SUMMARY: Today’s tough economic marketplace, coupled with highly price-conscious consumers, is forcing companies to take a look at which marketing activities maximize their return on advertising dollars. Nielsen has developed eight guiding principles to show marketers how to increase ad effectiveness.
With consumers becoming increasingly price conscious in a highly competitive marketplace, maximizing the return on their advertising spend is more important than ever.
Marketing return on investment (ROI) is the amount of sales achieved for every dollar spent on marketing/advertising. In today’s tough economy, measuring this return is vital to ensure that ad dollars are allocated to those activities that best maximize sales. The steps necessary to achieve the greatest return differ across brands, and an evolving tailored strategy is necessary.
Measuring marketing performance at the brand level will ensure that good advertising spend isn’t thrown behind underperforming marketing tactics. Through numerous studies conducted worldwide, Nielsen found that the average short-term ROI (sales within three months of media execution) is 9%.
Room for improvement
When looking at the overall efficiency of marketing strategies in achieving that 9% return, Nielsen discovered that there is room for improvement. Research found that, on average, advertising effectiveness could be increased 30–40%. The only investment necessary to achieve this increase is to take a closer look at how well each media and promotion type worked for each brand.
Eight guiding principles can help marketers maximize ROI.
An advertising campaign is only effective in building sales if the right marketing tactic is employed. Online campaigns and co-op programs are effective in boosting short-terms sales, while television and PR remain key to ensuring long-term brand loyalty.
The Internet is a powerful medium that can reach billions of consumers. To capitalize on its reach, you need to understand the percentage of the target market using the web, how they use it and for how long. Then tailor the campaign accordingly.
Unlike daily newspapers that have a broad reader base, magazines have a clearly segmented target group. In addition, newspapers are disposable, whereas magazines are read after their published date.
Marketing initiatives that positively impact the sales of the advertised brand and other brands in the portfolio should be invested in further.
TV advertising remains the most valuable driver of brand equity due to its effectiveness at building brand awareness and subsequently sales. TV’s residual effect on stimulating sales is greater than any other media.
Regardless of the media being consumed, a constant brand message must be conveyed tailored to how the consumer interacts with that specific media.
Excessive discounting and promotion erodes the brand’s equity. Using displays and features are more useful at building long-term incremental sales due to its emphasis on building brand awareness and value.
Although more costly in the short-term, an expensive giveaway can deliver better long-term sales volume because of the perceived value to shoppers.
Marketers have the opportunity to optimize advertising effectiveness by up to 40% by being mindful of how each piece of the marketing mix performs for each brand.