Consumer packaged goods (CPG) brands can experience a return of almost three dollars in incremental sales for every dollar spent in online advertising that has been precisely delivered using purchase-based information, according to research from Nielsen Catalina Solutions (NCS), a leader in measuring and improving advertising performance using purchaser-based analytics.
These findings, based on what NCS believes to be the most in-depth study on the correlation between online advertising and offline purchase, indicate a turning point for the digital medium as marketers seek to better leverage their advertising budgets across multiple channels.
“Not only can we prove that online advertising drives sales, but the returns on ad spends are significant when purchaser-based data is used to optimize the media buy,” said Mike Nazzaro, CEO of Nielsen Catalina Solutions. “The marketer’s ability to precisely reach the desired consumer segment in the right media enabled by shopper-based analytics is changing the way advertisers plan and buy media,” Nazzaro said.
Nielsen Catalina Solutions and Nielsen completed more than 800 studies over the past seven years, collaborating with more than 300 CPG brands and 80 companies to measure the correlation between online advertising and offline consumer purchases.
A key metric for measuring campaign success is the ratio of the sales generated compared with the cost of the advertising, typically expressed as a cost per thousand or “CPM.” The incremental sales revenue per thousand households or “RPM” is compared with the advertising CPM to determine the return, or payback. According to Nielsen Catalina Solutions’ research, the average payback for all CPG categories was 2.79, ranging from 2.36 for food items to 5.29 for the pet category.
“These findings reveal an opportunity for advertisers to increase sales by leveraging purchaser data to improve media planning and buying. CPG marketers spent over $22 billion in total advertising in 2011, including $2 billion to $3 billion in the online medium,” Nazzaro said.
Nielsen and Catalina established Nielsen Catalina Solutions as a joint venture enabling the CPG advertising industry to understand how advertising influences purchase behavior for TV, online, mobile, CRM and print using single-source analytics. The joint venture integrates viewing data from Nielsen and directly from media companies and purchase data from Nielsen Homescan and Catalina’s shopper data warehouse incorporating a subset of over 60 million households from participating retailers.