Econometrics How does it work for OOH?

Transcription

1 Econometrics How does it work for OOH?

2 Kinetic People projects from Consumer understanding to Media effectiveness Analysis Consumers Clients

3 Content 1. Why Use Econometrics? 2. Limitations of Econometrics for Out of Home 3. Out of Home successes using Econometrics 4. Examining other evidence of Sales Drivers

4 Why Use Econometrics? Econometrics has developed as a strong tool for predicting the effect of various activities on an outcome. It is now particularly widely used as a return on investment predictor for advertising campaigns, using short term sales as a determinant of success. As with any research technique, econometrics should only really be used to inform on ROI as part of a broader assessment of effectiveness. In particularly, when using econometric evaluation for Out of Home advertising, we should be well versed in the strengths and weaknesses of this approach, as well as the appropriateness of any specific campaign and communication objective. Econometrics is specifically relevant for assessing the short term sales effect of advertising, particularly for television campaigns where there is a surplus of high quality data inputs available. Any analysis should be used in isolation and be able to estimate the reliability of the findings. It is possible to calculate the payback return per investment unit against the given objective of short-term sales.

5 Some Limitations of Econometrics for Out of Home Mindshare s recent analysis for the OAA highlights some limitations we should consider when confronted with econometric modelling of campaigns. These all need to be put into perspective regarding the communications activity and objectives. Again, it is important to consider the results of econometric modelling alongside other evaluation techniques. Limitations in the technique concern data reliability and correct or understated attribution of effect. However, we are now seeing more evidence of successful Out of Home measurement from other work, including OMD s Brand Science

6 Key Findings of OAA Study Econometric modelling is a powerful technique that does have its limitations Econometric modelling typically estimates the ROI of outdoor to be lower than other media channels Measurement error can mean that econometrics systematically underestimates outdoor ROI Different approaches taken by econometric analysts may cause outdoor uplifts to be not measured or wrongly estimated The spread of results across different advertisers may be wider than for other media The true uplifts of a brand-building medium (like OOH) are underestimated by models of short-term sales The effectiveness of outdoor campaigns may be more dependent on creative quality than interruption-based channels

7 Limitations of Econometrics for Out of Home Econometrics can only reliably measure the impact of short-term sales, rather than any brand reinforcement or longer-term measure. - any brand equity effects that develop over time should be considered by other evaluation techniques. A rational measurement is only realistic where there is significant variation compared to other factors. - for activity that happens simultaneously, it is notoriously difficult to track a clear effect. With OOH often used as a secondary support medium and by definition therefore to make other media work harder - this will tend to attribute sales to a lead or complementary medium. The quality of available data for measuring OOH effects is a major concern. - whilst TV data can estimate daily impacts, OOH measurement against daily panel impacts is not practical. The effect of this measurement error can bias econometric ROI estimates to either attribute the impact (incorrectly) to other media or to simply measure the desired effect with less certainty. OOH advertising effect is inextricably linked to the strength of the creative; this may not be properly considered. Source: Mindshare / OAA / Kinetic

8 OOH Successes in Econometric Modelling Econometric analysis of over 400 campaigns has demonstrated that particularly at larger annual spend levels - OOH activity can generate strong profit levels. When Outdoor is used, TV performs better; print and online perform worse. Findings confirm that OOH advertising works best in certain sectors (e.g. telecoms, leisure, travel and FMCG), whilst print and online comes to the fore in others (e.g. driving financial service conversions). In addition, when production costs are considered as part of the cost analysis (this is not always the case), OOH becomes much more profitable, particularly relative to other media, including TV. One further reason that OOH works well is the carry-over effect of the medium, in that it can extend the life of a campaign in terms of consumer response and awareness, helping deliver a prolonged effect. Analysis of different media formats show that in FMCG, Outdoor advertising works well as part of a media mix, particularly alongside TV and Source: OMD print.

9 Revenue ROI: All Goods Radio and Online work well at low levels. Of Significantly used media, Outdoor performs best Incremental Sales revenue generated for each 1 of media cost Sample Set: All Results Vault studies by category from

10 ROI by sector: Services by subcategory Travel Telecoms Sample Set: All Results Vault studies by category from

11 Outdoor ROI vs. Outdoor annual spend Some evidence of benefits to increased outdoor spend 6 5 Outdoor Profit ROI Outdoor Product Profit ROI Poly. (Outdoor Product Profit ROI) Outdoor spend pa millions The line plots the best curve fit - We see a clear upward trend in ROI with increased spend - Some indications of saturation after 1.5m spend, or possibly benefits to spend > 3m Source: OMD

12 All FMCG: TV is only 5% more efficient than Outdoor advertising

13 All FMCG: If production costs are included, Outdoor becomes the most efficient medium Sample Set: All FMCG Results Vault studies ( ) with measured Outdoor RROI

14 FMCG ROIs over time: Outdoor is becoming more efficient, whereas TV is becoming less efficient Sample Set: All FMCG Results Vault studies ( )

15 Recommended Media Split for FMCG Out of Home at 16% Share of ATL spend TV 68% Print 17% Outdo or 8% Radio 3%

16 Some Insights on Econometrics Wider spread of results on OOH. (TV 4% to 8%) Creative impact! If a wholly brand-building campaign, then lowball effect is 30%; branding contribution to sales measured at 30% Effective at measuring media rather than individual components

17 Things to remember when applying Econometrics Econometrics best measures short-term sales against clear and variable activity. Most media campaigns should consider other effects and measure the effect of campaigns accordingly. Quality of available data makes or breaks an econometric model. In Out of Home, other research and our experience demonstrates the variation in effect of the creative, whilst the medium is often used best alongside other media or in a brand-building capacity.

18 People are spending less, but when they do they are seeking a higher quality experience AND things that offer value Value 2009

19 OOH Formats Driving Effect in combination with TV

20 TV + 6 sheets delivers larger incremental gains than TV alone Kellogg s TV + 6 sheet effect 1,600 1,200 Advertised stores Week 1 Test Control BASE PERIOD +35.4% Week 36 1, Non Advertised stores 6 sheet activity delivers an extra 8.6% increase Source: Litmus

21 Multiple Media Effect TV & OOH Numerous studies look at the impact of combined TV and OOH on High- Medium-Light viewers - light TV viewers results exceed recall metrics for other groups - Effectively brings attractive and lucrative light viewers into equitable Pre Post recall and recognition 66% Average of analysed findings 16% 7% 46% 10% 39% Light TV viewers Medium TV viewers Heavy TV viewers - Recall of message and consideration, all enhanced among light viewers by addition of OOH - Combination of OOH and TV spend quite influential behind creativity and actual weight of activity Source: JC Decaux, Clear Channel, Quaestor, Millward Brown

22 Andrex Sales Driver 2 Econometric Modelling conducted by OHAL They found that Total Andrex sales increase solely attributable to Outdoor was between +1.5% and +2.0% during the campaign, and continued for at least three weeks after the posters came down. Outdoor % Sales Uplift This is an impressive result for such a highvolume brand, especially when we consider that the Outdoor campaign followed 13 weeks of TV advertising week campaign Exact decay currently unknown % 15/04. 22/04. 29/04. 06/05. 13/05. 20/05. 27/05. 03/06. 10/06. 17/06. 24/06. 01/07. 08/07. 15/07. 22/07. 29/07.

23 Posters Work in Generating Awareness 80 Poster awareness Post campaign % Average post stage prompted awareness36% Source: Millward Brown/ Clear Channel Pre campaign %

24 Outdoor advertising works and influences choice Maltesers ** Exposed to Mars Exposed to Maltesers Brand brand Mars ** in favour of Maltesers Brand Score in favour of Mars Exposure to OOH advertising triggers people s visual recognition and memory in favour of the advertised brand as does information therein Average effect (differential) on exposed consumer of 35% across study Source: Kinetic Memory Study, Henley Centre

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