Effectiveness in the data age

November 3rd 2011

This Presentation

•  What drives effectiveness and what should we measure? •  Why some metrics and analytics are damaging to

effectiveness •  The ultimate data challenge: the dominant driver of

effectiveness is usually ignored •  What can we do about this?

Our main sources

•  IPA dataBANK - 929 case studies - 30 years of data

•  Nielsen analysis of 30 UK packaged goods categories - 123 brands

•  World’s leading database on creativity

•  World’s leading global case study database

The measures of business success

•  Effectiveness measured in terms of business results, not prizes.

•  Key metrics: –  Effectiveness Success Rate.

% cases showing very large effects across a range of business metrics, from sales to profit.

–  Efficiency points of market share growth per 10 points of Extra Share of Voice (ESOV). ESOV = SOV minus SOM

What drives effectiveness and what should we measure?

Broad findings from the IPA Databank

There is more to growth than volume

5%

26% 22%

63%

36%

25% 19% 20%

0%

10%

20%

30%

40%

50%

60%

70%

Price sensitivity Share growth Share defence Sales growth

Campaign objective

Price is the key to profit

Incidence

Very large profit growth

Build advocacy not loyalty

Common practice...

7%

13%

21%

0%

5%

10%

15%

20%

25%

Increase

loyalty

Increase

penetration

Increase both

Campaign objective

Incid

en

ce

...is not best practice

27%

73%

82%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Increase loyalty Increase

penetration

Increase both

Campaign objective

Eff

ec

tiv

en

es

s s

uc

ce

ss

rate

The myth of loyalty

Awareness, image & short-term responses are over-rated

61% 55%

46%

33%

67% 68% 67%

78%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Awareness Image Direct Fame Campaign objective

The most popular objectives are not the most effective

Incidence

Effectiveness success rate

Share of voice is still crucial

The concept of equilibrium SOV

Source: Marketing in the era of Accountability

How ‘extra’ share of voice drives growth

-40%

-20%

0%

20%

40%

60%

80%

100%

-60% -40% -20% 0% 20% 40% 60% 80% 100%

Mar

ket

shar

e g

ain

(%

poi

nts

)

ESOV (SOV-SOM)

Market share growth vs 'extra' share of voice

The advantage of brand leadership

1.4%

0.4%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

FMCG Brand Leaders FMCG Challenger Brands

Mkt

sha

re g

ain

per 1

0% p

oint

s ES

OV

(% p

oint

s)

The difference between average strategy and ‘best in class’

0.5%

0.8%

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

0.6%

0.7%

0.8%

0.9%

FMCG Nielsen Average FMCG IPA Average

Mkt

sha

re g

ain

per 1

0% p

oint

s ES

OV

(% p

oint

s)

The difference between traditional and multi-channel campaigns

1.1%

2.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

Traditional advertising alone Advertising plus other channels

Mkt

sha

re g

ain

per 1

0% p

oint

s ES

OV

(% p

oint

s)

Communications channels used

TV enhances campaign efficiency

0.9%

0.5%

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

0.6%

0.7%

0.8%

0.9%

1.0%

Campaigns using TV Campaigns not using TV

Effic

ienc

y: M

kt s

hare

gai

n pe

r 10%

po

ints

ESO

V (%

poi

nts)

Campaigns 2004-2010

On-line enhances TV effectiveness

63% 71%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Campaigns using TV without on-line Campaigns using TV + on-line

Effe

ctiv

enes

s su

cces

s ra

te %

Why some metrics can be damaging to effectiveness

How campaigns drive growth

Communications strategies

•  Effective campaigns aim to change behaviour.

•  Some try to do this in a primarily rational way, some primarily use emotions, and some use both.

•  Rational campaigns are the most common, but…

Emotional strategies are more profitable

16%

26%

30%

0%

5%

10%

15%

20%

25%

30%

35%

Emotional Combined Rational

Campaign strategy

V l

arg

e p

rofi

t g

ain

s (

% r

ep

ort

ing

)

Emotional campaigns outperform on almost every metric

…yield stronger business results

28%

11%

4%

31%

56%

26%

5%2%

27%

47%

0%

10%

20%

30%

40%

50%

60%

Sales Share Price

elasticity

Loyalty Penetration

Metric

Very

larg

e e

ffect

rep

ort

ed

%

Emotionalcampaigns

Rational campaigns

…build stronger brands

40%

32%

28%

20% 22%

14%

6%

34%

13% 13%

8%

13% 12%

5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Awareness Fame Differentiation Commitment Image Quality Trust

Very

larg

e ef

fect

repo

rted

%

Metric

Emotional campaigns

Rational campaigns

The dangerous exception

38%35%

28%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Emotional Combined Rational

Campaign strategy

V la

rge

shor

t ter

m d

irec

t eff

ects

(% r

epor

ting)

The most powerful strategy?

34%

28% 26%

16%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Fame Emotional involvement

Combined emotional & rational

Any rational

Very

larg

e pr

ofit

gain

s (%

repo

rtin

g)

Communications strategy

The power of Fame

34%

6%

53%

13%

32%

22%

3%

50%

9%

30%

0%

10%

20%

30%

40%

50%

60%

Profit Price sensitivity

Sales Loyalty Penetration

% a

chie

ving

ver

y la

rge

effe

ct

Business metric

Fame campaigns achieve broader business success

Fame campaigns

Other campaigns

Fame campaigns are more efficient

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

-40% -20% 0% 20% 40% 60% 80% 100%

SOM growth

ESOV

Fame campaigns are 2.3 times more efficient

Other campaigns

Fame campaigns

Implication for targeting

•  Fame is the antithesis of tight targeting – ‘waste’ can be good

•  By getting a brand and its marketing talked about: –  Give the brand a sense of stature and authority beyond its actual

size –  Turn consumers into brand advocates

The ultimate data challenge

The dominant driver of effectiveness

The impact of creativity

•  16 years of data –  367 campaigns –  65 creatively awarded –  20% international

•  Comparison of the efficiency of creatively awarded vs non-awarded campaigns

How ESOV drives growth: overall efficiency for the sample

On average 1.3 points of share growth per 10 points of ESOV

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

-60% -40% -20% 0% 20% 40% 60% 80% 100%

SOM growth

ESOV

How ESOV drives market share growth

99% confidence

Efficiency of non-creatively awarded cases

On average 0.8 points of share growth per 10 points of ESOV

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

-60% -40% -20% 0% 20% 40% 60% 80% 100%

SOM growth

ESOV

Efficiency of non-awarded campaigns

99.7% confidence

Efficiency of creatively awarded campaigns

On average 5.4 points of share growth per 10 points of ESOV

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

-60.0% -40.0% -20.0% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

SOM growth

ESOV

Efficiency of creatively awarded campaigns

99.9% confidence

The power of creativity is clear

~7:1 advantage in terms of efficiency

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

-60.0% -40.0% -20.0% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

SOM growth

ESOV

Comparison of the efficiency of awarded and non-awarded campaigns

Creatively awarded

Non-creatively awarded

Non-awarded campaigns are becoming less efficient

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

-60% -40% -20% 0% 20% 40% 60% 80% 100%

SOM growth

ESOV

The efficiency of non-awarded campaigns has fallen over time

Pre 2004

2004 & post

Whereas awarded campaigns are becoming more efficient

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

-60% -40% -20% 0% 20% 40% 60% 80% 100%

SOM growth

ESOV

The efficiency of creatively-awarded campaigns has risen over time

Pre 2004

2004 & post

Now ~12:1 advantage in terms of efficiency

How does creativity appear to work?

0%!10%!20%!30%!40%!50%!60%!70%!80%!90%!

100%!

Creatively awarded

Non-awarded

47% 35%

33%

31%

19% 34%

Pro

port

ion

of a

ll ca

ses

Communications model

Awarded campaigns are more likely to be emotional

Rational

Combined

Emotional

How does creativity appear to work?

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Fame Awareness

48%

23% 25% 25%

Perc

enta

ge re

port

ing

very

larg

e ef

fect

s

Creatively awarded

Non-awarded

+ -

So why is creativity getting more important?

0%

10%

20%

30%

40%

50%

60%

70%

80%

Pre 2004 2004 & post

28%

70%

18%

29%

% re

port

ing

very

larg

e fa

me

effe

cts

The widening fame gap

Creatively awarded

Non-awarded

The creative fame journey – the growing challenge for

measurement

The multi-channel idea makes non-holistic measurement irrelevant

The creative fame journey

•  From relying entirely on the popularity of great work to drive fame…

•  To developing on-line ‘collateral’ to drive and exploit the fame potential of a great idea

Mercedes Germany

Barclaycard

Barclaycard

Gillette India

Yellow Pages NZ

Source: CAANZ

What can we do about it?

Common practice

•  Measure volume

•  Measure loyalty

•  Measure brand awareness

•  Measure immediate response

•  Promote rational communication

•  Suspicious of creative awards

Best practice

•  Measure price elasticity

•  Measure advocacy

•  Measure brand fame

•  Measure long term effects

•  Promote emotional engagement

•  Reward creative awards

Further reading

Thank you