Sales uplift and ROI : “Sales Uncovered”

We can proceed from awareness and purchase consideration (previous section) to sales and return on investment. “Sales Uncovered” [71], published by PPA in May 2005 and part of a longer project called “Magazines Uncovered” [72], found that magazine advertising was associated with an average sales uplift of 11.6% and produced an impressive 12-month return on investment (ROI) of £2.77.

How the analysis was done

The study was an analysis of TNS Superpanel sales records and media exposure data. Superpanel’s 15,000 homes record their take-home purchases via bar-code readers and keypads, on a daily basis. The analysis examined purchasing records during the period August 2002 to February 2004. Panellists’ media exposure was measured through a self-completion questionnaire called mediaSPAN.

20 fmcg brands were selected for analysis according to detailed criteria, including the requirement that magazines accounted for at least 10% of the brand’s total advertising expenditure. The 20 brands were those which met the criteria and which spent the largest amounts on magazines. The cut-off point turned out to be a magazine expenditure of £325,000 or higher.

The NRS readership accumulation data were used for distributing across time, week by week, the exposures generated by each magazine insertion. This meant that a more realistic comparison of week by week exposures and purchases could be made, than in previous studies prior to accumulation data being available.

Taking each of the 20 fmcg brands’ campaigns in turn, Superpanel main shoppers were ranked according to the weight of their exposure to the magazine campaign. (A similar ranking was performed on weight of exposure to television advertising if appropriate.) The top 40% of main shoppers were defined as the ‘exposed’ group; in general, they accounted for about 90% of total magazine exposures. The bottom 40% of main shoppers in the ranking were defined as the ‘non-exposed’ control group; they only accounted for around 2% of total magazine exposures.

For each brand, purchases were analysed among the exposed group and the non-exposed control group, for each week during the campaign period, and during an equivalent pre-campaign period. Purchases during the campaign period were then compared with purchases during the pre-campaign period, separately for the exposed and non-exposed group. The analysis was therefore based on tracking the purchases of the same invidividuals (the exposed group, and the non-exposed control group) through time. External events in the marketplace applied to both groups, and any differences in composition between the two groups were constant through time.

Differences between the two groups in terms of sales lift (in the campaign period, compared with the pre-campaign period) were therefore associated with exposure to magazine advertising.

11.6% uplift in sales value

Aggregating the results of all 20 brands, there was an average sales increase of 10.0% among those not exposed to the magazine campaign – the increase being due to other activities than magazine advertising. However among those exposed to the magazine campaign, the sales increase was 21.6%. Thus the magazine advertising was associated with an extra 11.6% increase in sales (in terms of value).

18.1% uplift in sales volume

Taking a different criterion of performance: volume sales among the non-exposed group rose by 11.2%, but among the group exposed to magazines it was 29.3%. The uplift from magazines was therefore 18.1%.

Uplift in market share

Similarly, there were increases in market share when magazine advertising was used. For market share in terms of sales value, magazine advertising was linked to an uplift of 6.7 percentage points. For sales volume market share, the uplift was 8.6 percentage points.

Winning new customers: brand penetration and weight of purchase

Magazine advertising can win new customers for a brand, and at the same time increase the average weekly weight of purchase. Across the 20 brands, brand penetration of the market rose by 7.0% in the campaign period among people not exposed to magazine advertising, but rose by 15.5% among those who had seen the magazine ads – an uplift of 8.5 percentage points.

Meanwhile there were increases of 2.1% and 3.7% in average weight of purchase, among the non-exposed and exposed respectively – a magazine uplift of 1.6%. Thus the sales uplift for magazines was achieved mainly by bringing new buyers to the advertised brands (i.e. increase in penetration), and to a lesser extent by increasing the average weight of purchase.

ROI: return on investment of £2.77

A prime measure of accountability is return on investment (ROI): does the advertising produce more revenue than was spent on it, and if so, how much more? TNS were able to make estimates of the return on investment for each campaign.

One estimate was of the ROI for the campaign period. This represented the value of the incremental sales generated while the magazine advertising was running. For the 20 brands combined, the average ROI was a creditable £1.79. This however is only part of the story, for the effect of advertising lasts far beyond the campaign period. The ROI across 12 months from the start of the campaign is a more realistic assessment, and may be regarded as the medium-term ROI.

The 12-month ROI takes into account the repeat purchasing of the brand from those buyers who were persuaded by the magazine advertising to buy the product during the campaign. This calculation resulted in a figure, across the 20 brands, of £2.77. That is, for every £1 spent on magazine advertising, there were additional sales of £2.77.

To put it into context, magazines’ figure of £2.77 can be set beside the figure of £2.33 for television advertising, also based on Superpanel data and calculated by TNS [73].

TNS’ methods of calculation for the two media were based on the same principles, but as the calculations were not precisely the same, and different sets of brands were used, one should be circumspect in reading much into the magazine figure being rather higher than that of television. However it is reasonable to conclude that the ROI for magazine advertising is at least as good as that of television advertising.

Summary

“Sales Uncovered” has uncovered the following conclusions:

Magazine advertising was associated with an additional sales uplift of 11.6%, in terms of sales value
The uplift in terms of sales volume was 18.1%
There was an uplift in market share (sales value) of 6.7%
The uplift in market share (sales volume) was 8.6%
Market penetration increased by an extra 8.5% after exposure to magazine advertising
Average weekly weight of purchase rose by an additional 1.6%
The medium term return on investment for magazine advertising was £2.77 – at least comparable with that of television advertising

Further conclusions from “Sales Uncovered” concerned magazines’ share of the total advertising budget; magazines used in conjunction with sales promotions; and magazines’ performance in mixed-media schedules. These aspects are dealt with in later sections of this report.

“Proof of Performance” I & II

Instructively, the 11.6% sales uplift shown by “Sales Uncovered” was closely mirrored by PPA’s two earlier studies using the TNS Superpanel, “Proof of Performance” I & II [74, 75]. The first report was published in 1997 and the second in 1998, and both demonstrated that magazine advertising increased short-term sales by 11%.