The integration of PR and marketing has been underway for some time, basically going back to when brands started setting up websites. But advertising has mostly kept to its own (highly influential) niche within the comms department at arms’ length from PR. However, new research from advertising data firm NCSolutions shows that our cross-departmental colleagues are having to put on their PR hats from time to time as consumer loyalty (not that it’s a new ad metric by any means), as well as other brand factors like market share and brand penetration, are having significantly more influence in consumer advertising.
The firm’s newly released study, Five Keys to Advertising Effectiveness, updated from 2017, specifically looked at the primary drivers of incremental sales for advertising and select media comparisons. The findings reveal that these brand elements are now responsible for 21 percent of incremental sales, an increase of 6 percent since the original study. Meanwhile, the influence of audience reach now contributes just 14 percent, down 8 percent since 2017—clearly indicating that the balance is shifting in the advertising ecosystem.
The five key elements for advertising effectiveness that drive incremental sales are:
- Creative: the advertising content that influences purchases through effective use of entertainment and experience.
- Brand: the combination of several long-term factors, including market share, brand penetration and the ability to retain loyal customers relative to the competition.
- Targeting: the measure of how well a campaign was able to reach an intended audience.
- Reach: the number of households reached by a campaign.
- Recency: when a consumer sees an ad in relation to their actual purchase.
In this meta-study analysis, advertising creative drives nearly half (49 percent) of incremental sales and remains the most critical driver of advertising effectiveness by a wide margin. Its impact is unchanged from 2017. Likewise, the effect of recency remained the same at 5 percent. Targeting influences 11 percent of incremental sales in 2023, a slight increase over 9 percent in 2017.
“Short and long-term disruptions, like the pandemic, social media, e-commerce, delivery apps and the Gen Z buying block, are all major forces shaping how modern shoppers perceive brands and make purchase decisions,” said Alan Miles, CEO of NCSolutions, in a news release. “These new findings about the five keys to advertising effectiveness make clear that brand factors play an increasingly influential role. Brands that put loyalty at the center of their marketing strategies often see a compounding effect on their bottom line.”
To help quantify the value of sales effect of brand loyalty, the study looked at the depth-of-repeat among brand buyers. This advertising metric measures the number of consecutive times a household bought a brand when purchasing in a particular category. The study found that brands with the highest levels of consumer loyalty had twice the incremental sales as brands with average or low loyalty levels.
“Brand loyalty isn’t built overnight. It’s earned over a long period of time,” said Miles. “For instance, now is a good time for marketers to start to create connections with the newest generation of shoppers: Gen Z. But to do so, they need to be attuned to this generation’s preferences. They are twice as likely as baby boomers to be loyal to brands that prioritize the environment, so brands that align with this value can use it to build stronger relationships with these buyers.”
Earlier in the year, NCSolutions and the CMO Council conducted a survey to understand where brand marketers can improve their capabilities and what challenges they need to overcome. Sixty-four percent of brand marketers use incremental sales to measure campaign performance, according to survey findings released in January. Marketers can leverage the findings from this updated study to improve advertising outcomes across all media.
In the study of nearly 450 CPG campaigns across digital and TV formats, NCSolutions examined 18 features representing the five keys of advertising effectiveness (creative, brand, targeting, reach and recency). Using machine learning methodology, NCS modeled the proportional contribution of the five keys to short-term sales lift.