If you spend $1 on advertising, how much ROI would you expect? Assessing ROI on advertising consumer products

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December 8, 2016 by Paul Dughi

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Are you familiar with what’s called FMCG brands? I had to look it up.  It means “Fast Moving Consumer Goods.”  These are the type of products you reach for on the store shelves at the grocery or drug store.  Think Kimberly-Clark, Unilever, Lindt, or Pfizer.

Typically, they are long-standing brands that built their marketing on buying television ads.  But so much has changed in media, in advertising, and in consumer patterns over the years, it’s making all of us re-evaluate what works and what doesn’t.  It’s a fast-changing, ever-evolving dynamic.

Many of these brands have shifted significant dollars from traditional media into digital.

Ebiquity, an independent marketing analysis company, was asked to gauge the effectiveness of media buying based on Return on Investment for FMCG brands.

The research looked at real-life examples of 6 categories of advertising for consumer products to assess short-term ROI to see which medium was most effective:

  • Online video advertising
  • Online display advertising
  • Print
  • Radio
  • Television
  • Out-of-Home

The research claims TV advertising was the only medium tested that showed a positive return.  For every $1 invested in TV ads, advertisers realized a return of $1.74.

According to Ebiquity, these advertisers were losing money on some other ad platforms over the short-term.

For every $100 spent on advertising…

roi

Perhaps one of the reasons that TV has continued to perform is what it delivers:  Sight, Sound, Motion, Emotion.  Ebiquity points to other brands, like KitKat that have a long-term committment to a consistent branding approach (Gimme a Break, break me off a piece of that Kit Kat bar).  Campaigns for KitKat that use the slogan perform better those that don’t.

Or brands like Intel, that use what’s called “sonic branding” by consistently using a signature sound effect in ads.

High recognition – driven by continuity of slogans, celebrities, look and feel, and sonic elements – in pre-test advertising scores links subsequently to higher ROI. Continuity of style links to strong TV performance. But where creative is incoherent or incompatible with established creative devices, the ROI can be ten times lower than highly effective creative on leading brands. – Ebiquity blog

So is it the medium or the message?  In the digital space, agencies and marketers tend to think differently – that’s good.  But they may be going too far in trying to be different and walking away from the equity they’ve built up for years.

The temptation, when taking an established FMCG brand in a new direction on a new channel and with a new campaign, is to reinvent the wheel, to develop a creative route which either puts forward new brand assets for digital only, or adapts them to such an extent that they’re neither recognizable nor visible to the target market. Our recent experience has shown us that, if you use established brand assets and/or house ad styling on digital and social platforms, they work harder for brands. – Ebiquity blog

Reading this, you may be thinking “here’s a TV guy trying to justify TV again despite what we all know.”  Trust me, we sell a lot of digital products where I work and I can tell you first-hand that it works.

Honestly, any medium can work for advertisers if it’s done efficiently with sufficient dollars behind it.

None of this is a condemnation of any medium.  Each has its strengths and weaknesses, but the study questions whether changing too quickly and doing that all-eggs-in-the-digital-basket can erode what consumers know and think about brands.

We’re all learning here. The world’s biggest advertising spender, Procter & Gamble, came to a conclusion earlier this year when it announced that it was moving away from targeted Facebook ads that fell short of its needs.  It wasn’t cutting back on total digital ad spend, but it was figuring out what works and what doesn’t.

And it’s not an all or nothing thing either.

Studies have shown consistently there is a multiplier effect to overall advertising campaigns when mediums such as Digital and TV are combined.  The researchers call it “cross-screen exposure.”  A study done for Microsoft and Nielsen showed a marked increase in brand recall, ad recall, message recall, and ad likeability when TV campaigns are reinforced with similar creative on-line.

It will be interesting to see how things play out over time.

 

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