An ROI analysis of the FMCG sector
The missing link
The advertising community has two long-standing demands of online marketing:
Prove that the online channel can build brands l Prove that it can drive offline sales. l Whilst there have been many thousands of branding studies undertaken to address the first point, considerably less attention has been paid to the second. Studies of online marketing effectiveness have so far struggled to demonstrate a clear link with in-store behaviour. In the absence of a proven link between online campaigns and offline sales, FMCG marketers have been reluctant to shift marketing budgets to the web. In the UK, online display currently receives approximately 1% of FMCG brands’ media allocation; TV gets around 59%, Print 26%, Outdoor 8%, Cinema 3%, and Radio 3%*. With the current economic climate increasing the focus on ROI, demands for proof are more pressing than ever. Microsoft Advertising, in partnership with econometric experts BrandScience, looked carefully at how the case for online driving offline sales can best be made. Our approach is Econometric Modelling, a technique used for over 25 years by FMCG businesses in the UK. Econometric Modelling provides a credible, cross-media view of marketing reflecting today’s media landscape. Our study included all of the media channels used to a significant degree by FMCG brands. Online search advertising represents a tiny proportion of FMCG spend, and for this reason it has not been included in the study.
What is Econometrics?
Econometric Modelling takes its name from its original purpose – to understand economies. It has other applications too, one of which is the impact of marketing on sales. With its mathematical models, statistics and complex measurements, Econometrics is often seen as the dry end of marketing, the remit of number-crunchers, yet its capability for proving the impact of online on offline sales is nothing if not exciting. Econometrics is