceptions where You Tube views run into the tens of millions. They can extend the reach of paid activity, but this might not carry weight. But, by exploring the commentary we should be able to understand which elements are resonating with consumers and likely to become assets in the long term health of the brand and the effectiveness of the advertising.

Morag Blazey, Managing Principal, Marketing Intelligence, Ebiquity

Last updated 10/11/2016

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