IRI Extends Branding Study, Backs Role of TV Ads
July 10 2007
Retail information giant Information Resources, Inc. (IRI) is to extend its major syndicated study of brand drivers, the Long-Term Drivers Consortium, into a second phase. Results from the first phase provide good news for TV advertising, as does a separate GroupM study released this week.
IRI's Phase II study, to begin late this summer, will use brand information from a consortium of national FMCG manufacturers to quantify the importance of TV advertising, in-store promotion, distribution and brand variety on the short- and long-term health of brands and the overall FMCG industry. Consortium participants will receive an in-depth analysis of the long-term drivers of their own brands plus comparisons with the FMCG industry overall.
IRI Global Services President Sunil (Sunny) Garga says current metrics for brand evaluation are too much focused on the short-term. 'The pressure to produce positive financial returns in the current quarter often ignores the long-term viability of the brand. It may take years to create a strong and prosperous brand...' Garga describes the role of the Consortium as 'brand reforestation'.
For stage I, launched in mid-2006, the consortium reviewed more than 24 categories and drilled down to 10 categories and 30 brands, studying five years of history to separate short-term versus long-term drivers. The study built on academic research from Tilburg and Duke Universities, using proprietary modeling methodology to control for short-term effects. Initial top-line results, representative of major CPG categories and sectors, suggest that:
- TV advertising and distribution are key drivers of a brand's ability to maintain long-term growth, with TV being the largest driver, although short-term response to TV advertising does not always result in long-term growth.
- TV advertising can, but does not always, lower price elasticity; distribution/variety was more likely to be associated with lower elasticity.
- Quality trade promotion is a 'Double-Edged Sword', providing an important driver of short-term volume and long-term growth, but also raising price elasticity in the long term; and
- price discounting has long-term implications, driving increased price elasticity over time.
Phase II will use brand information from a consortium of six to ten national CPG manufacturers.
Another study of the marketing mix this week gives some solace to traditional advertising media, under fire from the boom in online - although it also warned of a sometimes forgotten effect of new media options. WPP subsidiary
GroupM looked at trends in the leading edge
online ad environment of the UK (see
www.mrweb.com/drno/news6994.htm ) and found that 'the erosion of demand for traditional media appears to be stabilizing... and may be poised for an upswing.' The authors of the group's 'This Year, Next Year' tracking study believe that 'demand has almost stopped slipping' and goes on: 'By our previous gloomy standards, this merits a national holiday. Not counting Internet, we think the other media are in for a 1% drop in revenue this year and something nearer 0% next.'
According to
www.mediapost.com , GroupM's report suggests that online media may be contributing to the 'price dilution' keeping advertising inflation in many media in check. The report states: 'We already see this in market research and directories. Doing it digitally can cost you less. Market research had the flat revenues to prove it last year, and directory revenue is only growing because of unsustainable oddities in its printed domain (up-selling and pressure to be in every title). Newspaper price dilution is evident in classified migration to the Internet.' The report does not directly comment on the impact on TV advertising prices, but notes that the UK TV ad marketplace is going through a period of 'disinflation' with average cost-per-thousand for TV ad time down 5.6% in 2006 and predicted to fall a further 4.1% in 2007 and 3.7% in 2008.
IRI is on the web at http://us.infores.com and GroupM at
www.groupm.com.
All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.
