ROI in Out Of Home. Proving OOH effectiveness in econometrics.

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Presentation transcript:

ROI in Out Of Home. Proving OOH effectiveness in econometrics

D at e Document Title2 Who we’ve been talking to…

The Agenda.  What is econometric modelling?  What are the challenges for Out of Home Media in econometric modelling?  How can these challenges can be resolved?

What is ‘Econometrics’?  Econometrics takes its name from its original purpose – to ‘understand economies’  Around 30 years ago, UK marketers began to build econometric models to measure the impact of key variables (including advertising) on sales and profit  It’s essentially maths and stats  Crucially, econometric modelling can be refined over long periods of time so that the forecasting can become more accurate

How it works. Key Brand Drivers Price Weather Competitor Activity Stock & Distribution Advertising Model RETURN ON INVESTMENT Sales Customer Acquisition Market Share

Why advertisers use Econometrics. Levels of investment Identifying the right media mix When to advertise Reach & Frequency

7 Where OOH fits into econometric modelling.  In advertising, different media channels perform to varying levels within econometric models, and OOH is no different  There is a perception that OOH does not deliver strong ROI within econometric models – although recent smarter uses of the medium have started to combat this  There are many factors as to why this happens, let’s investigate why…

Source: Outdoor Media Centre Return on Outdoor Investment The challenges for OOH in econometric modelling. Exclusion Low Quality Data Modelling the whole Lack of data variation The creative effect Low spend

If creative work is less impactful or is principally aimed at brand perception it can impact OOH’s ability to be picked up in models Source: Outdoor Media Centre Return on Outdoor Investment Modeller view: “… if the creative is unclear to the consumer, the modelling very often doesn’t work. Other media types have similar issues but they seem to get away with it more than outdoor in terms of modelling.” Ensure the metric fits the objective - pure ROI as reported by econometric models is not appropriate for creative geared towards driving awareness or image Best practice guidelines about the creative factors that drive positive ROI for OOH campaigns. The Creative Effect Econometric modelling challenges. Q. Did the creative match the ROI metric?

Advertisers will often quantify overall past campaign performance rather than produce ROI scores for each channel; especially ones with lower budget levels Source: Outdoor Media Centre Return on Outdoor Investment Econometric modelling challenges. Modeller view: “… clients seem to feel their media mix is generally working and as a result it is difficult to get them to make changes to get OOH modelled with different mixes to help unpick how OOH is performing”. Invest in production of different media mixes, weights and regional models to provide the critical variation in data. Modelling The Whole Q. Was an ROI score produced for each media channel?

There are serious concerns about the quality, accuracy and accessibility of the OOH data used in modelling Source: Outdoor Media Centre Return on Outdoor Investment Econometric modelling challenges. Modeller view: “…the biggest issue is the lack of robust, consistent audience data for posters. The data that we use needs to be more accurate and cover more poster types and formats.” Incorporation of Route data is essential in the proper evaluation of OOH in econometrics. We must provide econometricians with Route data. Also, we must ensure the modelling community are using Route data within their models. Low Quality Data Q. Was ROUTE used as the main OOH measurement?

Econometric modelling works best when looking at data that has a lot of variations. OOH spend allocated equally across two week periods (no variation) The way that most OOH is planned tends to be combined or overlapping with the same other media types Source: Outdoor Media Centre Return on Outdoor Investment Econometric modelling challenges. Modeller view: “… this is a very important issue. There is a big difference between the look of the data that we use for outdoor and TV. TV has much greater variability in it, which is a good thing from a modelling perspective.” Invest in production of different media mixes, weights and regional models to provide the critical variation in data. Lack Of Variation Q. Was there variation in the OOH data in the model?

There are a lot of occasions where OOH does not make it into the final model Source: Outdoor Media Centre Return on Outdoor Investment Modeller view: “… you need to make a clear distinction between when you can’t see a read for outdoor and it not working – because you can’t see it doesn’t mean that it is not working!” Establish if OOH was included into the final model. Being excluded from a model does not necessarily mean that a medium is not working; just that it could not statistically be separated from the other variables. Exclusion Econometric modelling challenges. Q. Was OOH included in the final model?

There is frequently low spend or share of spend in the medium Econometric modelling challenges. Modeller view: “… the size of the spend is key to getting a read on the effect of OOH”. This is something of a ‘chicken-and- egg’ conundrum When properly measured, OOH delivers good ROI Learnings about the optimum allocations for delivering ROI via OOH Low Spend Source: Outdoor Media Centre Return on Outdoor Investment Q. Was the OOH spend high enough to be picked up by the model?

Source: Outdoor Media Centre Return on Outdoor Investment Was OOH included in the final model? Was Route data used as the OOH measurement? Was a ROI score produced for each channel? Was there variation in the OOH data or was it allocated equally across 2 week periods? Did the creative execution match the ROI metric? Was the OOH spend high enough to be picked up in the model? Summary: these are the questions to ask

We need better OOH data…

ROUTE: a solution for econometric modellers.  Route was launched in 2013, and is the successor to Postar which had been the OOH audience measurement since 1996  Route produces audience estimates for OOH advertising in the UK, and is the currency in planning, trading and valuing advertising investment in the medium  The data published tells subscribers how many people see an advertising campaign, and how often

ROUTE uses Big Data to measure Out of Home exposure. GPS Travel Survey: shows how people move around day-to-day Traffic Intensity Model: determines absolute population numbers & travel flow on every single path Eye-tracking studies: gauges the likelihood of seeing various forms of display Inventory Mapping System: collates detailed characteristics of media owners’ frame inventory

ROUTE enables us to identify more variation in data. GRPs 0 1,500 3,000 LondonSouthEast Central SW Wales North WestYorkshire NE 750 2,250 Typical OOH data in Econometric model ROUTE data in an Econometric model Significantly improves the model’s ability to measure outputs from OOH campaigns

New case studies, using ROUTE data, are arriving all the time…

Talon & Brand Science meta data study – Methodology Focused on 211 campaigns 160 campaigns with OOH in the mix Campaigns were live between Most campaigns used ROUTE data for OOH measurement

Talon/Brand Science research – there is high variation in OOH campaigns. Revenue (£m)

Talon & Brand Science Research – when properly measured OOH delivers strong ROI performance.

All media channels, except radio, improve ROI when OOH is in the mix.

FMCG: All media channels, including radio, improve ROI when OOH is in the mix.

The key takeaways. 1)When measured properly OOH increases ROI for advertisers and improves ROI for other media channels 2)Route data is something we can push in the short term to improve measurement 3)We all need to challenge the old idea that OOH does not perform well in econometric modelling, by asking questions.

Document Title27 Thank you.