How Advertising Creative Affects Sales Lift

For every ad campaign they execute, brand and agency leaders have to decide on an array of variables: how much to spend on creative development and testing; whether to seek high reach or more precise targets; the context for the message; and how to add an element of recency to deliver the ad prior to the next expected purchase. However, it wasn’t too long ago that creative was an essential part of the mix by far. It was a pretty simple formula: Good creative sold products, bad creative didn’t. In 2006, Project Apollo found that 65% of a brand’s sales lift from advertising came from the creative.

With the transformation of the advertising industry over the past several years, the balance has shifted. Moreover, as a result, advertisers need to understand how the different levers of advertising affect sales so they can make better, more informed decisions about how to plan their campaigns.

While creative remains the undisputed champ in terms of sales drivers, new research from Nielsen Catalina Solutions highlights how the other elements factor into the overall sales picture. In addition to the five key components, the study also notes the impact of “brand factors” related to the intrinsic characteristics, such as price and penetration, which also affect the overall result.

While the equation today involves several factors, good creative is still the most crucial element. The findings also highlight how the media is playing a more critical role than ever. Because of breakthroughs in data and technology, the aspects of targeting, reach, and recency can significantly affect sales outcome of a campaign. The effect of media on sales has increased to 36% from 15% over the past 11 years.

Looking at the quality of creative, weak creative results in soft sales lift, and the sales lift is attributed primarily to media. The reverse is true when the creative is strong-sales lift is higher and is affected less by media.

Context, while it seems to have the smallest overall impact on sales, it is very tightly connected to the specific creative. Context has the potential to provide healthy benefits for advertising, though it requires creating content that matched appropriately to the surrounding program environment. We believe that the value that was measured is just a small fraction of the potential impact that context can have on advertising.

Despite increased conversations about precision targeting and repeated proof that consumers react better to more personalized advertising, less than half of fast-moving consumer goods (FMCG) brands today are doing an excellent job of reaching category or brand buyers.

It may seem obvious, but reaching a large number of consumers with advertising is critical to the success of a campaign: only consumers exposed to an ad can be influenced. This study examined 863 recent cross-media campaigns across all verticals and measured the volume of impressions for each of them, as well as the reach achieved with those impressions. The shape of the curve confirmed a well-known law of diminishing returns: past a certain point, most new impressions end up reaching the same people.

For many years, marketers have used recency theory (the belief that ads are most effective when they appear immediately before consumers are predicted to make a purchase) to gauge when to run their ads. Although theories come and go, the ability to implement recency theory has improved with the rise in popularity of purchase-based decisioning. For products most often bought on a Saturday or Sunday (beer, for example), advertising on Thursday or Friday has a dramatic effect on sales. Together, advertisements delivered on these days provide almost three times more incremental sales lift than ads running on other days of the week.

This information was based on nearly 500 FMCG campaigns that ran in 2016 and first-quarter 2017 on all major media platforms: linear and addressable television, online digital and video, mobile, magazines, and radio.

A Repost From The Nielsen Company; www.ncsolutions.com