Every four years, we not only get an extra day in February, we also get huge media cost increases. This year the Olympics and a presidential election will drive up the demand for media spots, especially for TV. Kantar is expecting $6B in election ad spending. Two presidential candidates are advertising on the Superbowl this year, which is unprecedented. Both Bloomberg and Trump are buying ads at $10M each. I can’t wait to see the Superbowl ad ratings on those ads. You can expect a 6% increase in TV ad rates according to The Global Advertising Expenditure report from Zenith and eMarketer predicts a 12% jump in digital ad rates. However, in-store advertising rates are not expected to increase, are much lower and have a higher ROI (Return on Investment). Perhaps, this is the year for In-store advertising.
TV ad costs in 2020 are expected to average $36.19 CPM (cost per 1000 reached) for prime, $19.45 broadcast and a whopping $101.83 for the Superbowl, while the CPM for digital averages $11.50. However, in-store advertising averages $1.29 CPM. (see below)
Ok, these CPM rates are not exactly comparable. The impressions for each of these three mediums are counted differently and the engagement levels are different. However, a comparable metric is ROI, which is also more relevant to decision making because it is direct link between ad expenditures and the P&L results. Here we see in-store ads on top also for CPG brands with an average of 2.49 ROI vs 2.18 for online and 0.94 TV (Source: Nielsen and Foresight ROI).
One reason in-store ads have better returns is that you can reach 100% of your audience in store and avoid reach duplication. Another reason that in-store ads work well is that shoppers reach the 1st moment of truth in the path-to-purchase, which is where the shopper is making the final purchase decision. In fact, we’ve seen the importance of in-store ads in our ROI measurement of 25,000 shopper marketing events. Shopper marketing ROI increases an average of 37% by adding in-store ads to your integrated path-to-purchase programs. (see below)
However, in-store advertising spending is down 10 points as a percent of total shopper marketing spend, from 40% to 30%. Some marketers are reducing their investments in in-store marketing in favor of increased digital ad spends. Retailers are also contributing by getting stricter about what in-store marketing is accepted. This decline has negatively affected the path-to-purchase efficiency. When in-store spending drops below 40%, there is a sharp drop in the total shopper marketing ROI as per our analysis in a previous blog In a Digital World, Don’t Forget the Power of In-Store Marketing. We’ve also seen that the retailers with the most restrictive in-store marketing policies generally have the lowest shopper marketing returns. One retailer increased their restrictions for three years and experienced declines in ROI. Then in 2018, they changed their policy, ROIs are increasing, and their vendors are spending more.
So, this year as TV and digital ad rates increase, consider a lower cost and higher return medium where all your shoppers can be reached and where they are making their purchasing decisions . . . in the store. You won’t experience any ad clutter with the presidential candidates’ ads, either.
Foresight ROI is the leader in shopper marketing measurement, decision support, and software solutions for CPG companies and retailers. To learn more about our measurement, software or industry ROI benchmark solutions, contact us at: contact@ForesightROI.com