How to win an advertising effectiveness award
14/06/06 03:06
Ehrenberg-Bass Institute researchers have come up with ways of maximising your chances of winning an advertising sales effectiveness award - and these guidelines have nothing to do with the quality of the award submission, or even the effectiveness of the advertising !
Advertising sales awards were invented as a contrast to awards for advertising creativity. Marketers said advertising is an investment, it's supposed to produce sales revenue that wouldn't have occurred without the advertising. So they came up with awards to recognise such advertising - and to encourage advertisers to produce sales effective advertising. In the UK these awards have run for many years under the auspices of.... In Australia the Advertisers Federation of Australia organises the awards. Last year Professor Byron Sharp, Director of the Ehrenberg-Bass Institute was on the judging panel. "Something I've noticed, in both the Australian and UK submissions, is that almost exclusively, marketers use weekly or monthly aggregate sales figures to assess the sales effects of their campaign. Not matter how they do their analysis, with econometric modelling or experiments across regions, they all rely on seeing movements in aggregates sales figures. No one, not even the judges, have stopped to ask how well such figures actually show up the sales effects of advertising."
It turns out that tracking movements in sales figures gives a partial view of the full sales effects of advertising. How much of the full effects they capture depends on a series of known conditions. In the right conditions a greater proportion of the sales effect will show up in the wwekly/monthly sales data - which then makes the advertising look more effective, irrespective of whether it is or not.
Here is the list published by the Ehrenberg-Bass Institute describing the conditions where sales effects will be more clearly seen in sales data:
1) When there is a big change in advertising spend.
You are more likely to be able to see a change in sales when there is a big change in advertising spend. A steady advertising spend, while extremely sensible and very sales effective, shows up as a flat line in terms of sales response - no way to win and award. Indeed the best response comes after a substantial pause in advertising.
Long ago advertising sales award judges realised that it was new products or re-launches that were winning all the awards. They don't let that happen now, instead a high proportion of award winners are companies that have turned advertising back on after a hiatus.
2) When a high proportion of those who saw the advertisement enter the category in the sales data period.
Advertising has the power to reach a lot of people. Using the big media like TV and newspapers, marketers can reach most people who buy from the product category. Yet few of these will buy from the category in the next few weeks or months. And even if advertising substantially enhanced their propensity to buy the brand, for many people that still means an actual purchase won't happen for many months or even years. So next week or month's sales figures only show a fraction of the total sales effect.
This varies by category, brands in categories with a high penetration rate in the period of analysis will see more of their sales effect in the current figures. People buy the category far more often than buy any particular brand so advertising for the whole category is more likely to show up. Category advertising has a natural (unfair) advantage in winning sales effectiveness awards (red meat advertising has been a big winner in Australian awards).
This effect also varies according to how the advertising has been targeted. You can show a bigger effect by targeting your advertising towards those most likely to buy from the product category in your analysis period. Advertising skewed to point of sale material is an example. Advertising that targets more regular buyers is another. Simply pairing the advertising with an in-store sales promotions is another. Even without having any greater sales effect these will produce more dramatic changes in current sales figures (and hence advertising elasticities).
3) When the recency effect is large, eg buyers screen out advertising until they are close to buying.
In some categories more of the advertising's sales effect naturally occurs on those who are about to buy. Car advertising, financial products, many durables like dishwashers, beds and sheets. In these categories we largely screen out advertising until we realise we need to buy soon, then we take particular interest in the advertising. This means that more of the advertising's total effect occurs quickly. Advertising is a little more likely then to show up as a spike in sales.
The real moral of the story is that looking at changes in weekly/monthly sales doesn't give a good indication of the sales effects of your advertising. Judges of advertising awards need to be aware of this. Otherwise they'll tend to award prizes to lucky rather than successful entries.
Advertising sales awards were invented as a contrast to awards for advertising creativity. Marketers said advertising is an investment, it's supposed to produce sales revenue that wouldn't have occurred without the advertising. So they came up with awards to recognise such advertising - and to encourage advertisers to produce sales effective advertising. In the UK these awards have run for many years under the auspices of.... In Australia the Advertisers Federation of Australia organises the awards. Last year Professor Byron Sharp, Director of the Ehrenberg-Bass Institute was on the judging panel. "Something I've noticed, in both the Australian and UK submissions, is that almost exclusively, marketers use weekly or monthly aggregate sales figures to assess the sales effects of their campaign. Not matter how they do their analysis, with econometric modelling or experiments across regions, they all rely on seeing movements in aggregates sales figures. No one, not even the judges, have stopped to ask how well such figures actually show up the sales effects of advertising."
It turns out that tracking movements in sales figures gives a partial view of the full sales effects of advertising. How much of the full effects they capture depends on a series of known conditions. In the right conditions a greater proportion of the sales effect will show up in the wwekly/monthly sales data - which then makes the advertising look more effective, irrespective of whether it is or not.
Here is the list published by the Ehrenberg-Bass Institute describing the conditions where sales effects will be more clearly seen in sales data:
1) When there is a big change in advertising spend.
You are more likely to be able to see a change in sales when there is a big change in advertising spend. A steady advertising spend, while extremely sensible and very sales effective, shows up as a flat line in terms of sales response - no way to win and award. Indeed the best response comes after a substantial pause in advertising.
Long ago advertising sales award judges realised that it was new products or re-launches that were winning all the awards. They don't let that happen now, instead a high proportion of award winners are companies that have turned advertising back on after a hiatus.
2) When a high proportion of those who saw the advertisement enter the category in the sales data period.
Advertising has the power to reach a lot of people. Using the big media like TV and newspapers, marketers can reach most people who buy from the product category. Yet few of these will buy from the category in the next few weeks or months. And even if advertising substantially enhanced their propensity to buy the brand, for many people that still means an actual purchase won't happen for many months or even years. So next week or month's sales figures only show a fraction of the total sales effect.
This varies by category, brands in categories with a high penetration rate in the period of analysis will see more of their sales effect in the current figures. People buy the category far more often than buy any particular brand so advertising for the whole category is more likely to show up. Category advertising has a natural (unfair) advantage in winning sales effectiveness awards (red meat advertising has been a big winner in Australian awards).
This effect also varies according to how the advertising has been targeted. You can show a bigger effect by targeting your advertising towards those most likely to buy from the product category in your analysis period. Advertising skewed to point of sale material is an example. Advertising that targets more regular buyers is another. Simply pairing the advertising with an in-store sales promotions is another. Even without having any greater sales effect these will produce more dramatic changes in current sales figures (and hence advertising elasticities).
3) When the recency effect is large, eg buyers screen out advertising until they are close to buying.
In some categories more of the advertising's sales effect naturally occurs on those who are about to buy. Car advertising, financial products, many durables like dishwashers, beds and sheets. In these categories we largely screen out advertising until we realise we need to buy soon, then we take particular interest in the advertising. This means that more of the advertising's total effect occurs quickly. Advertising is a little more likely then to show up as a spike in sales.
The real moral of the story is that looking at changes in weekly/monthly sales doesn't give a good indication of the sales effects of your advertising. Judges of advertising awards need to be aware of this. Otherwise they'll tend to award prizes to lucky rather than successful entries.