ROI Genome Marketing Intelligence Report 2018 Compilation: What Drives Marketing ROI?

New for 2019, the updated Analytic Partners’ ROI Genome Marketing Intelligence Report Compilation is our annual edition of important trends and insights on the factors that affect return on investment for offline and online marketing. We hope to help marketers get to the heart of the matter of what marketing and advertising efforts drive return on investment and what factors influence those returns.

Since 2000, Analytic Partners has collected marketing intelligence across industries and countries and this forms the core of ROI Genome which provides in-depth understanding of how marketing works. ROI Genome includes insights from hundreds of billions in marketing spend, more than 2 million marketing metrics, from 45+ countries and 700+ brands across industries & tactics.

Download and access updated trends as of February 2019 on:

• ROI Comparisons for Offline + Online
• ROI Trends by Channel
• Digital Marketing Spending Trends
• Multi-Channel Synergies
• What Factors Drive ROI
• Linear TV vs Addressable TV Trends

In addition this updated information, we have compiled all of the 2018 reports into one place, including:

• Have Promotions Lost Their Punch?
• The Value of an Impression
• Paid Search Intelligence
• Halo Effects in Portfolio Advertising

Content Summary

What is ROI Genome?
ROI Trend Updates
Have Promotions Lost Their Punch?
The Value of AI Impression
Paid Search Intelligence
Halo Effects In Portfolio Advertising

What is ROI Genome?

Over the past 19 years, Analytic Partners has collected a vast quantity of marketing intelligence across industries and countries. This intelligence lives and breathes in ROI Genome. ROI Genome has been an evolving endeavor that goes beyond traditional “you are here” benchmarking to understand and quantify the drivers of ROI and marketing success at a fundamental level to establish principles and truths for marketing success. By understanding and quantifying how factors such as brand health, marketplace factors, country dynamics, and the competitive landscape all impact marketing performance for each type of offline and online marketing activity, Analytic Partners can provide context and perspective for our clients.

The mission of ROI Genome is “To create marketing wisdom from accumulated numbers and knowledge.”

ROI Genome Highlights
In depth understanding of how marketing works, including:

• Hundreds of Billions in Marketing Spend Measured
• More Than 2 Million Marketing Metrics
• Global Footprint – 45+ countries
• 15 years, 700+ brands
• Cross-section of industries & tactics

ROI Trend Updates

ROIs Continue to Converge – Offline + Online
As we have reported in our first ROI Genome Report, the ROI for online advertising outperforms offline advertising, on average. The reasons for the digital advantage were lower costs and more precise targeting that allowed for efficiencies unattainable in offline media. However, over the last decade there has been a steady convergence with online advertising efficiencies declining and offline remaining relatively stable as costs continue to evolve. In updating this chart, we see this trend has continued. In fact, the gap between online and offline advertising ROI has closed by roughly 30% since 2016.

Online buying cost increasing and diminishing returns from higher and higher investment level are still identified as strong contributors to the convergence of ROI trends. Online media continues to struggle with transparency and accuracy of reporting.

Online Spend Continues to Grow
We have continued to see an increase in digital spend with now 62% of brands analyzed increasing online marketing spending from 2016 to 2017. Within these brands, the increased online spend led to a 1.5x increase in business impact. This is on top of the 2x increase reported for 2016.

Combine Channel Strategy Remains Powerful
Online continues to be, on average, 25% more efficient than offline over recent years, there is a strong case to be made for a combined-channel approach. Analytic Partners has found that combining offline and online channels in a combined approach continues to be 45% more efficient than offline alone and more efficient than online alone.

Wide Ranges in ROI Across Channels
While having a greater range of potential ROI, online channels have more potential upside than TV. Compared to our previous report, we have seen the potential ROI downside to online channels come into line with TV. TV continues to be more predictable, if on average, lower ROI than online.

Right Message, Right Person, Right Time
A fact that remains true is that advertising effectiveness is impacted by reaching the right person, with the right message at the right time. ROI Genome insights continue to back this up. To refresh, when we talk about these three factors we mean:

Context: The time of day or week/ context of content or location/situation, external or environmental factors, time in decision cycle, customer journey.

Message: The quality of the creative itself – the amount of branding, communication of benefits, level of interest or engagement.

Person: The audience/ target/ viewer of the ad.

When you compare the influence the right message has versus targeting the person or context, you see some differences between channels. The message, as measured in “Copy Quality,” is still the most important ROI driver for Video (including TV) though we have seen an increase in importance of targeting the right person and context, as measured in “Executional Elements” (up from 38%). Display ads’ business impact, while still being driven more by executional elements, has seen an increase in the importance of creative quality compared to our previous report (up from 35%).

When looking at ROI impact for audience targeting vs. strong copy quality for TV, there is still a strong connection between ROI and message. Compared to average linear TV ROI, Copy quality still is a bigger driver than targeting techniques, showing 63% more ROI than the index. Addressable TV ROI has grown to 45% above linear TV, compared to last year’s report of +23%. Millennial TV still trends lower than average linear TV, as the cost of targeting is not made up in business impact. Context/Timing influence remains flat compared to our previous report with seasonal TV showing a 30% lift compare to the linear average.

Looking further into targeting, our research shows that while targeted advertising can be highly efficient for very niche products, for broad products it is highly inefficient. In a similar vein, Reach-Based Advertising, while efficient for mass-market products, is inefficient for more niche products.

Have Promotions Lost Their Punch?

Promotions VS. Advertising
Promotions to increase sales through immediate incentives for short-term business results are a powerful lever for many brands. But marketers face the fundamental question of: what is the right balance between Advertising and Promotions? While both are critical components of a marketing mix, deciding on the right balance between each is often a subject for debate.

On one hand, advertising is critical to building brand awareness and credibility, communicating benefits, and ultimately influencing consumer decisions, to name a few. However, promotions can also be important drivers of business performance – such as customer acquisition, driving trials and increasing basket size, and in many industries securing distribution and greater retailer support and visibility in-store.

While many companies rely more heavily on one or the other, the reality is both are critical to the mix. Ultimately the right balance will vary by industry and category as well as by brand and product/ service.

Advertising/Media: Communication through media to expand awareness, build branding, and ultimately drive sales.

Promotions: Activities designed to offer consumers incentives to motivate short-term conversions such as coupons, bulk-buy discounts, free shipping, rebates samples, etc.

In this report, we explore the trends and insights related to this fundamental question of “what is the right mix?” and outline the principles marketers should consider when aligning on the best balance for their business.

Promotions Efficiency Has Fallen While Media Efficiency Has Increased
When looking at ROI trends over time and across industries and geography, an interesting pattern emerges. For many years promotional activities had, on average, a higher ROI but the data shows that the marketplace is changing, with advertising media becoming more efficient over time as promotion efficiency declines. By 2017, the divide is dramatic, with media being 35% more efficient than promotions, on average.

The decline in the promotion ROI over time is particularly surprising, as the rise of improved datasets, technology and advanced analytics should in theory be contributing to ROI improvements, much in the same way we’re seeing advertising ROIs grow due to an increase in media sophistication.

When we look deeper, we see that one driver of this trend may be an over-reliance on promotion leading to an increase in spending on promotions and discounting over time. And as frequency, scale and depth of promotions increases, effectiveness begins to erode. The charts below show examples of the relationship between spend, promotions and ROI.

The reasons for this dynamic are varied, but largely rest on two key themes:

• Consumers are becoming oversaturated with deals. We see this in terms of both breadth but also depth of discounts, and across promotional vehicles. Whether it be couponing, email offers or offers at shelf, the same trend holds true: As consumers are inundated with more and deeper deals, each one becomes less compelling. In the example to the right, as promotion frequency increases, effectiveness decreases – with a 36% drop in effectiveness with promotions happening every other week.
• The rise of technology and smartphones has enabled more transparent pricing. A more sophisticated consumer is able to compare prices and understand actual value of promotions, ultimately reducing any scarcity effect and perceived value of a deal.

The good news is that brands that invest heavily in advertising and brand-building efforts can counteract this downward efficiency trend for promotional activities. Insights from the ROI Genome show that advertising can actually bolster promotional effectiveness. In the example below, a brand that significantly increased advertising budgets saw a simultaneous increase in promotion efficiency in the same year despite no material change to their promotional strategy.

Companies who increased their Media Spend from 2015 to 2017, the Promotional ROI increased an average of +12%

This synergy shows how the brand-building benefits of media can outweigh the struggles caused by the tough promotional marketplace. Consumers are more likely to purchase a product if they have affinity for a brand, which develops when brands are advertised. We have found that the positive impacts of advertising have synergistic effects in that they not only benefit their own tactic’s performance, but also promotional performance.

Advertising Vs Promotions – 4 Principles To Consider
It is important to note that the trends showing promotions decreasing in effectiveness and media increasing are an overall average and your brand’s results may be different. However, for any brands that have the ability to offer promotions, it is clear that there are roles for both advertising and promotions in the mix. That said, the most efficient balance will depend on a variety of conditions. Below are 4 key principles marketers and business leaders should consider:

Don’t Ignore Tomorrow For Today’s Gain (Balance both short-term and long-term impacts when allocating budgets)

• Marketers should have measurement practices in place to be able to evaluate both short term and long-term effects and should balance budgets with both time horizons in mind. It may be that promotions are highly efficient from a short-term perspective, but their importance could change when looking at a longer-term view.
• For media, we typically see long-term impacts well over 2x that of the short-term effects, with the magnitude of these longer-term effects varying depending on tactic, messaging, consumer target, execution, etc.
• Promotions may or may not deliver longer-term benefits beyond their short-term impacts. For some brands, heavy reliance on promotions can actually have negative impacts in the long-term due to devaluing of brand perception. Furthermore, immediate lifts in business performance driven by promotions may simply be shifting sales forward rather than driving incremental impact.
• The chart below shows the expected long-term impact of media vs. promotions.

Optimize Budgets And Frequency For ROI (Monitor spend levels to avoid diminished returns)

• Businesses should ensure they have robust measurement practices in place to determine optimal investment levels within each advertising and promotional vehicle and understand the point at which diminishing returns may occur.
• Brands with significant budgets or narrow targets may need to consider the role of diminishing returns in determining optimal spend levels. In this case, it may be beneficial to balance investment across other vehicles to broaden reach, reduce frequency and benefit from synergies across touchpoints. In other cases, it may mean reducing advertising budgets in favor of promotional tactics.
• Marketers should also consider the role of diminishing returns when evaluating their promotional budgets and strategy – both in terms of frequency and depth. Rely on promotions too frequently and you’ll train consumer to buy on promotions, thus leading to less effective promotions over time. Discount too deep and you’ll be subsidizing consumption that could have occurred at lower discount depth, effectively eroding margins and leaving money on the table.

War Game VS. Competition (Consider competitive pressure and dynamics when building advertising and promotional plans)

• While marketers should not let competitive actions dictate their strategy, they should consider competitive pressure and dynamics when building marketing plans.
• For example, substantial competitive ad budgets will require a greater share of advertising support to break-through; the launch of new products or line extensions may warrant increased promotional support to defend.
• Brands with a heavy focus on competitive effects should ensure they have a measurement practice in place to understand the true impacts; often the reality of the competitive effects are less drastic than the perceived threat.

Time For Impact (Ensure promotions follow strong branding communication)

• Marketers should ensure both advertising and promotions are executed optimally in terms of sequencing. Specifically, leading with advertising to build awareness prior to discounting (rather than the reverse).
• Promotional budgets may be too high if promotions are happening prior to or at the expense of advertising.

Ultimately marketers should aim to establish measurement and optimization across both advertising and promotions using a holistic approach rather than examining each in a silo. A test and learn approach is also key to understanding what works and to keep your finger on the pulse.

The Value of AI Impression

Not All Impressions Are Created Equal
Reaching a large number of customers or potential customers is valuable, but it is important for marketers to remember that not all impressions are created equal. One tactic may get your messages and products in front of many consumers, but it may actually be less effective per impression than another tactic. Therefore, considering not only the relative CPM but also the relative effectiveness of different tactics is vital.

For example, let’s compare digital display to online video impressions. When looking at more than a thousand cases we see that digital display activity in the US typically yields $1.50 per thousand impressions on average, while online video activity typically yields close to $4 per thousand impressions. Naturally, while there are significant differences across types and sizes of businesses, it is generally true that an online video impression is almost three times more effective in driving sales than a digital display impression.

It is interesting to note that online video has a much wider range in response than display, which has a tight, more predictable range. This is likely due to the large influence of creative quality in driving results for video (see 2017 ROI Genome Marketing Intelligence Report).

However, it is important to monitor the costs along with the value of an impression. For example, although unbranded paid search terms can be expensive in comparison to branded paid search, they can often be more efficient due to the incremental benefit they have to the business from new customers.

Impression Value – A Real Life Example
In the following example, the client, which initially had a reach-based strategy, was achieving consistently high levels of reach with TV and digital display tactics. However, when looking at the average incremental revenue earned per impression of activity, it became clear that these tactics were not the most effective. Instead, paid search and online video showed greater levels of response per impression. It is also interesting to see that, although OOH and paid search were driving similar levels of reach, the effectiveness of that reach was much greater in paid search.

Does this mean that the client in question should always prioritize paid search and online video over digital display and OOH? Not necessarily. It is important to note that the above graph does not include costs for these tactics, obviously a crucial factor. Cost can be impacted by factors such as the level of targeting and competition/inventory. Costs need to be constantly monitored to ensure efficiency goals are being met.

There are also other underlying factors that influence the ability of impressions to effectively drive sales. One such factor is viewability, a measure of how well consumers are able to see and consume ads. Different websites and platforms have different rules for what qualifies as an impression in terms of viewability, which obviously impacts effectiveness. Another factor to consider is ad fraud, and particularly the amount of activity that is driven by bots. If a tactic or platform is more prone to fraudulent activity, one can assume its impressions will be less effective at driving sales.

Let’s take a quick step back to look at effectiveness vs efficiency.

• Effectiveness measures the incremental response generated from marketing (e.g. response per 1000 impressions) and should be used when comparing performance within a marketing activity and when the goal is to drive more conversions.
• Efficiency is the financial return per dollar spent on a marketing activity (i.e. the ROI) and should be used to compare across channels / campaigns when the goal is to optimize marketing spend allocations.

For example, we may want to look at response when comparing TV campaign A versus TV Campaign B or when our aim is to maximize turnover. Efficiency should be considered when comparing two dissimilar activities – such as a :15s TV commercial and a :30s TV commercial, or when comparing TV versus digital display which have very different cost structures. The choice of marketing channel / marketing tactic will also have other considerations such as targeting and reach.

Action Insight: When evaluating impressions make sure you have a clear view of both: 1) impact of that impression 2) the cost so you can balance both effectiveness and efficiency.

The Importance Of Context
As mentioned in earlier reports, the three major facets of a successful touch point are having the right message, in the right context, seen by the right person. And while much has been written about targeting and messaging, context is just as important. Marketers should remember that factors such as context and type of medium impact the effectiveness of impressions.

For example, radio and OOH work well for “on-the-go” businesses, those that are location-specific, and are cost effective solutions for regional businesses. As a point of comparison, digital display tends to work well as a reminder for large businesses, but generally underperforms in driving awareness for new brands or concepts.

Context also includes the correct timing, and as the analysis above shows us, for seasonal businesses, the correct timing/ context can show ROI improvements of 31%.

If a message or placement is not used in a way that is relevant for the tactic, it tends to underperform – or on the flip side a message communicated in the right context for a tactic can work very well. Some examples are as follows.

Take Out Restaurant and Radio Advertisements
In the below example, we see that radio advertising over-indexes in driving “on-the-go” behavior – in this case take-out meals.

Seating became a challenge during key meal times for this particular restaurant client, and the business was seeking opportunities to grow its take-out business to facilitate further growth via its newly launched app ordering service. The analysis identified radio as an efficient driver that capitalized on the strategic need to drive increased take-out. Historically only 10% of the restaurant chain’s sales were via take-out, but with almost half of radio’s impact driving take-out, the business was able to drive significant growth and double its take-out business within 2 years of increased radio investment. Thus, radio advertising is an ideal channel to reach people when they’re considering their meal options.

Candy Manufacturer and Cinema Advertisement
In a second example, this time with a candy manufacturer, we see that cinema is highly effective compared to both CPG and Food and Beverage benchmarks given its contextual relevance. The context, of course, being that people are more receptive to advertising (consciously or subconsciously) when the benefit of the product or service is more top-of-mind – as is the case given candy consumption is a common occurrence when watching movies.

Ingredient Product and Pinterest
In the example below, we see that Pinterest advertising is highly effective for ingredient-based Food & Beverage products (a product that is part of a recipe). These are products that lend themselves to meal ideation, one of the core strengths of the platform, given its reliance on graphic content and shareability.

Pinterest also works well for these types of products because they are reaching consumers while they are actively deciding what actions to take next and what products to purchase to fulfill those actions. Per Pinterest, there are “over 3.4 billion food ideas saved by 46 million people. These Pinners are taking their inspiration to the grocery store—79% of them say Pinterest has influenced their food-related purchase decisions.”*

Home Goods and Weather
In the next example, we look at a specialty home goods brand with highly seasonal products. With a short window to market to customers and make the majority of sales, every touch point matters. The analysis revealed a close connection between ad performance and weather conditions. The team was able to identify opportunities to reduce ad wastage during suboptimal conditions. They also used bid optimization and they deployed dynamic creative to drive sales when it mattered. Delivering ads when the context was right helped drive a 4-10x increase in ad performance and +30% increase in ROI.

Action Insight:

• Customer-centered decisioning drives impact.
• Consider context alongside channel focus decisions.

Summary
Marketers want to get their message in front of their current and potential customers. And while they will leverage a growing number of tactics to deliver this message, these impressions are not all created equal. It is important to understand not only the reach and cost/CPM of different tactics, but also the value of the impressions delivered across and within tactics.

A tactic that works for one company or brand won’t necessarily work for another. One key reason for this is the importance of context. By making sure a message is delivered in a context that is beneficial, an impression can significantly out-perform it’s expected value. Doing this in a scalable manner drives true competitive difference.

While our focus in this report has been on impressions and context, allocation decisions should weigh many factors, including:

• Diminishing returns
• Scalability
• Long-term impacts
• Synergies with other channels
• Competitive forces
• Business constraints
• Strategic goals

Analytic Partners can work with your team to better understand your customers and how to optimize your marketing tactics and make the most out of every impression. Contact us to learn how our balance of services and technology can help your business.

Paid Search Intelligence

What Drives Paid Search ROI?
Paid Search is a central part of many brands’ digital strategy and digital budget. It has the advantage of being able to directly reach individuals who are expressing current intent and interest in a product, category, or topic. Let’s review some of the key uses of search – steering customers and marketing.

Steering

• For many marketers, paid search is used to connect product and customer, moving consumers to the marketer’s website. This is different from traditional marketing channels where brands communicate to larger audiences.
• Paid search, especially branded paid search, is often used for navigation. As many customers use search engines as their primary portal to the internet, branded paid search helps ensure that the customer lands on the marketer’s desired page.
• Paid search can also be used strategically to dominate the search results page.

Marketing

• Paid Search also plays a more traditional marketing role of informing customers on the product.
• As search is still a point of communication to customers, sophisticated marketers will often look to optimize the creative messaging that appears on the search ad.

ROI Variability within Industries
Our data shows us that the ROI on paid search varies widely across and within industries.

So, this begs the question: Why? Why are ROIs so different, even within the same category? While there are many factors, our team, leveraging ROI Genome data, found that the following factors are influential in the ROI of paid search:

Competitive Bidding Environment
This is a good example of how competitive forces can affect your advertising ROI. With lower competition it is easier to have higher efficiency in paid search. Competitive environments can increase CPC and dramatically reduce ROI for paid search. In the example below, increases in competitor brand paid search budgets caused a significant rise in CPCs over time.

Action Insight: Monitor costs to ensure a positive value equation.

Product Price Point/Consideration
All else being equal, brands with higher margins or price points deliver higher paid search ROIs. In many cases, a high price point means the product is less of a commodity and there will be more room for a return. In an example below, we can see that, even within the same company, sub-brands have different search ROIs depending on product price.

Our research shows that paid search needs very high conversion rates to be efficient for low consideration brands. This concept is illustrated by an example where a $1 dollar product with a CPC of $0.96 would need 80% of clicks to convert into unit sales, in order to deliver a $1 ROI. This is compared to a $600 dollar product with a CPC of $2, which would need less than 1% of all clicks to converted to sales, in order to deliver an ROI above $1.00.

Action Insight: Evaluate products across a portfolio independently to understand differences in ROI and search effectiveness.

Branded vs Generic Terms in Paid Search
Brand and generic search terms have very different dynamics. With branded search, the consumer is already aware and is seeking out your brand. Brand terms are often less expensive due to lower competitive forces for those terms and if you are bidding on brand terms, your ad relevancy and quality score will likely be high. With generic search, the consumer is searching a category and therefore might ‘stumble’ upon your brand as a result of the search ad. This means generic is typically incremental (but also more expensive). Although as consumers searching for generic terms might be higher in the funnel, these searches may assist a conversion by driving later interactions such as brand term searches.

Our ROI Genome research shows that there is a strong positive relationship between spend and CPM for both branded and generic terms. However, generic costs increase more rapidly as there are greater competitive forces.

While branded search typically drives a lower rate of incremental traffic, investment in branded search is often seen as the cost of doing business; reducing investment in branded can lead to lower organic search index and higher competitive placing. The example above shows ROI Genome benchmarks for Financial Services, where generic search terms typically outperform branded in terms of both response and ROI.

Action Insight: Leverage the synergies between branded terms in paid and organic search.

Mobile Search
There are many factors that could determine ROIs for mobile search compared to desktop. Each business, depending on their offering and how they approach their ads, will see different results. Some factors to keep in mind that will impact mobile search ROI:

• Smaller Real Estate – Bidding strategies should be different for mobile search, since being in a top position has a greater importance on the smaller screen.
• Mobile Experience – A high quality mobile landing page is critical in delivering a high quality customer experience and the strong ROI that results. Landing pages that fall short could be subject to penalties from Google.
• Differentiated Campaigns – Mobile search ads should have distinct copy, site links, calls to action, and should leverage different extensions.
• Ability to Take Calls – Brands who can convert or move forward a customer on the phone can leverage search ads that direct a customer to call from their mobile device.

Action Insight: Differentiate mobile search efforts to take advantage of customer experience, but keep the full picture in mind.

E-Commerce Opportunities
While search is important for all brands, it is even more critical for businesses with the ability to purchase online because it serves as a critical lever to steer traffic to sites where a sale can occur. When comparing brands with little or no e-commerce opportunities to those with a strong potential, the difference in ROI for search is clear. We have seen a +2x difference in search ROI for brands with strong e-commerce.

Action Insight: As brands look to grow e-commerce they need to consider investing further in search.

Search Synergies And The Dangers Of Last-touch Attribution
Like all other marketing efforts, Paid Search does not exist in a vacuum. In many cases we see that paid search is heavily driven by word-of-mouth, other paid media (such as TV, print, and digital) PR, social, and more. In the example below we can see for a real brand the drivers of paid search ROI.

We began this report by walking through the concepts of steering and marketing for paid search. It is tempting to look at these interactions on search existing alone. But in reality you need to take into account all the factors influencing search. The customer who uses search to navigate to a site might be doing so because of a call to action on a billboard. The customer who searches for a generic term and clicks on a paid ad might have been influenced by word of mouth. Brand X Case Study: Drivers of Paid Search

Action Insight: Capitalize on synergies by leveraging keywords and terminology that have SEO and SEM support.

It is important not to evaluate paid search as an isolated channel. The content of your website and landing pages factor greatly into your search ROI. The customer experience when she clicks through the search ad will always be immensely important. The branding and advertising efforts you make across all of your marketing will drive searches for the both brand and generic terms.

These synergies bring to light the importance of an advanced measurement approach in evaluating ROI. If you do not use a comprehensive measurement approach that accurately reflects both online and offline business drivers and performance, then you run the risk of significantly over-estimating the impact of search and attribute credit or recognize the value of the other levers.

Halo Effects In Portfolio Advertising

Halo Principles
Retail, automotive, financial services, CPG and technology all share a common challenge – each makes tough decisions on which of their products and services to support with advertising. These decisions, if made wisely, will drive future growth and profitability.

When a company markets across multiple products or services, savvy marketers know that advertising creates interaction across offerings – due to a “halo” effect. Marketers can greatly benefit from learning how this concept can work as ROIs can increase by tenfold in some cases.

What is halo, how does it work, and how can it be leveraged most efficiently? By leveraging Analytic Partners’ ROI Genome from global marketing effectiveness analyses, we can share the following insights.

What is Halo?
The point of most advertising is to drive volume for the product being directly promoted. But halo is the volume driven for a separate unadvertised product because of an association between the two products in the consumer’s mind. The two parties involved in halo are:

Provider: The advertised portion of the business.

Receiver: The portion of the business that benefits indirectly from the advertising of another portion of the business.

Depending on how the products or services are related we see different ways halo can work. The most common example of halo is when within a category, a flagship product is the receiver and benefits when there is advertising on a line extension product (the provider). For example, advertising for “Hybrids” may have a positive impact and provide halo for “Sedans”. When advertising for the flagship product benefits a line extension, is another reverse example.

You can see from this example of a specific case how products with smaller sized segments may not generate the same magnitude of halo as larger segments.

Halo Benefits
On average, halo provides an ROI increase of 1.5-3x, but when effectively executed, halo can increase an ROI by up to 10x. Taking advantage of strong halo can eliminate the need for multiple campaigns and extend budgets.

Watch-outs
Halo is not a magic wand, however. First, there is no getting away from basics like “quality is important.” Lower quality creatives will have lower halo impacts. Based on ROI Genome, going from poor to high copy quality on average delivers over +40% higher response. It is not always a simple task to create strong messaging which links the franchise and provides strong halo. Halo is not one-size-fits-all. Marketers must continue to be adaptive and adjust where it makes sense.

How do you make the most out of halo?
To uncover the core drivers of positive halo, a thorough investigation of the ROI Genome’s collection of metrics and insights was conducted. Based on our examination of thousands of cases, Analytic Partners has developed recommendations and “Halo Principles” that drive halo and improve ROI.

Balance halo potential with sales goals for each product when making planning decisions

• Advertising behind line extensions will typically have lower ROIs vs. advertising the flagship product unless there is strong halo.

Principles for maximizing halo:

• Consistent Brand Equity: Halo provider and receiver should have consistent strategic benefits/equity.
• Similar Messaging: The branded elements of the products and advertising should be consistent (e.g. packaging, taglines, sound and color cues, etc.
• Proximity:  Co-merchandize or bundle products/services where possible.

Summary
As they say, “The only constant is change.” What worked yesterday won’t necessarily work the same tomorrow. The marketplace and consumer dynamics are constantly evolving which makes sophisticated measurement and forecasting more important now than ever.

Measurement is a discipline that is ongoing, where everyday we look at what worked, understand why it worked and forecast what will work tomorrow. That is how together we can turn data into expertise.

So often the answer to questions about what marketing tactic or strategy will work better is “It depends.” And as frustrating as it may be to those asking the question – it is an undeniable fact. But in the “it depends” is where all the magic happens. What works in one case may be the absolute wrong decision for a different circumstance. But understanding the mechanics behind the “whys” is what makes ROI Genome so vital. It opens the door to finding a competitive advantage by taking advantage of best practices, knowing what questions to ask about your business, and finding the connections to your bottom line.

Successful analytics is a discipline – it is not something you can flip a switch and get an answer. You build upon it every day, becoming better, learning more and evolving.

Source: Analytic Partners