IRI and Turner Find ROI Growth Potential for CPG Brands in a More Balanced Approach Between Promotion and Media Advertising
Tuesday, December 13, 2016
CHICAGO & NEW YORK — Dec. 13, 2016 — IRI®, the global leader in innovative solutions and services for consumer, retail, media and over-the-counter health care companies, and leading global media company Turner announced today insights from a study that revealed short- and long-term growth opportunities for consumer packaged goods companies by focusing on a more balanced approach between promotion spend and media advertising. CPG marketers spend as much as 66 percent of their marketing dollars on promotion; IRI’s analysis found that shifting even 10 percent of promotional spending to media advertising could increase ROIs by as much as 10 to 25 percent.
“A 10 to 25 percent increase in ROIs from a 10 percent shift makes a substantial difference for CPG companies as the choices for connecting with consumers increase,” said Bhanu Bhardwaj, principal of IRI Media Center of Excellence. “Today, many marketers are hesitant to switch their spending from promotions to media because they fear its short-term impact. However, our analysis shows that media and promotional spending produce a similar short-term ROI, yet a more balanced media investment brings an additional long-term ROI two to three times higher. And marketers measure their advertising success by leveraging the IRI Lift solution, which ties media exposures to actual offline purchases and optimizes in-flight media measurement and increases return on advertising spending.”
“We felt it was critical to remind advertisers of the risk that they take with trade promotion, which can not only harm the brand by training consumers to buy on a deal, but also sacrifice short-term and especially long-term ROI because of the strength of media and brand marketing,” said Howard Shimmel, chief research officer at Turner. “Building on this analysis, the ad capabilities that we’re establishing through Turner Ignite, from audience targeting to native advertising to social optimization, are even further enhancing the ROI that media can deliver.”
For this analysis that leverages three years of data, IRI and Turner mined marketing mix studies across 62 brands representing $20 billion in sales and $3 billion in marketing spend across food, beverage, health care, beauty and home care aisles. The research generated three key takeaways:
1. The short-term ROI of media investments is comparable to standalone promotional efforts; however, when considering the long term, the ROI of media spend is two to three times higher than promotion.
Over-promotion of CPG brands can “train” shoppers to buy products only when they are on sale, increase everyday price sensitivity and limit the ability to drive price increases, thereby contributing to a loss of brand equity. Focusing on a more balanced and resilient approach between promotion and media allows marketers to support a cycle of breakthrough, resonance and recall, which in turn brings stronger brand equity, more consistent growth and higher profit margin.
2. The short- and long-term benefits of media advertising are not limited to large brands.
While large brands are known to profit from media spending, smaller brands benefit as well, as media provides the opportunity to emphasize product benefits and other worthy differentiators. Over time, smaller brands that invest right in media generate higher growth.
3. A 10 percent shift in spend from promotions to media will substantially improve marketing ROI and support long-term brand growth.
Given the healthy short- and long-term impact of media advertising, marketers should realign a share of promotional dollars to media to stop brand erosion. This shift will enable marketers to reinforce brand equity, support shopper loyalty and drive consistent brand growth.
Developing a comprehensive media strategy is essential, and this study reinforces the power of good creative and targeting. By prioritizing advertising that conveys a targeted and contextually appropriate brand story, while leveraging the synergies of TV and digital, brands will create a positive ROI growth cycle and break away from the price-focused short-term impact and brand subsidization cycles created by promotions. Although a brand’s shift from promotional to media spending cannot be made overnight, the model needs to evolve to be consistent with how consumers shop to achieve long-term growth.
To download the full POV, please click here.
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IRI fundamentally believes that delivering differentiated growth for clients requires deep, highly integrated partnering with a variety of best-of-breed companies. As such, IRI works closely with a broad range of industry leaders to create innovative joint solutions, services and access to capabilities to help its clients more effectively compete in their various markets and exceed their growth objectives. IRI is committed to its partnership philosophy and continues to actively enhance its ecosystem of partners through alliances, joint ventures, acquisitions and affiliations. The IRI Partner Ecosystem includes such companies as Adobe, The Boston Consulting Group, comScore, Experian, GfK, Gigwalk, GuestMetrics, Ipsos, Kantar Shopcom, MasterCard Advisors, MaxPoint, Millward Brown Digital, Mu Sigma, Oracle, PlaceIQ, Research Now, SPINS, Univision and others.
IRI is a leading provider of big data, predictive analytics and forward-looking insights that help CPG, OTC health care organizations, retailers and media companies to grow their businesses. With the largest repository of purchase, media, social, causal and loyalty data, all integrated on an on-demand, cloud-based technology platform, IRI helps to guide its more than 5,000 clients around the world in their quests to remain relentlessly relevant, capture market share, connect with consumers and deliver market-leading growth. A confluence of major external events — a revolution in consumer buying, big data coming into its own, advanced analytics and automated consumer activation — is leading to a seismic shift in drivers of success in all industries. Ensure your business can leverage data at www.IRIworldwide.com.
Turner, a Time Warner company, creates and programs branded news, entertainment, sports, animation and young adult multiplatform content for consumers around the world. Turner brands and businesses include CNN/U.S., HLN, CNN International and CNN.com, TBS, TNT, TCM, truTV, Cartoon Network, Boomerang, Adult Swim, Turner Sports, Bleacher Report, iStreamPlanet and ELEAGUE.
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