Confidential & Proprietary Copyright © 2007 The Nielsen Company Nielsen Lessons for Effective Advertising Presented to: CARF March 6 th, 2008 Summer Vallillee,

Confidential & Proprietary Copyright © 2007 The Nielsen Company

Nielsen Lessons for Effective AdvertisingPresented to: CARFMarch 6th, 2008

Summer Vallillee, Client ConsultantJessica Avery, Client Consultant

Confidential & Proprietary Copyright © 2007 The Nielsen Company Page 2

• Rising commodity prices“Wheat Prices Surge to Record High” Associated Press, Dec ’07

“Rising Dairy Prices Signal Globalization” Business Week, Sept ’07

“Oil Prices Nudges to New Historic High ” Associated Press, Mar ’08

Pressure on Canadian Manufacturers

• Canadian Dollar increasing in value– Manufacturer Implications:

– Retailers demand lower prices– Increased scrutiny to Canadian marketing expenses

– Consumer Implications:– Consumers are taking notice of US vs Can pricing

• If American trends can predict Canadian trends, we can expect to see a decline in Advertising spending when the economy declines


Agenda

• Long-Term implications of cutting TV Spend • Targeting your consumer more efficiently• Effectively matching the quantity of spending

with concept• Efficiently matching vehicle with concept

Given pressure on marketing expenses, it is imperative to invest efficiently. A review of the following will shed light on the long-term effects of reducing TV spend and how to make your advertising dollars work more efficiently


Trade ROI is usually better than TV in the short term, but what are the long term implications of cutting TV?

Trade is more attractive in the immediate future

80 85

107125

Print TV Coupon Trade

Short-term ROI by Vehicle Long-Term ROI – TV vs Trade

Effects of TV continue to support base growth 3 years down the road

TV Trade

Yr 1 Yr 2 Yr 3 Cum 3 Year Effect

2 X More!

Lesson Learned: ROI of TV doubles after 3 years resulting in cumulative ROI higher than Trade

Source: Nielsen Analytic Consulting; Lessons Learned from Marketing Mix Analyses, 2006


With a $10M Marketing budget, how would profit growth differ with variations in Trade and TV spending?

Case Study: Scenario 1 – Brand A spends $5M TV and $5M on TradeScenario 2 – Brand A cuts TV spending and puts $10M in Trade

0 0

12.5

10.5

2.551.7

12.5

14.75

0

4,000,000

8,000,000

12,000,000

16,000,000

Scenario 1 Scenario 2

Pro

fits

Yr 1 Yr 2 Yr 3 Total Profit

Lesson Learned: Investing in TV in addition to other vehicles, such as Trade, will derive better profitability in the long-term

+18% Profit

Source: Nielsen Analytic Consulting; Lessons Learned from Marketing Mix Analyses, 2006

Efficient Targeting


Unique deliverable of the Consumer Marketing Mix is understanding of ROI at the Consumer Group Level

Looking at the Consumption Index in isolation can be misleading…In the case of Brand A, TV was skewed towards Smaller Families with Kids Layering on the Response to the medium, we can see that the advertising actually derived higher responses from Younger Adults without ChildrenMultiplying the Consumption Index by the Response Index gives us an ROI Index by Consumer Group. This fact quantifies the return for targeting each consumer group

Lastly, we can compare this to the Average Hhlds ROI to see what the $ potential is for each Consumer Group

ROIIndex

TV Advertising ROI Potential

Startup Families 136 72 98 $1.38

Small Scale Families 125 68 85 $1.20

Younger Bustling Families 113 45 51 $0.72

Older Bustling Families 97 22 21 $0.30

Young Transitionals 118 157 185 $2.61

Independent Singles 115 168 193 $2.72

Senior Singles 78 11 9 $0.12

Established Couples 98 134 131 $1.85

Empty Nest Couples 82 64 52 $0.74

Senior Couples 76 39 30 $0.42

Average Household 100 100 100 $1.41

ResponseIndex

ROIIndex

TV Advertising ROI Potential












ConsumptionIndex

ResponseIndex

ROIIndex












ConsumptionIndex

ResponseIndex

ROIIndex












Television AdvertisingResponse/ROI Summary Spectra BehaviourStageLifestages – Brand A

With

ou

t C

hild

renW

ith C

hild

ren


Invest!Optimize ROI

ChangeTactic

Invest?Opportunity

Forget It

Target Marketing Strategy Matrix:

Brand A

Startup Families

Small Scale Families

Young Bustling Families

Avg ROI: $1.10

Older Bustling Families

Senior Singles

Empty Nest Couples

Senior Couples

Avg ROI: $0.39

LOW HIGHResponsiveness

HIGH

LOW

Co

nsu

mp

tio

n

Determine which Consumer Groups are most efficient to target based on the Consumption and ROI Index

Established Couples

Avg ROI: $1.85

Young Transitionals

Independent Singles

Avg ROI: $2.67


Consumer habits/interests

are linked to each of the Consumer Groups via PMB

Data

Target the “Invest! Optimize ROI” consumer groups by understanding their media and lifestyle habits

Determine How To Reach Them

Current MediaCurrent Target

Index

High ROI! Optimize

TargetDateline NBC 135 95Law and Order 129 8660 Minutes 127 105Grey's Anatomy 125 72Lost 119 107Hockey Night in Canada 117 110

Recommended MediaCurrent Target

Index

High ROI! Optimize

TargetPrison Break 105 137Family Guy 69 131Simpsons 76 12824 99 125House 92 115

Source: Nielsen Spectra / Print Measurement

Dateline NBC 135 95Law and Order 129 8660 Minutes 127 105Grey's Anatomy 125 72Lost 119 107

Recommended MediaCurrent Target

Index

High ROI! Optimize

TargetPrison Break 105 137Family Guy 69 131Simpsons 76 12824 99 125House 92 115CSI 102 112


Skewing the TV advertising towards the Invest! Optimize consumer group will drive greater ROI

+10% ROI

Lesson Learned: When every Marketing Dollar counts, it is imperative to understand the ROI Index and Viewing preferences of your target consumers in order optimize ROI

Current Avg ROI

Invest! Optimize ROI $2.67 31% 39%All Other $0.84 69% 61%Total ROI $1.41 $1.55

Old Media Viewership


Old Media Viewership

New Media Viewership


Efficient Quantity


The match of advertising spend with the quality of the idea maximizes return.

Scenario 1Product One: Weak $5MM

Product Two: Average $5MM

Product Three: Strong $5MM

Total Spend $15MMPortfolio ROI $0.40

Portfolio Management


The match of advertising spend with the quality of the idea maximizes return.

Scenario 1 Scenario 2Product One: Weak $5MM $0

Product Two: Average $5MM $5MM

Product Three: Strong $5MM $10MM

Total Spend $15MM $15MMPortfolio ROI $0.40 $0.50

Portfolio Management


Source: BASES Sources of New Product Awareness Tracking - Canada

Traditional TV advertising remains the #1 way consumers become aware of products outside of store.


The more sources of awareness – the stronger the persuasion

Purchase interest by number of sources of awareness (indexed to total)

Note: Some of this effect may be due to self-selection – consumers who are primary targets for the proposition or have a clear need for the product may also be more receptive to marketing.

One source only

Two sources

Three sources

Four or more sources

0.5 1.0 1.5

• Even in a potential time of recession, it remains important to reach consumers through a variety of means.

Efficient Vehicles


CommunicationEffectively convey your distinct consumer proposition

Simple Message

Focused Message

Understandability through simplicity of message is critical to successful communication

Consumer takeaway is maximized with a limited number of messages in an uncluttered communication

CredibilityGiven interest in your benefits, consumers evaluate whether they believe you will deliver

Consumer Metrics can help guide the optimal media mix for generating awareness


The risk of using the inappropriate media type for a complex message is large.

100

62

10095

0

20

40

60

80

100

120

Persuasion with TVAd

Persuasion viaBillboard

Persuasion with TVAd

Persuasion viaBillboard

Per

suas

ion

Inde

xComplex Message Simple Message


Understandable Message

Do you think that this idea is a simple idea or a complicated idea?

51

29

19

4.1

Top Fifth versus Database

Extremely Simple

Very Simple

Neither Simple Nor Complicated

Very Complicated

Extremely Complicated

Simple

Complicated


Focused Message• Convey the key message you intend to impart with support, and no clutter

56

23

18

How well do you think the description of this product is

focused on a main point?

Extremely Focused

Very Focused

Somewhat Focused

2.9

Bottom Fifth versus Database

Slightly Focused

Not at all Focused

Focused

Unfocused

Sample Beverage Headline:

The great tasting, nutritious drink that keeps your children mentally sharp and physically

active


Credibility• Additionally, consumers have to believe the claims being made – and the type of

media pursued is key to communicating the credibility of the initiative

Scrubbing Bubbles Automatic Shower Cleaner

41

32

20

6

How do you feel about the believability of the statements

made about this product?

Completely Believable

Somewhat Believable

Neither Believable nor Unbelievable

Somewhat Unbelievable

Completely Unbelievable

Middle Fifth versus Database


Source: BASES Sources of New Product Awareness Tracking - Canada

Influence on Purchase

Internet

Read about it in a magazine or newspaper

Coupons

Magazine Ad

Demos/Samples

Friend or Family told You

TV Ad

When credibility is an issue, TV ads with their ability to show demos are the most compelling mean of communication.

• Small brands especially need to use the appropriate media vehicles to convince consumers their message is credible.


The simplicity and credibility profile should define the optimal media type(s).

Cre

dib

ilit

y

Simplicity/Focused

Low High

High

Re-evaluate copy and messaging

Billboard

Internet Banner Ads

At-Shelf Communication

On Package Communication

Television

Demos

Samples

Print

Longer TV Ads


• With pressures to maximize advertising efficiency, consider the following efficiency measures:

– Don’t jump to cut your media spending – it pays off in the long term!

– If you’re a small brand, it’s also a great time to get aggressive.

– Understand response by consumer group as well as consumption by consumer group to maximize ROI

– Spend to the quality of the idea

– Consider the simplicity, focus, and credibility of the message; the consumer measures can guide use of media types with the best ROI

Lessons Learned


Documents

Confidential & Proprietary Copyright © 2007 The Nielsen Company Nielsen Lessons for Effective Advertising Presented to: CARF March 6 th, 2008 Summer Vallillee,