For Retailers:

The Impact of Online Advertising

Based on a meta-analysis of econometric studies by BrandScience

2

Online Currently Receives a Low Share of Media Spend

27%27%

23%

10%

7%6%

0%0%

10%

20%

30%

TV Print DM Online Radio Outdoor Cinema

Sh

are

of

Med

ia M

ix

Current Media Mix Allocation for Retailers

TV Print DM Online Radio Outdoor Cinema

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

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.”

Sales

Market Share

Customer Acquisition

Brand Perception

5

Econometric Modelling

Applying Maths to Marketing

• 26 UK retailers who spend online

• 24 of those in top 100 retailers ranked by media spend

Marketing Activity

Pricing

Weather

Competitor Activity

Drivers Performance

6

Calculating Revenue Return on Investment

Revenue Gained Through Marketing Activity

Cost of Marketing Activity= RROI

7

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.

Online is More Efficient than TV for Retailers

£1.85

£5.01

£3.44

£2.15

£1.62

£1.11

£0.00

£1.00

£2.00

£3.00

£4.00

£5.00

£6.00

Radio Print Online TV Outdoor DM

RR

OI

Total Retail*

% Media

Mix2% 41% 19% 16% 7% 14%

* Includes all 26 studies that were included as part of this analysis

Based on a meta-analysis of econometric studies by BrandScience

9

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.

Bricks & Mortar (“Offline”) Retailers

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

10

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.

Online is the Second Most Efficient Media Behind Print

Bricks & Mortar Retailers

£2.50

£6.41

£2.84£2.43

£2.21

£0.91

£0.00

£1.00

£2.00

£3.00

£4.00

£5.00

£6.00

£7.00

Radio Print Online TV Outdoor DM

RR

OI

Revenue Return on Investment

% Media

Mix4% 40% 16% 20% 9% 12%

Based on a meta-analysis of econometric studies by BrandScience

11

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

12

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.

Online is the Most Efficient Medium

Online Retailers

£0.71

£1.48

£3.75

£1.02

£0.23

£1.06

£0.00

£0.50

£1.00

£1.50

£2.00

£2.50

£3.00

£3.50

£4.00

Radio Print Online TV Outdoor DM

RR

OI

Revenue Return on Investment

% Media

Mix1% 47% 29% 8% 4% 12%

Based on a meta-analysis of econometric studies by BrandScience

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

Improved online ROI

14

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.

Introducing Above and Below Median

10 50 70 200 450

Median AboveBelow

• An equal number of campaigns above and below the median

• More accurate than mean average – less skew to higher or lower spending campaigns

500

15

Increase Online Share to Increase Online ROI

Online ROI vs Online Spend

£1.42

£2.24

£0.00

£1.00

£2.00

£3.00

£4.00

£5.00

£6.00

Below Median Above Median

On

lin

e R

RO

I

Online Spend

+58%

£2.51

£5.69

£0.00

£1.00

£2.00

£3.00

£4.00

£5.00

£6.00

Below Median Above MedianO

nli

ne

RR

OI

Online Spend

+127%

ROI Curve

Based on a meta-analysis of econometric studies by BrandScience

Varying online spend can also affect the performance of other media

Improved ROI for TV & Press

18

Increase Online Share to Increase TV ROI

£1.59

£3.91

£0.00

£0.50

£1.00

£1.50

£2.00

£2.50

£3.00

£3.50

£4.00

Below Median Above Median

TV

RR

OI

Online Spend

+146%

£0.46

£1.63

£0.00

£0.50

£1.00

£1.50

£2.00

£2.50

£3.00

£3.50

£4.00

Below Median Above MedianT

V R

RO

IOnline Spend

+254%

Based on a meta-analysis of econometric studies by BrandScience

19

Print ROI Does Not Follow Suit

£9.98

£3.10

£0.00

£2.00

£4.00

£6.00

£8.00

£10.00

Below Median Above Median

Pri

nt

RR

OI

Online Spend

£0.65

£2.43

£0.00

£2.00

£4.00

£6.00

£8.00

£10.00

Below Median Above MedianP

rin

t R

RO

IOnline Spend

+274%

Based on a meta-analysis of econometric studies by BrandScience

20

Print ads often have an offline call to action

Varying online spend can also affect the life of a campaign

22

Ad Stock – Life of Campaign

Ad

Sto

ck

Time

Carryover rate 90% Carryover rate 50% Campaign Activity

100%

5%

100%

5%

23

Increase the Life of Online Campaigns with More Online Investment

910

0

3

6

9

12

15

Below Median Above Median

On

lin

e L

ife -

Days

Online Spend

7

11

0

3

6

9

12

15

Below Median Above MedianO

nli

ne

Lif

e -

Days

Online Spend

Based on a meta-analysis of econometric studies by BrandScience

24

Make TV Campaigns Work Harder with Extra Online Spend

38

49

0

10

20

30

40

50

60

70

80

Below Median Above Median

TV

Lif

e -

Days

Online Spend

49

73

0

10

20

30

40

50

60

70

80

Below Median Above MedianT

V L

ife

-D

ays

Online Spend

Based on a meta-analysis of econometric studies by BrandScience

25

Print Life Can Be Extended for Online Retailers

35

28

05

1015202530354045

Below Median Above Median

Pri

nt

Lif

e -

Days

Online Spend

31

40

05

1015202530354045

Below Median Above MedianP

rin

t L

ife -

Days

Online Spend

Based on a meta-analysis of econometric studies by BrandScience

What should the media mix be for the industry?

27

£2.50

£2.88

£3.26

£2.00

£2.20

£2.40

£2.60

£2.80

£3.00

£3.20

£3.40

10% 15% 20%

To

tal R

RO

I

Level Of Online Investment

Increasing Online Investment

Increase Overall Return on Investment Through Increased Online Spend

Based on a meta-analysis of econometric studies by BrandScience

Current

Industry

Spend

+30%

28

27% 27%

23%

10%

7% 6%

0%

17%

37%

13%

20%

7% 6%

0%0%

5%

10%

15%

20%

25%

30%

35%

40%

TV Print DM Online Radio Outdoor Cinema

Me

dia

Sp

en

d A

llo

ca

tio

n

Reallocating Spend for Maximum ROI

£2.50 RROI

£3.26 RROI

Reallocate Money to Online and Print from TV and Direct Mail

Based on a meta-analysis of econometric studies by BrandScience

29

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