Does advertising work?
A sizeable faction in the marketing community thinks that advertising is no longer as effective as it used to be. I am sure you have heard this many times, and we tend to respect this view as being based on long-term market observation. It is true that price and promo are eroding baseline sales in many categories, but at the same time, advertising remains the strongest weapon brands have to announce, involve, differentiate, and create strong brand equity.
At the end of the day, measurement is the ultimate answer to the question of advertising effectiveness, and our measuring experience give us the permission to consider that the notion of declining effectiveness is wrong. Measurement in FMCG shows what’s possible; the availability of sales data and weekly detailed marketing mix variables allow us to build up very accurate and insightful econometric models. In the last two years, we have measured more than 116 different products in more than 30 different categories. The results are robust and clear: in those two years, the average media return on investment for FMCG brands rose 6.3 percent for TV and 8.5 percent for online video. The effectiveness of TV is still superior to online due to the age of the Italian population and the fact that web penetration is yet to reach its full potential. That being said, web ROI is growing faster, and the gap between TV and online is virtually nil when we eliminate campaigns in which the creative was not aligned to short-term sales. In 2017, it is possible to use quantitative and observational research to identify and suggest creative triggers that maximize viewability and sales. This can multiply the impact of advertising by a factor of seven, we have found. Put simply: great advertising does work.