Study Findings Show Online Media Lifts Sales
The results of the Advertising Accountability Study were released on Thursday at MSN's fifth annual Customer Summit. Consortium participants are Nestle SA, Kraft Foods, Procter & Gamble, and Neutrogena, each of which submitted campaigns for the project. While testing for the latter two remains ongoing, the results for Nestle's Coffeemate and Kraft's Jell-O showed that online advertising generated noticeable increases in sales.
While the interactive medium has worked hard to establish that the addition of online media to the overall media mix lifts key brand metrics, the new findings mark the first time that online media has been evaluated against the context of sales. The link is a critical one, as publishers and agencies struggle to make the case that marketers should shift more media dollars to online programs.
The findings of the study, sponsored by Microsoft Corp.'s MSN--which shared the costs of the research with the participating marketers--recommend dramatically increasing online spending within the consumer packaged goods category where spending is currently less than 1 percent, according to Knowledge Networks/SRI. The study culled data from a variety of sources used on a regular basis by consumer packaged goods companies including IRI, ACNielsen, and scanner data.
"We wanted to address two issues," says Stephen Kim, director of sales research for MSN. "How does online advertising influence offline purchases--which is a pressing question for marketers--and if there is a relationship between the two, how does that impact stack up against traditional media elements in terms of cost efficiencies?"
The CPG Consortium formed in July 2003, and agreed to release results even if they weren't positive. The studies were conducted by Rex Briggs, principal, Marketing Evolution, between November 2003 and January 2004.
In the case of Jell-O, the brand saw a 7.5 percent sales lift over the control group. Brand attributes were also up--healthy brand attributes and purchase intent increased 7 percent. For Coffeemate, sales increased 10 percent, with brand image metrics up 5 percent to 7 percent, and purchase intent in the 3 percent to 4 percent range. Both brands pre-tested their ads the same way they would for TV advertising, choosing the two strongest ads from a pool of five or six.
P&G is at the midway point of its research with the Olay brand: "The results look very directionally encouraging," says P&G's Tim Kopp, who expects to examine rich media and the role of reach and frequency in the second phase of the study.
"Having engaged in similar research over two years ago with IRI to link online advertising to offline purchase, I can safely say the results are encouraging," says David Cohen, senior vice president, interactive media director, Universal McCann Interactive. "The real proof, however, will be the translation of the results into increased budgets and demonstrable effects on the participants' marketing plans," he says. "The pragmatist in me would have liked to have seen one brand in which online advertising was not effective. If for no other reason than to give added credibility to the results," Cohen says.
Marketing Evolution's Briggs says the participants agreed to share their results even if they weren't positive. "Maybe these results aren't surprising," he says, noting that there have been more than 1,500 studies conducted on online media's impact on brand metrics during the last eight years, and at least "two dozen" studies in the consumer packaged goods category isolating sales. Most have been conducted by individual marketers, but haven't been part of shared learning.
"The issue is the relative return on investment of online in the mix--that's the new question," Briggs emphasizes. "There are paybacks with various media; you want to increase above-average performers and decrease below- average performers," he adds.
For Jell-O, Kraft found that online media is the first or second-most important element in a marketing mix that includes TV, print, radio, trade, free-standing inserts, and online advertising. Ultimately, the study's recommendations were that Jell-O increase online by 5 percent to 6 percent, while the recommendation for Coffeemate was 4 percent to 5 percent. Many consumer packaged goods brands currently spend less than 1 percent of their media budget online.
"This study answers one of the most important questions top of mind with today's marketers: how to determine the best mix of online media with other traditional media to get the best return on investment," says Todd Manion, director of e-business, Nestle.
"The results were very consistent with results we've had in the past," says Carole Walker, director of e-marketing at Kraft. "The other serendipitous finding was related to frequency. ... The key learning for us is that on general [media] planning alone, we have to get back to zero-based planning in every single situation," Walker says, adding: "Unfortunately, in many cases, the upfront is already driving the program."
The Advertising Research Foundation and the Internet Advertising Bureau (IAB) lent their support to the study, which will be extended to industry verticals, including the retail, financial services, entertainment, and travel categories. The IAB may ultimately take over the effort in a co-op funding arrangement.