In an environment where consumers stop to think before they buy, marketers are increasingly challenged to find ways to appeal to them.
But appealing to them is just the first step; the payoff comes only when their brands and products end up in consumers’ carts.
Marketers in India spend over $5 billion each year, but it’s estimated that up to 30 per cent misses its mark. That’s $1.5 billion in wasted marketing spend each year! And the fragmented media landscape isn’t helping matters, as companies are finding it progressively difficult to capture mindshare in the segments they serve.
To guide marketers through their budget allocations and increase their returns on investment, Nielsen has developed a seven-step framework to help them battle today’s challenges. The framework, which is called the Media Compass, shares uncommon ways in which one can optimize seven steps that help determine a marketer’s choice of media, timing of exposure and the size of investment. This framework is based on nearly 1100 studies across 98 categories carried out globally in the area of Marketing Mix, looking through the lens of Neuroscience.
1. Choosing the optimal media mix
Explore unconventional media outlets to break the industry clutter
TV is the dominant mode of advertising for fast-moving consumer goods (FMCG), while the service industry puts most of its ad dollars to work in digital advertising. Nielsen studies point out that online industry promises the maximum return on investment (ROI) globally and in the Asia-Pacific region followed by magazines, radio, television and newspapers. Shifting spends towards the digital medium is imperative. Evaluate current ROI for your brands across media platforms.
2. Supporting new brands beyond early launch
It is crucial to maintain support for new brands in the first year and into year 2 and 3 to maximise trial.
After analysing over 560 initiatives in the FMCG market in the last two years, we classified brands based on the growth observed in year 2 over year 1. Brands that grew by over 10 percent were classified as ‘up’ and brands that declined by over 10 percent were classified as ‘declining’ brands. The rest were classified as ‘stable.’ One of the key factors influencing brand growth on analysing these new launches was the difference in the sheer level of media support provided. The support for brands that were stable or growing was over 50 percent higher as compared to brands that didn’t succeed.
3. Maximising the Halo Effect
Advertisers need to balance the spend between the parent brand and line extensions carefully to drive portfolio sales
Advertising drives volume for the brand being directly promoted. However, such advertising may also drive volume for a sister brand if there is a connection between the two brands in the consumer’s mind. It’s called Halo Advertising Effects, as opposed to direct advertising effects.
4. Brand budgets – incorporate sponsorship for building equity
They can be a great way to drive volume with no detriment to ROI.
Bigger budget brands can afford higher levels of advertising spend. If the budget allows, they should consider sponsorships as part of their media plans. Nielsen studies show that Gross Rating Points (GRPs) spent on sponsored programs, or impact GRPs, generate very high sales volume, and are generally three times as effective as regular GRPs.
Their high costs (almost three times that of regular GRPs) are offset by the volume benefit, and hence there is no negative impact on ROI.
Brands with smaller budgets are often unable to take advantage of such sponsorship programs. Such brands should maximize efficacy of their spends by executing within optimal GRP ranges, considering shorter length copy and ensuring good copy quality.
5. The flighting opportunity
Establish the optimal range of GRPs for your brand and spend within it to maximise ROI.
The economic principle of diminishing returns exists in media planning too. The volume response due to TV advertising is not linear, and shows a pattern of diminishing returns beyond a certain point.
Nielsen research across multiple brands shows that more than 2/3rd of the GRPs during a given week’s TV advertising are suboptimal (either too low or too high), suggesting considerable scope for GRP optimization.
6. Timing it right
Longer-duration ads are needed to convey a new or complex message, while shorter ones can suffice as reminder messages. Currently, however, 80 percent of TV advertising uses the longer form, with no variety in message.
Now that the TRAI (Telecom Regulatory Authority of India) has capped total duration of ads at a maximum of 12 minutes per hour (10 minutes for brand commercials and 2 minutes for the channel’s own promotions), it becomes even more important to reconsider the duration of your ads.
The most critical question for the marketer therefore is - which parts of the copy can be cut out, and which parts are essential to the message?
Integrate your marketing and sales efforts to benefit from synergies
In India, we have seen synergistic effects among various set of brand drivers – for example, above the line (ATL) efforts and below the line (BTL) and distribution, print and radio etc. A study conducted to test synergies between ATL & BTL activities among 25 categories revealed that a vast majority of companies do not integrate their ATL and BTL efforts. The 20 percent companies who do integrate ATL and BTL efforts witnessed about 5-8 percent extra sales growth. The various budgets combined create an impact greater than the sum of their individual impacts.
Ultimately, individual brands will need media plans tailored to their unique situations, based on findings specific to their category and company. In the quest for higher return on investment and greater marketing effectiveness, the importance of marketing mix optimization and media planning cannot be overlooked. Companies that have adopted a data-driven approach to marketing planning have achieved higher returns and thereby reduced their waste in terms of spends as well as efforts.
This study is authored by Nitya Bhalla, Executive Director, Nielsen India and Deepika Goel, Associate Director, Nielsen India with inputs from Shila Schoots from Nielsen Retail Audit Team.