The commercial influence of newsbrands Sally Dickerson managing director Benchmarketing #shiftnorth

The ROI study Sales return A meta-analysis of 500+ econometric models 2011 – 2016 This study represents an unprecedented insight into how advertising works for newsbrands. It is a bespoke analysis of Omnicom’s econometrics data vault •500 statistical models, identifying immediate and longer term impact on revenue and Return on investment •Models across multiple categories covering the last five years, and combined with industry spend sources – Standard Media Index and Nielsen • We focus on the impact of newsbrands in a multimedia and increasingly digital media mix, in terms of incremental sales and Revenue Return On Investment

The ROI study Analysis conducted by Sally Dickerson, managing director of effectiveness consultancy Part of the Omnicom Media Group A graduate in Mathematics from Oxford, Sally joined Mars UK as a market research analyst, later joining their Management Science division. She co-founded The Decision Shop, part of Bates/Cordiant then in 1999 joined the then OMD group and set up ROI (Return on Investment) focused on market mix modelling, which became OMD Metrics, then BrandScience, and is now Annalect Marketing Sciences. In 2016 Sally created a new consultancy business, Benchmarketing, running strategic quantitative consultancy projects using meta analysis.   She has also contributed to over 30 IPA advertising effectiveness awards, been an IPA effectiveness award judge, and run marketing effectiveness masterclasses for the Marketing Society and Chartered Institute of Marketing. She was a judge on the inaugural Cannes Creative Effectiveness Lions panel, in 2011 and again in 2013.

3 key questions 1 How effective are campaigns that use print newsbrands versus those that do not? 2 Do digital newsbrands improve effectiveness? And what impact do print newsbrands have on the effectiveness of other media channels? 3 What proportion of the budget should be spent on print newsbrands to deliver optimum total campaign ROI? For this particular study Newsworks wanted the answers to 3 key questions: 1. How effective are campaigns that use print newsbrands versus those that do not? 2. Do digital newsbrands improve effectiveness? What impact do print newsbrands have on the effectiveness of other media? 3. What proportion of the budget should be spent on print newsbrands to deliver optimum total campaign ROI?

The evidence Print newsbrands boost overall campaign ROI by three times on average 1 Digital newsbrands improve the effectiveness of print and print newsbrands make TV twice as effective and online display four times as effective 2 3 Spend on print newsbrands should return to 2013 levels, and can be boosted further by use of digital newsbrands Print newsbrands have a respectable direct ROI vs other offline channels, but there is evidence across all categories that including print newsbrands in the mix improves the overall campaign ROI – by an average of THREE times Not only that, but print newsbrands boost the ROI of other channels – they make TV twice as effective, online display four times as effective and radio between four and ten times more effective. It is no surprise that newsbrand advertising has been in sharp decline. Our analysis shows that the exodus has been overdone, the optimal mix % for print newsbrands is closer to 2013 levels than current 2015/2016 levels – the pendulum has swung too far Source: Benchmarketing analysis of 500+ econometric models

The study analysed six categories Retail Finance Automotive Combined services Travel & Transport FMCG Our evidence comes from hundreds of econometric modelling projects run by BrandScience, between 2011 and 2015 •Spans six different categories Combined services (retail, finance, travel, entertainment, government and telecoms) Retail Finance Travel/Transport Automotive FMCG We look at all channels as part of our modelling. One point to note though is that digital newsbrands are included in online display in the econometric models. No-one has yet modelled digital newsbrands as a separate channel. However we know that they complement print incredibly well, and boost print ROI when included. So our analysis focuses on print newsbrands and their role in the total campaign mix.

Today we will cover Retail Finance Automotive Combined services Our evidence comes from hundreds of econometric modelling projects run by BrandScience, between 2011 and 2016 •Spans six different categories Combined services (retail, finance, travel, entertainment, government and telecoms) Retail Finance Travel/Transport Automotive FMCG We look at all channels as part of our modelling. One point to note though is that digital newsbrands are included in online display in the econometric models. No-one has yet modelled digital newsbrands as a separate channel. However we know that they complement print incredibly well, and boost print ROI when included. So our analysis focuses on print newsbrands and their role in the total campaign mix.

How has adspend evolved in the last five years? Let’s look first at the advertising spend context. The challenge has been to establish the true picture of spend across channels, especially in digital.

SMI data provides a representative picture of actual media mix Actual media spend from booking data provided by 65% of UK agencies Detailed breakdown of digital spend across display, video and paid search Data across all above the line media Breakdown of newsbrand spend across print and digital So for this analysis we have used a source called Standard Media Index, which provides a much more accurate and representative picture of the actual media mix. It is based on actual media spend from booking data covering 65% of UK media agency billings. The data covers all above the line media. Importantly it provides a detailed breakdown of digital spend across display, video and paid search. So for newsbrands it covers spend both in print and in digital. Source: SMI (Standard Media Index)

Across all categories, total newsbrand spend has declined since 2011 13.7% 2013 11.9% 2014 9.7% 2015 14.4% 2012 15.4% 2011 Combining print and digital newsbrands, the picture is one of decline. Although investment in digital newsbrands is growing, it is not yet compensating for the exodus from print. Source: Total available categories SMI 2011-2015 Newsbrands = Newspapers (inc newspaper magazines), Digital newsbrands Source: Total available categories SMI 2011-2015

Digital channels accounted for a third of media spend in 2015 31.6% 50% 0% 43.0% 1.4% 9.4% 3.6% 3.4% 7.6% 2.1% 11.1% 5.8% 12.6% 9.7% TV Cinema OOH Radio Magazines Print newsbrands Online newsbrands Other digital display Digital video Search Looking at SMI for the calendar year 2015, we can see that TV is still the biggest single channel, , digital combined comes in at a third of total spend and newsbrands account for just under 10% of the market. % spend over the year – All categories Source: Total available categories SMI 2011-2015 Newsbrands = Newspaper Magazines, Newspaper, Digital Print Digital = Digital Video, Digital Display, Digital Programmatic, Search Source: Total available categories SMI 2011-2015

Across all categories print newsbrand spend has declined since 2011 11.4% 2013 9.6% 2014 7.6% 2015 12.5% 2012 13.7% 2011 Investment in print newsbrands has declined from 13.7% in 2011 to 7.6% in 2015. Source: Total available categories SMI 2011-2015 Print newsbrands = Newspapers (inc newspaper magazines) Source: Total available categories SMI 2011-2015

In retail, print newsbrands remain the #2 channel despite the decline 27.1% 2013 22.3% 2014 16.5% 2015 28.1% 2012 30.1% 2011 Looking at individual categories, In retail print newsbrands remain the number #2 channel despite the decline Source: SMI retail category 2011-2015 Print newsbrands = Newspapers (inc newspaper magazines) Source: Total available categories SMI 2011-2015

In finance, spend in print newsbrands has declined less sharply 13.1% 2011 10.7% 2012 9.8% 2013 8.3% 2014 7.7% 2015 Looking at individual categories, In finance spend in print newsbrands has declined less sharply Source: SMI finance category 2011-2015 Print newsbrands = Newspapers (inc newspaper magazines) Source: Total available categories SMI 2011-2015

Has the pendulum swung too far? Combining print and digital newsbrands, the picture is one of decline. Although investment in digital newsbrands is growing, it is not yet compensating for the exodus from print. Source: Total available categories SMI 2011-2015 Newsbrands = Newspapers (inc newspaper magazines), Digital newsbrands

Our exploration So that sets out the advertising spend context. We’ll now turn to the performance of print newsbrands in driving return on investment. Before we do so, a few words on the methodology, and how we got there.

Econometrics – identifying and assigning a weight to the ingredients driving sales Advertising x medium and message PR, Media mentions, Buzz Pricing vs competitors Store universe changes Product/Range changes Brand awareness/perceptions Competitor marketing Competitor routes to market Technological change Seasonality Economic change If sales are a cake, econometrics determines the recipe To understand return on investment of media, we need to be able to identifying and quantifying ALL key drivers of sales and revenue. The ingredients will usually include: The Advertising x Medium and Message PR, Media mentions, Buzz Pricing vs competitors Store universe changes Product/Range changes Brand awareness/ perceptions Competitor marketing Competitor routes to market Technological change Seasonality Economic change The technique assigns a weight to each ingredient Once the ‘recipe’ is known, we can reproduce the cake by combining the weighted ingredients

Calculating revenue return on investment (RROI) We isolate and quantify drivers of sales. This chart is a very simplified illustration of that, showing the sales pattern over time broken down by the different drivers, in this case a combination so enabling calculation of Revenue return on media investment

Calculating revenue return on investment (RROI) Sales £m due to spend Spend £m RROI Calculating revenue return on investment (RROI) Channel 1 £2.5 £3.0 1.20 Channel 2 £0.5 £0.5 1.00 Channel 3 £1.5 £3.0 2.00 Channel 4 £1.0 £1.5 1.50 Channel 5 £0.5 £0.6 1.20 Total £6.0 £8.6 1.43 So excluding all other factors we can isolate the contribution of each channel to sales, take away the investment on that channel, and you get the RROI – as per this example table

A meta analysis of multiple econometric cakes Meta analysis is analysis of analysis results – the “meta data” It’s common in pharmaceuticals, clinical drugs trials One trial isn’t enough, you need hundreds so as to be sure of your results If all the trials come up with the same answer, that’s a very strong result If the trial results are different, then being able to explain robustly why they are different – different dosage, different demographic sample - is again a result and new learning Using our cake analogy – we can work out whether better tasting cakes always use butter rather than margarine in the recipe, and whether using three eggs works better than two

This is an example chart, not real data Defining the relationship between spend and revenue return Each dot on the graph represents a case in our Results Vault Here the data suggests as the % of print newsbrands in the mix increases, so does effectiveness Scatter graphs allow us to see relationships in data. Here in this example chart, used for illustration, we can see the relationship between media spend and revenue return. Specifically looking at print newsbrands Percentage of total comms spend and the revenue ROI. Each dot on the graph represents an econometric model case in our Results Vault. Here the data suggests as the % of print newsbrands in the mix increases, so does effectiveness This is an example chart, not real data

Creating tertile groups of cases shows the revenue return for low, medium and high spend levels In order to see the relationship more clearly, we create tertile groups of case, according to their print newsbrand spend as a % of the overa;ll media mix. This creates robust groups, on which we can report the average Y axis score for each group - ie the average Revenue ROI Tertiles of % of total communications spend This is an example chart, not real data

1 How effective are campaigns that use print newsbrands versus those that do not? So on to our first question… How effective are campaigns that use print newsbrands versus those that do not? Is it better to have print in the mix? In each of the following charts we will look at grouping of low, medium and high spenders on print newsbrands, as well as an additional group, those spending no money in print newsbrands, and then the total campaign revenue ROI per £1 spend for each of those groups

Retail £9.08 £25.18 £18.82 £18.25 Total campaign revenue ROI Low 2-20% Medium 20-31% High 31-100% Print newsbrand % of total campaign spend in retail No print newsbrand spend 2015 spend levels 16.5% Print newsbrands boost total campaign ROI by 2.8 times, but the category is failing to spend at optimum levels In Retail: Print Newsbrands boost total campaign ROI by 2.8 times, with the optimum return when they are 20% to 31% of the mix. In all cases it is always better to have print newsbrands in the mix. Source: Brand Science Results Vaults 2011 to 2015 – excludes outliers and incomplete models Source: Benchmarketing/BrandScience Results Vault 2011 to 2015

Finance Automotive Finance 2015 spend levels 7.9% 2015 spend levels 7.9% £1.49 £8.47 £6.76 £3.91 Print newsbrands boost overall campaign ROI by up to 5.7 times but advertisers are missing out on large additional revenues by not including newsbrands in the mix Total campaign revenue ROI Low 2-5% Medium 7-22% High 22-37% Print newsbrand % of total campaign spend No print newsbrand spend Financial Services campaigns boost overall campaign ROI by up to 5.7 times when print newsbrand spend is between 7% and 22% Financial services – total comms revenue ROI vs. print newsbrand % of spend Source: Results Vaults 2011 to 2015 – excludes outliers and incomplete models Source: Benchmarketing/BrandScience Results Vault 2011 to 2015

Determining the ‘adstock’ – or the memory effect of advertising Advertising carryover rates measure the time period over which the media will drive a sales response Advertising carryover rates measure the time period over which the media will drive a sales response. 50% carryover rate a week means that if there were 100 impacts in the week of the advert, then there would be an effect of 50 in the second week & 25 in the third Carryover is identified by best fit/statistical confidence within the modelling process It greatly influences the total return of a campaign

Adstock greatly influences the total return of a campaign 80% per week is typical of a long term branding message 30% per week is typical of a shorter term promotional message

Print newsbrands go on working for much longer than online in the finance category 391% higher impact at day 7

Even in the short-term retail category, print newsbrands add 9% more impact on a weekly basis 9% higher impact at day 7

Print newsbrands outperform online for all service categories Category Print newsbrands Online Automotive Finance Retail Travel & transport Combined services 69% 54% 47% 48% 60% 11% 43% 39% 37%

2 Do digital newsbrands improve effectiveness? And what impact do print newsbrands have on the effectiveness of other media channels? So we know then from our results that it is always best to have print newsbrands in the mix, and we know the average levels to deliver optimum return. This is not about comparing individual channels but rather acknowledging that most if not all campaigns are multimedia and that we need to know the role of print newsbrands in the mix. Our second question relates to how print newsbrands boost the effectiveness of other channels within the mix.

Adding digital to print improves print revenue ROI by up to five times in retail x5

Print newsbrands make TV spend work twice as hard Combined services £6.49 £12.22 £5.72 £10.82 Print newsbrands make TV spend work twice as hard TV revenue ROI Low 2-10% Medium 10-12% High 12-18% Print newsbrand % of total campaign spend in combined services No print newsbrand spend Using the same format, comparing groups by level of spend in print newsbrands we looked at the impact on the average TV revenue ROI. For this analysis we looked at the wider combined services category to get a bigger sample of models. The results showed that including print newsbrands in the mix make TV spend work twice as hard, doubling the average revenue per £1 spent on TV. Source: Benchmarketing/BrandScience Results Vault 2011 to 2015. Combined services includes: Finance, Retail, Telecoms, Travel & Leisure, Media, Government/Social/Political, Other Services(Online & Offline)

No print newsbrand spend Combined services £12.46 £20.96 £17.42 £55.98 Print newsbrands boost online display and video by up to four times Online display revenue ROI No print newsbrand spend Low 2-10% Medium 10-12% Print newsbrand % of total campaign spend in combined services High 12-18% Using the same format, comparing groups by level of spend in print newsbrands we looked at the impact on the average online display revenue ROI. For this analysis we looked at the wider combined services category to get a bigger sample of models. The results showed that including print newsbrands in the mix makes online display spend work up to four times as hard, Source: Results Vaults 2011 to 2015 – excludes outliers and incomplete models Source: Benchmarketing/BrandScience Results Vault 2011 to 2015. Combined services includes: Finance, Retail, Telecoms, Travel & Leisure, Media, Government/Social/Political, Other Services(Online & Offline)

Finance Automotive Finance 2015 spend levels 7.9% £4.84 £12.10 £13.33 £8.28 Print newsbrands also boost online RROIs by an average of 2.3 times in finance Online display revenue ROI Low 2-10% Medium 10-12% High 12-18% Print newsbrand % of total campaign spend in finance No print newsbrand spend And even in the finance category print newsbrands boost online display ROIs by an average of 2.3 times Finance – online total revenue ROI vs. print newsbrand % of spend Source: Results Vaults 2011 to 2015 – excludes outliers and incomplete models Source: Benchmarketing/BrandScience Results Vault 2011 to 2015

Combined services Finance Automotive Finance Finance 2015 spend levels 7.9% £4.02 £40.45 £11.34 £55.82 Radio revenue ROI Low 2-7% Medium 7-22% High 22-37% Print newsbrand % of total campaign spend in combined services No print newsbrand spend Combined services: print newsbrands boost radio revenue by up to 10 times And the same is true for radio, where the inclusion of print newsbrands in the mix, boosts radio revenue ROI by up to 10 times in combined services. Combined services – radio total revenue ROI vs. print newsbrands % of spend Source: Results Vaults 2011 to 2015 – excludes outliers and incomplete models Source: Benchmarketing/BrandScience Results Vault 2011 to 2015. Combined services includes: Finance, Retail, Telecoms, Travel & Leisure, Media, Government/Social/Political, Other Services(Online & Offline)

Print newsbrands boost radio revenue by up to 1.9 times in finance 2015 spend levels 7.9% £1.70 £3.21 £0.45 £3.15 Radio revenue ROI Low 2-7% Medium 7-22% High 22-37% Print newsbrand % of total campaign spend in finance No print newsbrand spend Print newsbrands boost radio revenue by up to 1.9 times in finance In finance there is also a positive story the effect of print newsbrands on radio revenue, where they boost the radio revenue ROI by almost two times Finance – radio total revenue ROI vs. print newsbrand % of total campaign spend Source: Results Vaults 2011 to 2015 – excludes outliers and incomplete models Source: Results Vaults 2011 to 2015 – excludes outliers and incomplete models Source: Benchmarketing/BrandScience Results Vault 2011 to 2015

3 What proportion of the budget should be spent on print newsbrands to deliver optimum total campaign ROI? So what we’ve shown so far is how vital print newsbrands are to both overall campaign revenue ROI, boosting it on average by three times, and also to the effectiveness of other channels, making TV spend up to two times more effective, online display up to four times and radio as much as ten times. The final question then, using all this data, is how much should you spend on newsbrands. We know the ranges that deliver the optimum spend across the categories, but what is the sweet spot and how does that differ by budget level?

The data from the meta analysis allows us to build response curves for each channel, by which we calculate the optimum split for any given budget Revenue £m Media investment £m 80 900 Online Display TV Online Search Newspapers VOD Outdoor Magazines Radio TV Sponsorship Cinema Our Results Vault across the last 10 years feeds a channel planning for sales system We analysed ROIs across data points in each category and generated average response curves Curves that “go flat” suggest high diminishing returns and no benefits to spending, unless that curve is flat and above all others We can take an annual budget and optimise the overall ROI for the spend, by changing the mix It’s a simple hill-climbing optimisation that picks the highest and the slopi-est points by medium. We then use this to calculate the optimum channel split for any given budget. Source: BrandScience channel planning sales analysis 2015

Print newsbrands should form a significant proportion of the mix for all budget levels in supermarket retail Recommended % spend on print newsbrands to optimise total campaign ROI 0% 13% 22% 24% 26% 27% 21% 20% 19% 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 Total annual campaign budget £m In retail, we have looked at supermarkets. Here the average spend is around £40m and larger spenders are at around £80m. The range from our tertile analysis was 20-31%. Here we can see that the sweet spot for the average spender is at 27%. Source: BrandScience channel planning sales analysis 2015

Print newsbrand spend % 2015 Category Typical spend p.a. £m Print newsbrand spend % 2015 Print newsbrand % spend for maximum campaign effect Retail – Supermarkets £40m 16.5% 27% Source: Benchmarketing/BrandScience Results Vault 2011 to 2015 Source: BrandScience channel planning sales analysis 2015

Above annual budgets of £5m+ print newsbrands should form a significant proportion of the mix in non-grocery retail Recommended % spend on print newsbrands to optimise total campaign ROI 0% 8% 15% 19% 21% 23% 24% 25% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 total annual campaign budget £m In retail we also looked at non-grocery retail. Here the average spend is around £8m.

Print newsbrands should form a significant proportion of the mix for finance brands Recommended % spend on print newsbrands to optimise total campaign ROI 11% 62% 51% 34% 26% 21% 17% 15% 13% 12% 5 10 15 20 25 30 35 40 45 50 Total annual campaign budget £m In finance the average spend is around £25m and larger spenders are at around £50m. The range from our tertile analysis was 7-22%. Here we can see that the sweet spot for the average spender is at 21%. Average spend in 2015 was much lower at 7.7%. Source: BrandScience channel planning sales analysis 2015

Finance Category Finance Typical spend p.a. £m Print newsbrand % spend for maximum campaign effect Print newsbrand spend % 2015 £25m (higher spends £50m) 21% 13% for higher spends 8% Source: BrandScience channel planning sales analysis 2015

The pendulum has swung too far for print newsbrands – and advertisers are missing out 13.7% 2011 12.5% 2012 11.4% 2013 9.6% 2014 2017 7.6% 2015 2016 Source: SMI (Standard Media Index)

The evidence Print newsbrands boost overall campaign ROI by three times on average 1 Print newsbrands make TV twice as effective and online display four times as effective 2 3 Spend on print newsbrands should return to 2013 levels, and can be boosted further by use of digital newsbrands Print newsbrands have a respectable direct ROI vs other offline channels, but there is evidence across all categories that including print newsbrands in the mix improves the overall campaign ROI – by an average of THREE times Not only that, but print newsbrands boost the ROI of other channels – they make TV twice as effective, online display four times as effective and radio between four and ten times more effective. It is no surprise that newsbrand advertising has been in sharp decline. Our analysis shows that the exodus has been overdone, the optimal mix % for print newsbrands is closer to 2013 levels than current 2015/2016 levels – the pendulum has swung too far