Consumer packaged goods (CPG) brands can experience a return of almost three dollars in incremental sales for every dollar spent in online advertising that has been precisely delivered using purchase-based information, according to research from Nielsen Catalina Solutions.
These findings, based on what we believe to be the industry’s most in-depth and comprehensive study to date on the correlation between online advertising and offline purchase, indicate a turning point for the digital medium as marketers seek to better leverage their advertising budgets across multiple channels.
“Not only can we prove that online advertising drives sales, but the returns on ad spends are significant when purchaser-based data is used to optimize the media buy,” said Mike Nazzaro, CEO of Nielsen Catalina Solutions. “The marketer’s ability to precisely reach the desired consumer segment in the right media enabled by shopper-based analytics is changing the way advertisers plan and buy media,” Nazzaro said.
Nielsen Catalina Solutions, a JV of Nielsen and Catalina, helps CPG marketers and media companies measure and improve advertising performance with single source analytics for television, print, CRM, online and mobile. For this body of work, Nielsen Catalina Solutions and Nielsen completed more than 800 studies over the past seven years, collaborating with more than 300 CPG brands and 80 companies to measure the correlation between online advertising and offline consumer purchases.
A key metric for measuring campaign success is the ratio of the sales generated compared with the cost of the advertising, typically expressed as a cost per thousand or “CPM.” The incremental sales revenue per thousand households or “RPM” is compared with the advertising CPM to determine the return, or payback. According to Nielsen Catalina Solutions’ research, the average payback for all CPG categories was 2.79, ranging from 2.36 for food items to 5.29 for the pet category.
Payback* per $1 Advertising Investment
All-Category Average 2.79
Health & Beauty Aids 2.73
General Merchandise 2.73
*Ratio of incremental sales revenue per thousand households (RPM) to advertising cost per thousand (CPM). RPM/CPM = Payback
The Best Customer Analytics: Define Once, Activate Everywhere
Nielsen Catalina Solutions integrates media viewing data with 60 million households of shopper data from Catalina and the Nielsen Homescan panel to help marketers identify and reach their most valuable customers, and measure the resulting return on investment (ROI). The resulting “Define Once, Activate Everywhere” model delivers advertising performance and accountability analytics for national CPG brands across all major platforms, including:
Nielsen Catalina Solutions powers closed-loop analytics for several networks, portals and publishers under brand names such as Yahoo! Consumer Direct, AOL Shopper Loyalty, Catalina BuyerVision, Microsoft Advertising CPG Online Effect, Specific Media Shopper Access, Time Inc. PinPoint, Everyday Health Consumer Connect, and BrightRoll ShopperConnect.
Television: The data on what people buy also integrates with the majority of network and cable television.
Print: Nielsen Catalina Solutions’ analytics fuel the program, Time Inc. PinPoint, which incorporates the shopper data for both its print and digital offerings and the Meredith Sales Guarantee, an ROI guarantee from the Meredith Corporation.
Mobile: Nielsen Catalina Solutions’ strategic alliance with leading mobile advertiser 4INFO links purchase data with mobile viewing data from 80 million unique users tracked by 4INFO’s AdHaven platform.
“These findings reveal an opportunity for advertisers to increase sales by leveraging purchaser data to improve media planning and buying. CPG marketers spent over $22 billion in total advertising in 2011, including $2 billion to $3 billion in the online medium,” Nazzaro said.