For Retailers: The Impact of Online Advertising. Based on a meta-analysis of econometric studies by BrandScience

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1 For Retailers: The Impact of Online Advertising Based on a meta-analysis of econometric studies by BrandScience

2 Share of Media Mix Online Currently Receives a Low Share of Media Spend Current Media Mix Allocation for Retailers 30% 27% 27% 23% 20% 10% 10% 7% 6% 0% TV Print DM Online Radio Outdoor Cinema 0% TV Print DM Online Radio Outdoor Cinema 2 Source: Nielsen Media Research/BrandScience Estimates UK Retailers who spend 1m+ on advertising p.a. Only includes retailers who spend online. Includes Search.

3 The Section Key helps your audience track where you are in the presentation. It should live at the bottom of every page in your presentation. It is, of course, optional. But worth the trouble. THE SECTION KEY DOES NOT AUTOPOPULATE. If you move slides around within a deck, you ll have to redo it. Facts about online advertising for retailers: More efficient than TV The most efficient medium for online retailers Return on investment is yet to peak The performance of other media can be improved by spending more online 3

4 The Section Key helps your audience track where you are in the presentation. It should live at the bottom of every page in your presentation. It is, of course, optional. But worth the trouble. THE SECTION KEY DOES NOT AUTOPOPULATE. If you move slides around within a deck, you ll have to redo it. You only get out of something what you put into it. 4

5 Econometric Modelling Applying Maths to Marketing Marketing Activity Sales Pricing Market Share Drivers Performance Weather Customer Acquisition Competitor Activity Brand Perception 26 UK retailers who spend online 24 of those in top 100 retailers ranked by media spend 5

6 Calculating Revenue Return on Investment Revenue Gained Through Marketing Activity Cost of Marketing Activity = RROI 6

7 RROI Online is More Efficient than TV for Retailers The Section Key helps your audience track where you are in the presentation. It should live at the bottom of every page in your presentation. It is, of course, optional. But worth the trouble. THE SECTION KEY DOES NOT AUTOPOPULATE. If you move slides around within a deck, you ll have to redo it. Total Retail* % Media Mix Radio Print Online TV Outdoor DM 2% 41% 19% 16% 7% 14% 7 Based on a meta-analysis of econometric studies by BrandScience * Includes all 26 studies that were included as part of this analysis

8 Bricks & Mortar ( Offline ) Retailers The Section Key helps your audience track where you are in the presentation. It should live at the bottom of every page in your presentation. It is, of course, optional. But worth the trouble. THE SECTION KEY DOES NOT AUTOPOPULATE. If you move slides around within a deck, you ll have to redo it. 17 Studies Brands featured in this presentation are for illustrative purposes only and may or may not be included as part of the study - BrandScience Confidential 9

9 RROI Online is the Second Most Efficient Media Behind Print Bricks & Mortar Retailers The Section Key helps your audience track where you are in the presentation. It should live at the bottom of every page in your presentation. It is, of course, optional. But worth the trouble. THE SECTION KEY DOES NOT AUTOPOPULATE. If you move slides around within a deck, you ll have to redo it. Revenue Return on Investment % Media Mix Radio Print Online TV Outdoor DM 4% 40% 16% 20% 9% 12% 10 Based on a meta-analysis of econometric studies by BrandScience

10 Online Retailers 9 Studies Brands featured in this presentation are for illustrative purposes only and may or may not be included as part of the study - BrandScience Confidential 11

11 RROI Online is the Most Efficient Medium Online Retailers The Section Key helps your audience track where you are in the presentation. It should live at the bottom of every page in your presentation. It is, of course, optional. But worth the trouble. THE SECTION KEY DOES NOT AUTOPOPULATE. If you move slides around within a deck, you ll have to redo it. Revenue Return on Investment Radio Print Online TV Outdoor DM % Media Mix 1% 47% 29% 8% 4% 12% 12 Based on a meta-analysis of econometric studies by BrandScience

12 What can be gained from increasing the weight of online spend? Improved online ROI

13 Introducing Above and Below Median The Section Key helps your audience track where you are in the presentation. It should live at the bottom of every page in your presentation. It is, of course, optional. But worth the trouble. THE SECTION KEY DOES NOT AUTOPOPULATE. If you move slides around within a deck, you ll have to redo it. Below Median Above An equal number of campaigns above and below the median More accurate than mean average less skew to higher or lower spending campaigns 14

14 Online RROI Online RROI Increase Online Share to Increase Online ROI Online ROI vs Online Spend +127% % Below Median Above Median Online Spend 0.00 Below Median Above Median Online Spend 15 Based on a meta-analysis of econometric studies by BrandScience ROI Curve

15 Varying online spend can also affect the performance of other media Improved ROI for TV & Press

16 TV RROI TV RROI Increase Online Share to Increase TV ROI +146% Below Median Above Median Online Spend % Below Median Above Median Online Spend 18 Based on a meta-analysis of econometric studies by BrandScience

17 Print RROI Print RROI Print ROI Does Not Follow Suit % Below Median Above Median Online Spend Below Median Above Median Online Spend 19 Based on a meta-analysis of econometric studies by BrandScience

18 20 Print ads often have an offline call to action

19 Varying online spend can also affect the life of a campaign

20 Ad Stock Ad Stock Life of Campaign 100% 100% 5% 5% Time Carryover rate 90% Carryover rate 50% Campaign Activity 22

21 Online Life - Days Online Life - Days Increase the Life of Online Campaigns with More Online Investment Below Median Above Median Online Spend 0 Below Median Above Median Online Spend 23 Based on a meta-analysis of econometric studies by BrandScience

22 TV Life - Days TV Life - Days Make TV Campaigns Work Harder with Extra Online Spend Below Median Above Median Online Spend Below Median Above Median Online Spend 24 Based on a meta-analysis of econometric studies by BrandScience

23 Print Life - Days Print Life - Days Print Life Can Be Extended for Online Retailers Below Median Above Median Online Spend Below Median Above Median Online Spend 25 Based on a meta-analysis of econometric studies by BrandScience

24 What should the media mix be for the industry?

25 Total RROI Increase Overall Return on Investment Through Increased Online Spend Increasing Online Investment Current Industry Spend +30% % 15% 20% Level Of Online Investment 27 Based on a meta-analysis of econometric studies by BrandScience

26 Media Spend Allocation Reallocate Money to Online and Print from TV and Direct Mail Reallocating Spend for Maximum ROI 40% 35% 30% 25% 20% 15% 10% 5% 0% 37% 27% 27% 23% 20% 17% 13% 10% 7% 7% 6% 2.50 RROI 3.26 RROI 6% 0% 0% TV Print DM Online Radio Outdoor Cinema 28 Based on a meta-analysis of econometric studies by BrandScience

27 The Section Key helps your audience track where you are in the presentation. It should live at the bottom of every page in your presentation. It is, of course, optional. But worth the trouble. THE SECTION KEY DOES NOT AUTOPOPULATE. If you move slides around within a deck, you ll have to redo it. Recommendations: Retailers should increase the weight of online spend in order to: Increase online ROI Make TV and press work harder Improve efficiency of the entire integrated campaign In order to increase retention rates, retailers should explore more creative online executions and new messaging Based on this evidence we believe better creatives and more brand driven advertising will lead to better retention rates and therefore improved ROI 29

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