REDMOND, Wash., March 25, 2004 — A study unveiled today at the fifth annual MSN
Strategic Account Summit concluded that online advertising can produce significant increases in product branding and offline sales and that these effects can be achieved in a cost-efficient manner when compared with traditional marketing vehicles. In findings released today based on studies conducted between November 2003 and January 2004 of consumer-packaged goods (CPG) brands, results recommend levels of online spending that are dramatically higher than the average today (which is less than 1 percent*) within the CPG category. Researchers determined that online advertising generated lifts in sales ranging from 7 percent to 12.5 percent. In addition, when compared alongside ads in traditional media on a cost-efficiency basis, online advertising’s effect on sales at the study’s recommended levels outperformed the average of all marketing vehicles in the study by as much as 30 percent.
The first-of-its-kind research study was developed by a consortium of CPG companies convened by MSN last summer to address the increasingly critical question of advertising accountability. The consortium members include Nestl SA, Kraft Foods Inc. and Procter & Gamble, each of which submitted brands and campaigns for evaluation as part of the project. The resulting research study employed a media-neutral methodology developed by research firm Marketing Evolution and supported by the Advertising Research Foundation and the Internet Advertising Bureau.
The study comes at a time when advertising budgets are tight, marketers are under growing pressure for advertising accountability, and consumers are becoming harder to reach via television and other traditional media.
“This study answers one of the most important questions top of mind with today’s marketers: how to determine the best mix of online media with other traditional media to get the best return on investment,” said Todd Manion, director of e-business of Nestle Brands Company. “We participated in this study with MSN to help provide the accountability needed to establish the value of online advertising among the more traditional forms of media.”
Additional results from the study show that online advertising produced increases in key brand image attributes (+5 to +7 points) and purchase intent (+3 to +7 points).
“This study provides marketers with the research-based insight and guidance they need to get the most bang for their increasingly scarce advertising buck across a broad range of media,” said Joanne Bradford, chief media revenue officer for MSN. “We are delighted that marketers were willing to work with us to develop a method that adds new accountability to this entire industry.”
Beyond CPG brands, other categories of marketers can replicate this study and the methodology behind it to define the optimal media mix for their industries.
Study Offers Complete Picture of Advertising Impact
The study predicts that marketers will achieve the best results through optimal media investment in the right mixture of online and offline advertising. Based on the findings, the recommended proportion of online advertising for the participating CPG brands should be at least 5 percent of a total marketing allocation, and potentially higher depending on specific marketing objectives.
“This study creates a media-neutral, gold-standard measurement standard that the industry can apply to improve the performance of its overall marketing investment,” said Rex Briggs, managing partner at Marketing Evolution. “MSN and others that took part should be commended for making it possible to conduct this study and develop a 360-degree brand and sales measurement approach that benefits the entire marketing industry.”
Experimental Design and Marketing Mix Integration Differentiate Study
To provide results that further quantified the value of advertising to go beyond studies currently available, Marketing Evolution developed an in-market experimental design and tracked specific respondent-level purchase data. Study participants were randomly divided into test and control groups, with adjustments made to account for any differences in purchase histories. During the study the test group viewed advertising for specific brands, and the control group viewed “placebo” advertisements. Study participants’ purchases were then tracked using different technology methods employed by established third-party sales reporting companies. Sales volume shifts were traced to see if advertising resulted in product purchases. The test group had to purchase more than the control group to demonstrate the effectiveness of the advertising. These results were then compared with traditional marketing mix models to define the optimal media mix for each CPG brand.
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* Knowledge Networks/SRI
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