Findings on the effectiveness of Outdoor advertising from Econometric studies conducted by BrandScience

- Retailers (and highlights from FMCG study)

21 September 2009

Agenda

Retailer Meta Analysis: Key questions to be answered

Question answeredHow effective is Outdoor advertising for Retailers? How does the efficiency of Outdoor compare with other media?How does the efficiency of Outdoor advertising change at different levels of spend?How does Outdoor advertising impact on the performance of other media channels?Is Outdoor advertising becoming more or less efficient over time?What are the implications for budget allocation by media?

Agenda

BrandScience Results Vault The BrandScience Results Vault collates data from over 400 econometric studies conducted by BrandScience to provide a unique insight into how different media drive sales independently, and in combination with other media.The Results Vault contains: 71 Retail studies 57 of the Retail studies have Outdoor advertising spend34 of the Retail studies have a measured Outdoor effectThe Results Vault allows for detailed examination of media performance by channel and sector and contains lots of findings on how Outdoor advertising works:AbsolutelyRelative to and in synergy with other mediaOver timePartly due to poor data quality, the impact of Outdoor could not be measured in 40% of studies. The comparable figure is 4% of studies for TV and 10% for Print

Retailer ATL Media Mix: Studies in the BrandScience Results Vault are fairly representative of the UK: Outdoor makes up 9% of ATL media spend for Retailers in the Results Vault compared to the UK Norm of 6%

BrandScience Results Vault*:ALL Retail StudiesNielsen Media ResearchTop 100 UK Retailers*Sample Set: Retail Results Vault studies as at 15th May 2009

Chart1

0.5

0.36

0.0915419027

0.0365876317

0.0076202352

Sales

Sheet1

Sales

TV50%

Print36%

Outdoor9%

Radio4%

Cinema1%

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Chart1

0.52

0.35

0.06

0.07

0.0028884258

Sales

Sheet1

Sales

TV0.52

Print0.35

Outdoor0.06

Radio0.07

Cinema0.00

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Retailer TOTAL Media Mix: Studies in the BrandScience Results Vault are fairly representative of the UK: Outdoor makes up 6% of total media spend for Retailers in the Results Vault compared to the UK Norm of 5%

BrandScience Results Vault*:ALL Retail StudiesNielsen Media ResearchTop 100 UK Retailers*Sample Set: Retail Results Vault studies as at 15th May 2009

Chart1

0.444856447

0.2974492845

0.052506943

0.0599124882

0.0024759619

0.0109242768

0.1318745987

Sales

Sheet1

Sales

TV44%

Print30%

Outdoor5%

Radio6%

Cinema0%

Online1%

DM13%

TVPrintOutdoorRadioOnlineCinemaDM

0.4448564470.29744928450.0525069430.05991248820.01092427680.00247596190.1318745987

Chart1

0.3512356981

0.2718541663

0.0617065816

0.0269041412

0.0053506615

0.1319130724

0.1482085229

Sales

Sheet1

Sales

TV35%

Print27%

Outdoor6%

Radio3%

Cinema1%

Online13%

DM15%

Retailer Total (ATL & BTL) media mix Results Vault

TVPrintOutdoorRadioOnlineCinemaDM

0.35123569810.27185416630.06170658160.02690414120.13191307240.00535066150.1482085229

What types of Retail clients are we studying?57 of the 71 retailers spend on outdoorThe majority of the cases are UK firms with 80% being top 5 in their category

Chart1

0.8275862069

0.1724137931

Sales

Percentage Split of Firm Types

Sheet1

Sales

Bricks and Mortar0.8275862069

Online Retailers0.1724137931

3rd Qtr1.4

4th Qtr1.2

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Agenda

FMCG: TV is only 5% more efficient than Outdoor advertisingSample Set: All FMCG Results Vault studies (2002 -2008) with measured Outdoor RROI

Chart1

0.1

0.14

0.3

0.37

0.38

1.25

1.31

Series 1

Revenue ROI

Sheet1

Series 1Series 2Series 3

Cinema0.12.42

Radio0.144.42

Online0.31.83

DM0.37

Print0.38

Outdoor1.25

TV1.31

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MediumROIIndex

Cinema Average Revenue ROI0.0584210526Cinema0.05842105269.9532440915

Radio Average Revenue ROI0.1868421053Radio0.186842105331.8324473195

Online Average Revenue ROI0.3436842105Online0.343684210558.5537692948

Newspapers Average Revenue ROI0.3115789474

Magazines Average Revenue ROI0.4321052632Print0.371842105363.3510536092

Direct Mail Average Revenue ROI0.4842105263DM0.484210526382.4953564337

Outdoor Average Revenue ROI1.2768421053Outdoor1.2768421053217.5366681611

Non DR TV Average RROI1.3868421053TV1.3868421053236.2774610901

0.5869548872

Chart1

0.00743055560.04111111110.03451515150.030.19536574070.310.37

Cinema

Radio

Online

DM

Print

Outdoor

TV

Sheet1

Series 1Series 2Series 3

Cinema1%4.42

Radio4%1.83

Online3%

DM3%

Print20%

Outdoor31%

TV37%

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0.07398%

0.177319%

0.06687%

0.496153%

0.130114%

ROIIndex

Cinema0.05842105269.9532440915

MediumRadio0.186842105331.8324473195

Cinema Average Revenue ROI0.0584210526Online0.343684210558.5537692948

Radio Average Revenue ROI0.1868421053

Online Average Revenue ROI0.3436842105Print0.371842105363.3510536092

Newspapers Average Revenue ROI0.3115789474DM0.484210526382.4953564337

Magazines Average Revenue ROI0.4321052632Outdoor1.2768421053217.5366681611

Direct Mail Average Revenue ROI0.4842105263TV1.3868421053236.2774610901

Outdoor Average Revenue ROI1.2768421053

Non DR TV Average RROI1.38684210530.5869548872

FMCG: If production costs are included, Outdoor becomes the most efficient mediumSample Set: All FMCG Results Vault studies (2002 -2008) with measured Outdoor RROI

Chart1

0.0856

0.1209

0.25872

0.34003

0.34922

1.1525

1.12136

Series 1

Revenue ROI

Sheet1

Series 1Series 2Series 3

Cinema0.092.42

Radio0.124.42

Online0.261.83

DM0.34

Print0.35

Outdoor1.15

TV1.12

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Radio0.13

Online0.28

Print0.35

Outdoor1.15

TV1.12

MediumROIIndex

Cinema Average Revenue ROI0.0584210526Cinema0.05842105269.9532440915

Radio Average Revenue ROI0.1868421053Radio0.186842105331.8324473195

Online Average Revenue ROI0.3436842105Online0.343684210558.5537692948

Newspapers Average Revenue ROI0.3115789474

Magazines Average Revenue ROI0.4321052632Print0.371842105363.3510536092

Direct Mail Average Revenue ROI0.4842105263DM0.484210526382.4953564337

Outdoor Average Revenue ROI1.2768421053Outdoor1.2768421053217.5366681611

Non DR TV Average RROI1.3868421053TV1.3868421053236.2774610901

0.5869548872

FMCG: Outdoor ROI increases with proportion of spendSample Set: All FMCG Results Vault studies (2002 -2008) with measured Outdoor RROI

Chart1

0.93

1.25

1.6

Category 1

Average Outdoor ROI

Outdoor ROI Vs Outdoor Spend

Sheet1

Below median (9% )Median (31%)Above median (50%)

Category 1$0.93$1.25$1.60

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FMCG: Increasing share of spend on Outdoor boosts the ROI on other main mediaSample Set: All Results Vault studies (2002 -2008) with measured Outdoor RROI

Higher Outdoor spend drives higher carryover rates (lagged effect of advertising). 1) For Outdoor 2) for TVSample Set: All FMCG Results Vault studies (2002 -2008) with measured Outdoor RROI

Chart1

0.3874773322

0.5427777778

Series 1

Outdoor spend

Outdoor Carryover rate

Outdoor weekly carryover rate

Sheet1

Series 1Series 2Series 3

Below Median39%2.42

Above Median54%4.42

38%0.95227272731.83

2%0.09

7%0.52

38%0.95

Chart1

0.5452043016

0.584036

Series 1

Outdoor spend

TV Weekly Carryover rate

TV weekly carryover rate

Sheet1

Series 1Series 2Series 3

Below Median55%2.42

Above Median58%4.42

38%0.95227272731.83

2%0.09

7%0.52

38%0.95

Outdoor is becoming more efficient, whereas TV is becoming less efficient Sample Set: All FMCG Results Vault studies (2002 -2008)

Chart1

0.4321428571

0.4778571429

0.6878571429

0.75

Outdoor RROI

Year

Outdoor Revenue ROIs

Sheet1

Outdoor RROISeries 2Series 3

20050.43214285712.42

20060.47785714294.42

20070.68785714291.83

20080.75

2%0.09

7%0.52

38%0.95

Chart1

0.933559322

0.9375625

0.7003703704

0.53828902

TV RROI

Year

TV Revenue ROIs

TV RROI

Sheet1

TV RROISeries 2Series 3

20050.932.42

20060.944.42

20070.701.83

20080.54

2%0.09

7%0.52

38%0.95

Outdoor optimal share of spend should be 16%We can apply ROI by medium by year figures to determine optimal media split for the average FMCG brand

Chart1

0.6

0.16

0.16

0.03

0.02

0.03

Sales

Recommended Media Split 2008

Sheet1

Sales

TV0.6

Print0.16

Outdoor0.16

Radio0.03

Cinema0.02

Online0.03

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0.620.6014

0.160.1552

0.160.1552

32.91

32.91

Chart1

0.69

0.12

0.1

0.04

0.04

0.01

Sales

Actual 2008 Media Split Top 250 Wider FMCG

Sheet1

Sales

TV0.69

Print0.12

Outdoor0.1

Radio0.04

Cinema0.04

Online0.01

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Agenda

Outdoor performs just as well as TV and both media are second only to PrintIncremental Sales revenue generated for each 1 of media costSample Set: Retail Results Vault studies as at 15th May 2009

Chart1

0.44

3.001632953

6.2348511709

2.2268072714

3.5731860262

3.5685100402

1.6876414521

Series 1

RROI

Retail Studies with a measured Outdoor effect

Sheet1

Series 1

Cinema0.44

Radio3.001632953

Print6.2348511709

Online2.2268072714

TV3.5731860262

Outdoor3.5685100402

DM1.6876414521

To resize chart data range, drag lower right corner of range.

Chart1

0.010.040.240.240.240.10.14

Cinema

Radio

Print

Online

TV

Outdoor

DM

Average % media mix

1%

4%

Sheet1

Series 1Series 2Series 3

Cinema1%

Radio4%4.42

Print24%1.83

Online24%

TV24%

Outdoor10%

DM14%

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RROI calculations are often based on media space costs and exclude production costs which can be a sizeable percentage of total ad spend TV production costs make up for a larger share of spend than any other mediumSource: WARC

ATL MediaProduction Costs as a percentage of media/production totalTV 14.4%Print8.1%Outdoor7.8%Internet7.6%Radio7%

RROI calculations are based solely on media space costs and exclude production costs - which can be a sizeable percentage of total spendIncremental Sales revenue generated for each 1 of media and productioncostSample Set: Retail Results Vault studies as at 15th May 2009

Chart1

0.010.040.240.240.240.10.14

Cinema

Radio

Print

Online

TV

Outdoor

DM

Average % media mix

1%

4%

Sheet1

Series 1Series 2Series 3

Cinema1%

Radio4%4.42

Print24%1.83

Online24%

TV24%

Outdoor10%

DM14%

To resize chart data range, drag lower right corner of range.

Chart1

0.41

2.81

5.73

2.06

3.06

3.29

1.55

Series 1

RROI including production costs

Retail Studies with a measured Outdoor effectand incl. production costs

Sheet1

Series 1

Cinema0.41

Radio2.81

Print5.73

Online2.06

TV3.06

Outdoor3.29

DM1.55

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The Print, DM and Radio RROIs are far higher when Outdoor is used Sample Set: Retail Results Vault studies as at 15th May 2009+34%+61%+84%

Chart1

1.6116160913

1.5282199073

4.2814593216

4.4399849008

3.2213877079

0

0.9565258333

Series 1

RROI incl. production costs

Non-Outdoor spenders

N/A

Sheet1

Series 1

Cinema1.6116160913

Radio1.5282199073

Print4.2814593216

Online4.4399849008

TV3.2213877079

Outdoor0

DM0.9565258333

To resize chart data range, drag lower right corner of range.

TVPrintOutdoorRadioOnlineCinemaDM

3.22138770794.28145932161.52821990734.43998490081.61161609130.9565258333

Chart1

0.41

2.81

5.73

2.06

3.06

3.29

1.55

Series 1

RROI incl. production costs

Outdoor spenders with a measured Outdoor effect

Sheet1

Series 1

Cinema0.41

Radio2.81

Print5.73

Online2.06

TV3.06

Outdoor3.29

DM1.55

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Chart1

0.010.040.240.240.240.10.14

Cinema

Radio

Print

Online

TV

Outdoor

DM

Average % media mix

1%

4%

Sheet1

Series 1Series 2Series 3

Cinema1%

Radio4%4.42

Print24%1.83

Online24%

TV24%

Outdoor10%

DM14%

To resize chart data range, drag lower right corner of range.

Chart1

0.010.080.20.050.6Series 10.07

Cinema

Radio

Print

Online

TV

Outdoor

DM

Average % media mix

1%

4%

Sheet1

Series 1Series 2Series 3

Cinema1%

Radio8%4.42

Print20%1.83

Online5%

TV60%

Outdoor

DM7%

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Outdoor RROI increases slightly as spend increases, implying there is room for retailers to increase their share of spend on OutdoorSample Set: Retail Results Vault studies as at 15th May 2009+22%

Chart1

3.2125835981

3.5685100402

3.9244364823

Series 1

Outdoor spend

Outdoor RROI incl. production costs

Outdoor RROI vs. Outdoor spend Retailers with measured Outdoor effect

Sheet1

Series 1

Below Median3.21(0.19m pa)

Median3.57(0.95m pa)

Above Median3.92(1.71m pa)

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Outdoor Carryover rate increases significantly as spend increases, implying there is room for retailers to increase their share of spend on OutdoorSample Set: Retail Results Vault studies as at 15th May 2009+145%

Chart1

0.1967725333

0.3440908121

0.4914090909

Series 1

Outdoor spend

Outdoor weekly Carryover rate

Outdoor Carryover rate vs. Outdoor spendRetailers with a measured Outdoor effect

Sheet1

Series 1

Below Median20%(0.19m pa)

Median34%(0.95m pa)

Above Median49%(1.71m pa)

Outdoor carryover rate for Below median spend on OutdoorOutdoor carryover rate for Above median spend on OutdoorOutdoor carryover rate for median spend on Outdoor

20%49%34%

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Lifeof campaign vs. Outdoor spendBased on time taken for advertising to have 95% of its total effect

Sample Set: Retail Results Vault studies as at 15th May 2009+131%

Chart1

13

19

29

Series 1

Outdoor spend

Days (duration of measured sales uplift)

Time period over which sales are generated vs. Outdoor spend

13 days

19 days

30 days

Sheet1

Series 1

Below Median13(0.19m pa)

Median19(0.95m pa)

Above Median29(1.71m pa)

Outdoor carryover rate for Below median spend on OutdoorOutdoor carryover rate for Above median spend on OutdoorOutdoor carryover rate for median spend on Outdoor

20%49%34%

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Increased spend on Outdoor boosts the RROI on TV and Print Sample Set: Retail Results Vault studies as at 15th May 2009+19%+28%

Chart1

3.2536764909

3.8696686024

Series 1

Outdoor spend

TV RROI

TV RROI vs. Outdoor spendRetailers with a measured Outdoor effect

Sheet1

Series 1

Below Median3.25(0.19m pa)

Above Median3.87(1.71m pa)

3.25367649093.87

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Chart1

5.3295445441

6.820896847

Series 1

Outdoor spend

Print RROI

Print RROI vs. Outdoor spendRetailers with a measured Outdoor effect

Sheet1

Series 1

Below Median5.33(0.19m pa)

Above Median6.82(1.71m pa)

5.32954454416.82

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Higher spend on Outdoor is associated with a higher carryover rate on TV and PrintSample Set: Retail Results Vault studies as at 15th May 2009+18%+50%

Chart1

0.49

0.58

Series 1

Outdoor spend

TV weekly carryover rates

TV Carryover rate vs. Outdoor spendRetailers with a measured Outdoor effect

Sheet1

Series 1

Below Median49%(0.19m pa)

Above Median58%(1.71m pa)

3.25367649093.87

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Chart1

0.3552056621

0.5370638889

Series 1

Outdoor spend

Print weekly carryover rates

Print Carryover rate vs. Outdoor spendRetailers with a measured Outdoor effect

Sheet1

Series 1

Below Median36%(0.19m pa)

Above Median54%(1.71m pa)

5.32954454416.82

Print carryover rate for Below median spend on OutdoorPrint carryover rate for Above median spend on Outdoor

0.35520566210.54

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Higher Outdoor spend elongates the life of TV and Print campaignsBased on time taken for advertising to have 95% of its total effect

Sample Set: Retail Results Vault studies as at 15th May 2009+30%+62%

Chart1

30

39

Series 1

Outdoor spend

Days (duration of measured sales uplift)

Time period over which sales are generated from TV ads.vs. Outdoor spend

30 days

39 days

Sheet1

Series 1

Below Median30(0.19m pa)

Above Median39(1.71m pa)

3.25367649093.87

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Chart1

0.3552056621

0.5370638889

Series 1

Outdoor spend

Days (duration of measured sales uplift)

Time period over which sales are generated from Print ads.vs. Outdoor spend

21 days

34 days

Sheet1

Series 1

Below Median36%(0.19m pa)

Above Median54%(1.71m pa)

5.32954454416.82

Print carryover rate for Below median spend on OutdoorPrint carryover rate for Above median spend on Outdoor

0.35520566210.54

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Trends in RROI over time: 1) Major Media vs Outdoor*Two year moving averageSample Set: Retail Results Vault studies as at 15th May 2009

Trends in RROI over time: 2) Support Media vs Outdoor

*Two year moving averageSample Set: Retail Results Vault studies as at 15th May 2009

Agenda

Summary of findings for Retailers and FMCG study

*****Retailers in the BrandScience Results Vault spend a smaller share of their budgets on TV advertising (35%) compared to the UK norm (44%) and a larger share on Online (13%) compared to the UK average of 1%. Share of spend on Outdoor is comparable (6% for Retailers in the Results Vault vs. the UK average of 5%).When ROI is based on the cost of the media space only (i.e. excluding production costs), TV is more efficient than outdoor. *By including production costs as well as media space costs in the ROI calculation, Outdoor ROIs are higher than that of TV.*Outdoor ROI increases as spend on outdoor increases.*Large outdoor campaigns appears to make TV and Print adverts more efficient. *The sales response to outdoor advertising lasts longer for big spenders (those spending above median level) on outdoor.

Large outdoor campaigns help to extend the life of a TV campaign*Outdoor is becoming more efficient over time whilst TV ROI is in decline (this could be due to the popularity of tools such as Sky+ which allow viewers to evade TV adverts).*Recommended share of spend on Outdoor is 16% of ATL spend****Strong synergies do not exist between Online and Outdoor because most of the retailers studied do not integrate their Online messages (aimed at driving customers to their websites) with their brand building Outdoor messages.

***********