Findings on the effectiveness of Outdoor advertising from Econometric studies conducted by BrandScience

- Retailers (and highlights from FMCG study)

21 September 2009

Background & Objectives

Highlights from the FMCG study

Results of the Retailer Meta analysis

Agenda

Overview of the BrandScience Results Vault

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?

Background & Objectives

Highlights from the FMCG study

Results of the Retailer Meta analysis

Agenda

Overview of the BrandScience Results Vault

Summary and Conclusions

BrandScience Results Vault

• The BrandScience Results Vault collates data from over 400 econometric studies conducted by BrandScience 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 BrandScience 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%

BrandScience Results Vault*:ALL Retail Studies

Nielsen Media ResearchTop 100 UK Retailers

*Sample Set: Retail Results Vault studies as at 15th May 2009

The average UK retailerspends £6.4m pa on ATL advertising with this media split

The average retailer in the BrandScience Results Vaultspends £5m pa on ATL advertising with this media split

Retailer TOTAL Media Mix: Studies in the BrandScience 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%

BrandScience Results Vault*:ALL Retail Studies

Nielsen Media ResearchTop 100 UK Retailers

*Sample Set: Retail Results Vault studies as at 15th May 2009

The average UK retailerspends £7.5m pa on advertising with this media split

The average retailer in the BrandScience Results Vaultspends £7.1m pa on advertising with this media split

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

Background & Objectives

Highlights from the FMCG study

Results of the Retailer Meta analysis

Agenda

Overview of the BrandScience Results Vault

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 VaultHow 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

Sample Set: All Results Vault studies (2002 -2008) with measured Outdoor RROI

FMCG Results VaultCarryover 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 VaultROI 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

Recommended Media Split 2008

Radio, 3%

Cinema, 2%

Online, 3%

TV, 60%Print, 16%

Outdoor, 16%

Background & Objectives

Highlights from the FMCG study

Results of the Retailer Meta analysis

Agenda

Overview of the BrandScience Results Vault

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 15th 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

Source: WARC

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

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 productioncost

Sample Set: Retail Results Vault studies as at 15th May 2009

The Print, DM and Radio RROIs are far higher when Outdoor is used

Sample Set: Retail Results Vault studies as at 15th May 2009

+34%

+61%

+84%

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

Sample Set: Retail Results Vault studies as at 15th May 2009

+22%

Outdoor Carryover rate increases significantly as spend increases, implying there is room for retailers to increase their share of spend on Outdoor

Sample Set: Retail Results Vault studies as at 15th May 2009

+145%

“Life”of campaign vs. Outdoor spend

Based on time taken for advertising to have 95% of its “total” effect

Sample Set: Retail Results Vault studies as at 15th May 2009

+131%

How does Outdoor advertising impact on the efficiency of

other media channels?

Increased spend on Outdoor boosts the RROI on TV and Print

Sample Set: Retail Results Vault studies as at 15th May 2009

+19% +28%

Higher spend on Outdoor is associated with a higher carryover rate on TV and Print

Sample Set: Retail Results Vault studies as at 15th May 2009

+18% +50%

Higher Outdoor spend elongates the life of TV and Print campaigns

Based on time taken for advertising to have 95% of its “total” effect

Sample Set: Retail Results Vault studies as at 15th May 2009

+30% +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 15th May 2009

Trends in RROI over time: 2) Support Media vs Outdoor

*Two year moving average

Sample Set: Retail Results Vault studies as at 15th May 2009

What are the implications for budget allocation by media?

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.

The Retailer category includes brands with very disparate media strategies.

Television, radio and cinema should be reduced.

Background & Objectives

Highlights from the FMCG study

Summary and Conclusions

Agenda

Overview of the BrandScience Results Vault

Results of the Retailer Meta Analysis

Summary of findings for Retailers and FMCG study

Outdoor delivers High ROI for both FMCG brands and 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

When production costs are taken into account, Outdoor outperforms TV by 3% for FMCG brands & by 8% for Retailers.