Best Practices: Advertising and Marketing
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1 Ad Dynamics Best Practice Series Best Practices: Advertising and Marketing Insight into developing a plan for cadence, volume, themes and versions Before Category Managers and Merchants pick and choose the promotional space allocated to different product categories, Advertising teams and Marketing Managers face the tall task of building the base structure to a winning promotional plan. Every week throughout the year, circular drops, changes to social media sites and websites, and blasts sent to shoppers are carefully scheduled, refined, and approved for execution. Advertising teams work each week to determine the appropriate cadence for promotions from print to , along with the optimal characteristics for each promotion in particular, page counts for print circulars. The Marketing Team then builds upon the promotional schedule through the development of attractive themes and events, creative subject lines for s, and strategic versioning based on a variety of demographic criteria. The goal for these teams is simple: plan a promotional calendar that will be most effective in attracting shoppers to the store, or to the website, to maximize sales opportunities. This goal is arduous, however, as each retailer faces a sea of competitive promotional strategies that are designed to steal traffic away from their stores and websites. The rigorously competitive promotional landscape makes it essential that Advertising and Marketing teams leverage promotional intelligence to ensure that their plan takes into consideration competitive influences in the market. In this Ad Dynamics Best Practice Series, we will examine some of the top challenges facing Advertisers and Marketers from a competitive promotional perspective, and recommend some best-in-class strategies to address those challenges. The reporting and analysis to follow is intended to assist the teams responsible for developing the promotional calendar by using a calculated, data-supported methodology to determine optimal promotional cadence, volume (page counts), versioning (by market, assortment, or page count), and messaging (themes/events) relative to competition. Key Takeaways Always incorporate competitive promotional data into planning promotional drop cadence for both print and digital, and adapt your strategy where necessary. Monitor the total number of and social media promotions you offer shoppers relative to your competition for key event periods, rather than simply tracking day-today activity. Never assume your competition ran the same promotional version across all markets, both in terms of page counts and product mix, particularly during big versioning events like Spring/Summer holidays and Back to School. The effective use of themes and events can differentiate your promotional engagement from your competitor s. Ensure you have an understanding of how and when your competition uses themes in the circulars, web promotions, s, and social media platforms, and realign your theme and event strategies to make your promotion more attractive to the shopper. Learn More For more insight into the entire promotional landscape or an analysis of your digital and print strategies, call at or perspectives@addynamics.com.
2 Challenge 1: Promotional Drop Schedule vs. Competition One of the first orders of business for Advertising teams is creating a promotional schedule. On which weeks should we run print circulars and which weeks will we be dark (i.e. not run a print circular)? Figure A: YOY comparison of circular drops by week Which weeks will our website, blasts, and social media sites support our circular messaging? Which weeks will we target for more limited or versioned distributions? All these questions need to be answered prior to determining category and product mix, pricing, printing or production, and distribution. Creating a competitive circular drop calendar helps to understand on which weeks your competition is likely to publish a print promotion or send out an promotion. Figure A above provides a simple example a year over year weekly view of circular drops for our subject Retailer, and their top four competitors. During the four week period leading up to Memorial Day 2012 and 2013, our subject Retailer dropped one circular per week. Competitor D published more circulars than any other competitor competitor, dropping at least one circular per week, and multiple circulars twice in 2012, and once in The other three Competitors each had dark weeks leading up to Memorial Day. Depending on how traffic and sales numbers performed throughout the season, there are opportunities for the subject Retailer to adjust the circular drop schedule to better optimize their promotional calendar and allocation of resources. For instance, on week starting 5/26/13, three of their four competitors did not drop a circular. If the Retailer saw sales growth on that week year over year, then a case can be made to keep that drop on the calendar. If they remained relatively flat year over year, or even lost sales, then promoting on that week may not be worth the investment, as the Retailer can infer that their competition will not promote. The creation of a promotional calendar should integrate both print and digital media to gain an understanding of all competitive promotional engagements influencing shoppers. Digital Advertising teams work day-to-day to make sure the retailer website is refreshed with strategic messaging, and that cadence captures the shopper s attention without being overbearing. Figure B shows a sample of the Ad Dynamics Calendar View for one retailer. This view differs from the weekly ad calendar in Figure A in that it provides daily reviews of promotional activity (and count of products) across multiple media that will provide answers to questions regarding Figure B: Promotional calendar view your competitors ad calendars. How often does my competitor change their home page? How many promotions do my competitors send out each week? On which days do my competitors typically send these promotions? Expanded over a longer period, both retailers and manufacturers can use this view to understand digital promotional patterns among their competitors, and develop a strategy that best combats the cadence of competitive promotions. 2 Ad Dynamics Best Practice Series
3 Challenge 2: Page Counts vs. Competition Once a strategy for promotional cadence is determined, Advertisers then need to develop a promotional volume plan. In many ways, this step in the promotional planning process is the most difficult to refine, as there is more year-over-year variability in page counts and digital promotional volume than in cadence. Finding opportunities to either cut or increase promotional volume can help manage production costs for the Advertising team, while optimizing the promotional exposure to shoppers. A best practice for adding a methodical approach to your promotional volume planning is the use of a summarized page count trend by week for your top competitors. In a summary report like Figure Figure C: Summary report of page counts by week C, Advertisers can very quickly reference the week for which they are planning, and understand not only whether their competitors page counts are trending up or down over the past few years, but to what extent. There are few interesting trends that occurred in the example below as well. First, on week starting 12/2/12, the subject Retailer and Competitor A saw an opportunity to scale back their page counts, given that Competitor B ran 20 fewer pages than them in However, knowing they lagged extensively behind our subject Retailer and Competitor A, Competitor B increased their page counts dramatically in 2012, far surpassing the volume of their two competitors. Competitor B also increased their print volume the following week to try to bridge the gap in advertising from The report below serves as a real example of how competitors respond to one another by analyzing volume trends by week, and is a simple input into the planning process that will allow for strategic, data-driven changes to a retailer s promotional plan. Measuring promotional volume in the digital space is a distinct process from that of print, particularly for and social media promotions. There are no page counts to measure over time, so the volume numbers for and social should be measured differently. For instance, the total number of s sent to shoppers during key selling periods is a useful measure of promotional volume. If you know your top competitors ran an average of six promotions during the week of Black Friday, that helps you make the decision based on your strategy to either adjust or stay the course. Similarly for social media, knowing the total number of promotions hitting shoppers during a given time frame will provide a competitive benchmark against which you can base your strategy. Figure D illustrates a basic Ad Dynamics digital volume report for the four weeks leading up to Christmas For the four week season, digital volume for our subject Retailer lagged substantially behind the majority of their competition, with less than half the volume of Competitor B, and just over half the volume of Competitors A and C. Depending on our subject Retailer s strategy, this analysis lends itself to prompting a larger investment into digital for December 2013, particularly if reaching the younger audiences that consume these digital media is of importance to them. Figure D: Digital volume report The Power of Market Intelligence 3
4 Challenge 3: Market Versioning vs. Competition Though some retailer channels do it more than others, versioning is still a critical ingredient to the promotional planning process for all retailers, in one form or another. For some, market to market product and page count versioning is a key component to their circular, website, and strategy. For others, versioning between print and digital circulars is characteristic of their promotional engagement with shoppers. Versioning allows retailers to differentiate their promotional impact from their competition by targeting different segments of their shopper base with unique offers. Figure E: Ad pulsing by market Tracking competitive versioning is necessary for retailers to ensure that their own versioning efforts are not overshadowed. There are a variety of different Ad Dynamics best practices to help determine the best weeks, markets, and media types to version, based on past versioning patterns of competitive retailers. Figure E shows the pulsing of ad drops for one retailer across 10 of the top US retail markets. As you can see, for this particular retailer, ad drops vary depending on the week and the market. If this retailer was a top competitor for a leading Mass merchant, that Mass merchant could reference the chart below and know that additional promotional advertising may be needed in the Atlanta market on the week starting 8/5/12, while on week starting 8/19/12, Atlanta may require less. The Mass merchant s strategy will ultimately determine the course of action to respond to this competitive versioning. The key takeaway is that the merchant now knows with a level of certainty where and when this particular competitor versions. Certain retail channels need to not only worry about volume versioning by market, but also product versioning by market. The Home Hardware and Office Channels, in particular, struggle to find the right mix of products for the key spring season and Back to School season events, respectively. The product mix at Home Hardware stores is influenced by climate variations across the US, thus making certain products less relevant to promote in certain markets (for example, snow throwers in Miami). Similarly, Office stores version product mix based on school start dates, which vary from state to state. These environmental factors force retailers in these channels to flight their circulars so they have the greatest impact on the audience they are targeting. Figure F: Ad images by market Figure F exhibits Ad Dynamics s market-by-market image reporting, which affords retailers and manufacturers visuals of the front page versioning occurring on any given week during their key selling seasons. Note that each of The Home Depot front pages featured a different flower as the feature item, depending on the market. On the same week, Lowe s pushed five different flowers in five key markets as well, hoping to win the targeted shopper bases against The Home Depot. This view enables retailers to determine the extent of the product versioning their competitors executed in past years, and make adjustments to the number of different versions the Advertising and Production teams need to plan for in the upcoming season. 4 Ad Dynamics Best Practice Series
5 Challenge 3: Market Versioning vs. Competition (continued) Figure G: Percentage of total online and print Still another form of versioning takes place between retailer print and online circulars. Print vs. online versioning is a more recent phenomenon than market versioning, yet retailers from all channels of trade have ramped up their usage of this form of versioning as traffic to their online circulars has increased. Best Buy, for instance, posts the same pages they run in print on their online circular, and an additional online exclusive set of pages that is regularly longer than their print publication. Knowing who among your competition is leveraging online circular versioning, and to what extent, can help explain lifts and dips in sales for certain categories, and assist in adjusting versioning plans to combat those competitive threats in future weeks. To understand the extent to which a competitor is using online circular versioning as a promotional tactic, a Ad Dynamics page count chart by media type offers quick insight. Figure G shows the percentage of total pages online and print inserts made up for a single retailer during a set time period. This particular retailer allocated roughly two-thirds of their overall page count to online circulars over double the print total. This chart provides not only a method for understanding how your competition leverages the digital circular, but also illustrates the extent of the versioning taking place. Challenge 4: Themes/Events vs. Competition Up to this point we have discussed more measurable functions within the Advertising and Marketing roles, as cadence, volume, and versioning can all be tied back to numbers or counts. Though some creativity is needed for creating an effective strategy for each of those functions, the process of determining promotional themes and events is more difficult to measure. Marketers use themes and/or events to capture the shopper s attention and incent them to come to their store, rather their competitor s. A retailer may have the best Super Bowl sale, for example, but if their Super Bowl event fails to capture the shopper s attention, they risk losing the shopper despite having better deals. Marketers have started using themes and events nearly every week to attract their shopper base to the store or to their website. Of course, the larger shopping events such as Black Friday, Back to School, Thanksgiving, Christmas, etc., receive the most of promotional support across all media types, yet more and more retailers are running small events every week, like a 20% Off Sale, or a general, Clearance Event. It is an easy and effective strategy for marketers to create these events without actual occasion. Because the strategy is so widely used among retailers from all channels, including analysis of competitive themes and events in the promotional planning process is a necessity. Figure H: Executions of Thanksgiving theme Some effective best practices for monitoring competitive themes and events can be found in Ad Dynamics s image reporting. A critical consideration when planning out your own themes and events is being able to see how your competition executed their theme for the given week. Figure H shows several different executions of the Thanksgiving theme across competitive grocers. Giant-Landover and Hannaford both used a fairly standard Happy Thanksgiving theme, while Stop & Shop ran a theme that showed a bit more intimacy with their shopper base, saying Your Holiday Safeway went a different route than the other three by making sure to keep their focus on the deals, rather than the holiday event itself. The Power of Market Intelligence 5
6 Challenge 4: Themes/Events vs. Competition (continued) Themes on the front page of a circular or at the top of a retailer blast have the first and largest impact of a shopper s perception of that retailer s sale event for the week, yet it is not the only chance a retailer has to influence shopper perception using themes. Many marketers have started to use themes for the sub-sections in their print, online, and promotions. Figure I again shows Ad Dynamics image reporting, but this time for some of the common sub-section themes. Whether the theme shows a sale for a holiday or a sale for one category, themes and events are being used well after the first point of influence as further incentive for the shopper to buy from that particular retailer. Figure I: Subsection themes Though the creation of a unique, differentiated theme is more of an art for marketers than an exact science, there is an easy way to insert some science into the process to help marketers keep their strategy in check. Figure J shows a Ad Dynamics theme summary by retailer. This particular report sums the number of times our subject Retailer has used various themes relative to their competition, functioning as a benchmark for the Retailer to compare their own strategy against. Competitor B in this example ran 17 general Sales events during the focus period, while our subject Retailer used a variety of different, more specific themes, from 50% Off Sale to Dollar Days. This report quickly allows marketers to see how often their competition runs different themes and events, and sets a baseline for any changes needed to their own strategy based on those competitive themes. Figure J: Theme summary by retailer In Summary Advertising and Marketing teams have the difficult task of determining what combination of promotional schedule, volume, versioning, and themes and events will drive the most traffic and attract shoppers away from their competition. Ad Dynamics s Best Practices for Advertisers and Marketers helps place a methodology around each of the business challenges individuals in these roles face on a daily basis. This methodology enables Advertisers and Marketers to make data-supported decisions about their promotional strategy that will ultimately give them a competitive advantage in their promotional planning and execution process. 6 Ad Dynamics Best Practice Series
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