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Introduction 4
Management summary 6
Contacts 18
Additional reading 18
Appendix 19
Glossary 22
Foreword
We are indebted to Nielsen Analytic Consulting, the econometrics
arm of Nielsen, for rising to the challenge we gave them to validate
(or disprove) the relationship between a brand’s share of voice and
its share of market.
Nielsen’s analyses provide finance directors, marketing directors and agency directors
with the market-based metrics and benchmarks they need to plan marketing
expenditure and assess agency performance.
It’s a wake-up call to those marketing clients who set unrealistic targets; those finance
directors who negotiate unrealistic budgets; and those agencies who accept PBR terms
and conditions without checking the small-print.
Its publication is timely for the industry, being at a point when second half-year budget
revisions are being made and plans for the year ahead are beginning to be considered.
Hamish Pringle
IPA Director General
Introduction
In a difficult economic climate, extremes apply. Some
companies go under, others grow at their expense. All
previous recessions have taught us that in periods of
downturn the strong tend to get stronger, and the weak tend
to go to the wall. This is not comforting reading, but it is
typical, and there are reliable precedents. Janet Hull
What is true of companies is especially true of brands. Strong brands, able to invest in
a period of uncertainty, can gain share relatively cheaply because the competition for
media reduces, rates are lower, and weaker competitors disinvest, thus increasing the
strong brand’s relative share of voice.
Determining the relationship between share of voice and share of market in order to
guide investment strategy in difficult economic circumstances may not be fashionable,
but it is no less relevant for that. Marketers must pay heed to this key relationship and
use it as the basis for setting their brand communications budget. This new publication
helps them do just that. It interrogates old truths, re-asserting their relevance, and
their application.
The relationship between market share and share of voice has been a topic of discussion
in marketing circles for many years. Indeed, the IPA first published PIMS analyses in
2003 and again in 2008. But it is in the last two years that interest has been reawakened
in this subject, with the publication of telling evidence from the IPA dataBANK
of effectiveness cases in Marketing in the Era of Accountability, an IPA/WARC
publication authored by Les Binet and Peter Field.
Their analysis of a sample of 123 cases, from the 880 under investigation, established
important new benchmarks for relating required share of voice to share of market targets.
Of course, the analysis provided by Les and Peter was derived from an elite source
- the IPA Effectiveness Awards cases - which are ‘best in breed’, rather than typical
everyday campaigns. There is, therefore, a risk that they will present unrealistic and
unrepresentative scenarios rather than everyday benchmarks, despite the use of a
statistical technique (Tobit) in the analysis to estimate the relationship for everyday
campaigns. The cases in the IPA dataBANK also cover a 30-year time span from 1980
to 2008, during which time the communications landscape has changed radically: some
now question whether a relationship between SOV and SOM exists at all in the digital
era and so for that reason the contemporary relevance of the analysis is sometimes
questioned.
To address these issues once and for all, we designed the project which forms the basis
of this publication, and of an IPA seminar given on 9th June. The idea was to replicate
the IPA analysis, but with Nielsen’s fully representative and contemporary database
of FMCG brands’ sales and their media impacts. By comparing and contrasting the
findings of the IPA dataBANK with Nielsen, not only would the true nature of the
relationship between SOV and SOM be revealed for everyday campaigns, but the
validity of the IPA data and its analysis would also be examined.
The project also drew on largely unexplored IPA data on different market sectors,
residing in the online appendix of Marketing in the Era of Accountability, as well as
new analysis of how the relationship between SOV and SOM varied for award winners
and non-winners. And from Nielsen it drew out revelatory data exploring differences
between brand leaders and challenger brands, and between brands with ‘new’ news and
established brands.
Finally, and perhaps most excitingly, by studying the differences between the two data
sets, it quantified empirically, for the first time, the real added value contributed by
campaigns with top quality strategies and executions.