In the highly competitive Consumer Packaged Goods (CPG) arena, marketers are going online to expand the effectiveness and efficiency of their media mix. A recent study shows marketers how to determine the best mix of online media with other traditional media to get the greatest return on investment (ROI). The study provides critical sales and branding information.
Online CPG Marketing Proves Cost Efficient
In August 2003, Kraft’s Jell-O brand participated in a research study sponsored by MSN. Kraft wanted to determine the impact of online advertising on branding and offline sales, and evaluate online performance relative to traditional media vehicles. Study results were analyzed in order to:
- Determine rank order payback of marketing mix elements.
- Measure online contribution to key branding metrics relative to offline advertising.
- Evaluate online advertising’s impact on offline sales.
- Provide guidance on maximizing return of future marketing mixes.
Key Findings
CPG brands succeed because they differentiate in the consumer’s mind—driving sales is not enough to guarantee long-term success. For Kraft it was important to measure the branding impact of online advertising, as well as the immediate sales lift. The study shows that online advertising produced these measurable results*:
- Online advertising increased Jell-O offline sales: +7.5 percent increase.
- Key branding metrics lift: +7 increase in purchase intent (top 2 box score).
- Both sales and branding improve when online is increased considerably above current levels.
Study recommendation: Online spending allocation should be increased substantially over current spending levels (from current level of <1 percent in cases studied).
Sales ROI: Payback of Each Media Vehicle
Offline marketing data was compared with online sales impact results to evaluate the efficiency of each media (“payback analysis”). Online advertising was dramatically more cost efficient than the average of all marketing media included in the study. Depending on the frequency, online advertising was either the most efficient element in the mix, or the second most efficient (behind print).
CPG Study Background
MSN convened a consortium of CPG companies to conduct this study between November 2003 and January 2004. Each member submitted brands and campaigns for evaluation as part of the project. It was the first of its kind to quantify advertising effectiveness across multiple media, including television, magazine, radio and online. The resulting industry research standards are supported by the Advertising Research Foundation (ARF) and the Internet Advertising Bureau (IAB).
Innovative Research Methodology
Marketing Evolution developed an in-market experimental design and tracked specific respondent-level purchase data. Study participants’ purchases were tracked by established third-party sales reporting methods. Sales volume shifts were traced to see if online advertising caused product purchases. These results were then compared with traditional marketing mix models to define the optimal media mix for each CPG brand. The study integrated two parallel studies to evaluate the impact of all marketing elements:
- Sales Response Model analyzed the major marketing mix components, including sales volume and ROI for each marketing element. A multi-pooled regression model was used to analyze marketing elements; an in-market experimental design was used to capture sales impact at household level.
- Branding Study applied XMOS (Cross Media Optimization Study) methodology, including continuous tracking to capture branding trends from offline marketing, and an experimental design to isolate online advertising’s incremental contribution.
Conclusion
The CPG Advertising Accountability study showed that online advertising not only moved offline sales, but it did so more cost efficiently than the average for all marketing vehicles. Based on these study results, marketers should substantially increase their online advertising budgets in the future.
