How share of voice

wins market share

New findings from Nielsen and the IPA dataBANK

Promoting the value of agencies

Contents
Foreword 3

Introduction 4

Management summary 6

Inputs from the IPA dataBANK analysis 8

Findings from the Nielsen analysis 12

Contacts 18

Additional reading 18

Appendix 19

IPA data for services and durables sectors 21

Glossary 22

“The benchmark ratios revealed in this publication are extremely significant

at the moment. In a recession such as this, there is a double-whammy effect
which makes buying Excess Share of Voice (ESOV) markedly cheaper. Not
only are media costs falling but so are levels of competitor spending. This
provides a strong case for bravery for anyone who sees the recession as an
opportunity to steal a march on competitors – and take market share from
competitors which they may find ruinously expensive to buy back when the
economy improves. To more timid advertisers it offers a rough guide to what
the likely consequences may be of cutting back on advertising expenditure. Rory Sutherland
To anyone planning to grow market share, it suggests that this cannot normally
be done without planning for the cost of ESOV. And it provides all of us with a fairly useful rule of thumb
which allows us to see whether we are getting the return we might expect on our budgets, and whether a
declining share of market is caused by spending too little money or spending more than enough money
but badly. Who knows, it could even form the basis for a system of remuneration.”
Rory Sutherland
IPA President and Executive Creative Director & Vice-Chairman, OgilvyOne London & OgilvyGroup UK


Foreword
We are indebted to Nielsen Analytic Consulting, the econometrics
arm of Nielsen, for rising to the challenge we gave them to validate
(or disprove) the relationship between a brand’s share of voice and
its share of market.

Their acceptance of it and the rigour with which they have

approached their task has resulted in some truly significant
Hamish Pringle
findings. Not only have they re-validated the relationship, they
have provided an industry benchmark.

Nielsen’s analyses provide finance directors, marketing directors and agency directors
with the market-based metrics and benchmarks they need to plan marketing
expenditure and assess agency performance.

It’s a wake-up call to those marketing clients who set unrealistic targets; those finance
directors who negotiate unrealistic budgets; and those agencies who accept PBR terms
and conditions without checking the small-print.

Its publication is timely for the industry, being at a point when second half-year budget
revisions are being made and plans for the year ahead are beginning to be considered.

Hamish Pringle
IPA Director General


Introduction
In a difficult economic climate, extremes apply. Some
companies go under, others grow at their expense. All
previous recessions have taught us that in periods of
downturn the strong tend to get stronger, and the weak tend
to go to the wall. This is not comforting reading, but it is
typical, and there are reliable precedents. Janet Hull

What is true of companies is especially true of brands. Strong brands, able to invest in
a period of uncertainty, can gain share relatively cheaply because the competition for
media reduces, rates are lower, and weaker competitors disinvest, thus increasing the
strong brand’s relative share of voice.

Determining the relationship between share of voice and share of market in order to
guide investment strategy in difficult economic circumstances may not be fashionable,
but it is no less relevant for that. Marketers must pay heed to this key relationship and
use it as the basis for setting their brand communications budget. This new publication
helps them do just that. It interrogates old truths, re-asserting their relevance, and
their application.

The relationship between market share and share of voice has been a topic of discussion
in marketing circles for many years. Indeed, the IPA first published PIMS analyses in
2003 and again in 2008. But it is in the last two years that interest has been reawakened
in this subject, with the publication of telling evidence from the IPA dataBANK
of effectiveness cases in Marketing in the Era of Accountability, an IPA/WARC
publication authored by Les Binet and Peter Field.

Their analysis of a sample of 123 cases, from the 880 under investigation, established
important new benchmarks for relating required share of voice to share of market targets.

Their findings were headline news at a Marketing Effectiveness event at Cranfield in

2008 and have been presented on numerous platforms across the world since then.

Of course, the analysis provided by Les and Peter was derived from an elite source
- the IPA Effectiveness Awards cases - which are ‘best in breed’, rather than typical
everyday campaigns. There is, therefore, a risk that they will present unrealistic and
unrepresentative scenarios rather than everyday benchmarks, despite the use of a
statistical technique (Tobit) in the analysis to estimate the relationship for everyday
campaigns. The cases in the IPA dataBANK also cover a 30-year time span from 1980


to 2008, during which time the communications landscape has changed radically: some
now question whether a relationship between SOV and SOM exists at all in the digital
era and so for that reason the contemporary relevance of the analysis is sometimes
questioned.

To address these issues once and for all, we designed the project which forms the basis
of this publication, and of an IPA seminar given on 9th June. The idea was to replicate
the IPA analysis, but with Nielsen’s fully representative and contemporary database
of FMCG brands’ sales and their media impacts. By comparing and contrasting the
findings of the IPA dataBANK with Nielsen, not only would the true nature of the
relationship between SOV and SOM be revealed for everyday campaigns, but the
validity of the IPA data and its analysis would also be examined.

The project also drew on largely unexplored IPA data on different market sectors,
residing in the online appendix of Marketing in the Era of Accountability, as well as
new analysis of how the relationship between SOV and SOM varied for award winners
and non-winners. And from Nielsen it drew out revelatory data exploring differences
between brand leaders and challenger brands, and between brands with ‘new’ news and
established brands.

Finally, and perhaps most excitingly, by studying the differences between the two data
sets, it quantified empirically, for the first time, the real added value contributed by
campaigns with top quality strategies and executions.

In the process it provides practical industry benchmarks and a proven analytical

framework for justifying brand budgets, setting market share targets, and
demonstrating effectiveness.