Date post: | 21-Apr-2017 |
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Data & Analytics |
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Maximising EfficiencyKey learning from the IPA Databank
• Analysis of 996 IPA cases over 30 years.
• Covers 700 brands in 83 categories.
• Identifies the ingredients for effectiveness, over the short and long term.
• “Effectiveness” measured in hard business terms.
“Long-term results cannot be achieved by piling short-term results on short-term
results.” Peter
Drucker, 1993
This presentation
• 5 drivers of efficiency• 5 implications for performance measurement
What do we mean by efficiency?
0% 2% 4% 6% 8% 10% 12%0%
2%
4%
6%
8%
10%
12%
Share of market
Shar
e of
voi
ce
SOV > SOM: brands tend to grow
SOV < SOM: brands tend to shrink
Equilibrium: SOV = SOM
What do we mean by efficiency?
Share growth α 0.04 x ESOV
Above average
Below average
Grow
th
Investment
Drivers of efficiency
1. Balanced campaign of long-term brand-driven growth and short-term activation
The 60:40 rule
Time
Sale
s upl
ift o
ver b
ase
Sales activationBig direct effect,
but decays quickly. Brand buildingSmaller effect on all metrics.Decays slowly.
Two ways marketing can affect sales
Time
Sale
s upl
ift o
ver b
ase
Sales activationShort term sales uplifts, but no long term growth
Brand buildingLong term sales growth
Brand building drives long-term growth
Short term effects dominate ~6 months
Different time-frames favour different strategies
0-3 months 3-6 months 6+ months0%
10%
20%
30%
40%
50%
60%ADMA data
Brand-build-ing
Activation
Campaign evaluation period
Shar
e gr
owth
effe
cts
For maximum profit, you need both
Brand buiding Both Sales activation0%
5%
10%
15%
20%
25%
30%
Campaign objectives
Profi
t effe
ct
For maximum efficiency, you need both
Brand buiding Both Sales activation0.0
0.1
0.2
0.3
0.4
0.5
Campaign objectives
ESO
V Effi
cien
cy
Balance is important to effectiveness
Balance is very important to efficiency
Optimum: ~35%
Balance is very important to efficiency
The 60:40 ruleBrand:Activation
2. Pricing effects
Volume is not enough
Neither Sales/share only Price only Both0%
10%20%30%40%50%60%70%80%90%
100%
Improvements reported in…
Profi
t effe
ct
Volume is not enough
Neither Sales/share only Price only Both0.0
1.0
2.0
3.0
4.0
5.0
6.0
Improvements reported in…
ESO
V Effi
cien
cy
Insufficient data
But price effects are long term
3 months 6 months 1 year 2 years 3 years0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
Campaigns periods up to
Pric
ing
effec
t
Brand building is key to lower price sensitivity
0 1 2 3 4+0%
2%
4%
6%
8%
10%
12%
Number of brand metrics improved
Pric
e eff
ect
3. Emotional engagement
Emotional campaigns work harder
Rational Combined Emotional0%1%2%3%4%5%6%7%8% Price effect
NONE
Rational Combined Emotional0.0
0.1
0.2
0.3
0.4
0.5
0.6 ESOV Efficiency
4. Fame
Fame drives volume and pricing
Fame campaigns
Other campaigns
0.00.20.40.60.81.01.21.41.61.82.0
SOV Efficiency
Fame campaigns
Other campaigns
0%1%2%3%4%5%6%7%8%9%
10%Price effect
4:1
5. Creativity
Creativity amplifies fame
0.0
2.0
4.0SOV Efficiency
0%3%6%9%
Price effect
10:1
And creativity is getting more efficient
Up to 2002 Post 20020.0
0.5
1.0
1.5
2.0
2.5
3.0
ESO
V effi
cien
cy
Implications for performance measurement
A challenge for performance measurement
0%
5%
10%
15%
20%
25%
30%
35%
40%
19%
31%27% 26%
35%
Shor
t-ter
m a
ctiva
tion
effec
ts
Pre-testing has promoted short-term effects
≤ 6 months 1 year 2+ years
-15%
-10%
-5%
0%
5%
10%
15%
Campaign duration
Upl
ift to
cam
paig
n sa
les e
ffect
s pr
etes
ted
min
us n
on-p
rete
sted
Balancing the metrics
1. Beware of quarterly sales measures or shorter-term activation sales as a sole measure of success: balance short term sales responses with long-term metrics:– Year-on-year sales uplifts – econometrics will help
apportion these to the campaign– Annualised efficiency – ESOV is not a short-term metric– Price elasticity - econometrics will be needed
Balancing the metrics
2. Beware persuasion scores as a sole measure of success: balance these with emotional responses and emotional brand equity shifts: these relate to long-term effects
3. Measure buzz and advocacy4. Encourage creativity – reward major achievements5. Aim for a balanced scorecard of a wide range of short and
long-term metrics – the more metrics, the more reliable the indication.
www.ipa.co.uk/content/the-long-and-the-short-of-it
Thank you