Measuring Impact of Advertising

Do TV ads reduce consumers’ sensitivity to price changes? A recent study carried out by a leading market research agency in the US shows that the answer to the question is yes. This article provides a report on the study.

According to new research from the Apollo pilot project, which is tracking consumers’ media and shopping habits TV ads really do reduce sensitivity to price differences, particularly when consumers are frequent buyers in a category, reports Jack Neff in a recent issue of Advertising Age.

The study by Apollo, which combines media-exposure data collected from consumers using Arbitron’s Portable People Meters with purchase data culled from Nielsen Co.’s ACNielsen Homescan consumer panel, found exposure to TV ads decreases consumers’ tendency to react to price changes.

The study, involving an unnamed “Brand X,” broke consumers down into heavy, medium and light category purchasers, finding that heavy purchasers were most likely to have their price sensitivity reduced by exposure to TV ads.

Exposure to the ads also had a cumulative effect, the study found. Even one or two exposures to TV ads for the brand produced some reduction in price sensitivity. Consumers exposed to the brand’s ad four or more times showed even less sensitivity, “with behavior changes tapering off at between seven and eight exposures,” according to a statement by the joint backers of Apollo, Arbitron and Nielsen.

Though it’s unclear what brand was involved, it’s likely to be a high-household-penetration brand from one among the Apollo pilot’s charter clients, which include seven advertisers with a combined $6.8 billion in measured US ad spending, Jack says. These advertisers include Procter & Gamble Co., Unilever, Kraft Foods, Pfizer and SC Johnson. It would need to be a fairly widely purchased brand to produce statistically meaningful results in the pilot group of 11,000 of PPM-equipped consumers, the report’s author claims.

The Modeling Group, a unit of ACNielsen that does marketing-mix modeling for clients that include P&G, conducted the pricing analyses. Research based on such modeling has long suggested that advertising reduces price sensitivity, but the Apollo backers noted that such a detailed analysis of purchases and consumer segments isn’t possible using conventional marketing-mix modeling.

Market research based on pilot panels comprising actual consumer households has not caught on as yet in India. But with signs of the Indian consumer market and advetisers spending big bucks, it is time that top advertisers encourage market research agencies to go for these studies which have become standard practice in North American and European markets.

In the ‘Project Apollo’ case, The Nielsen Company and Arbitron have deployed a national pilot panel of more than 11,000 persons in 5,000 households as a demonstration of the ‘Project Apollo’ national marketing research service. The pilot panel is delivering, to a select group of charter supporters, multi-media and purchase information from a common sample of consumers. Seven advertisers are members of the ‘Project Apollo’ Steering Committee, a group of marketers who have signed agreements for the ‘Project Apollo’ pilot panel data.

The pilot panel is intended to show advertisers how ‘Project Apollo’ enables a better understanding of the link between consumer exposure to advertising on multiple media and their shopping/purchase behavior. The pilot also showcases the enhanced ability of the ‘single-source’ marketing research service to measure the return on investment for marketing efforts.

The panel members are being given incentives to voluntarily carry Arbitron’s Portable People Meter, a small, cell phone-sized device that collects the volunteers’ exposure to electronic media sources: broadcast television networks, cable networks, and network radio as well as audio-based commercials broadcast on these outlets and on additional media. Consumer exposure to other media such as newspapers, magazines and circulars is being collected through additional survey instruments.

Data on consumer preference and purchases for a wide range of services and products are also being collected from panelists via ACNielsen’s Homescan technology, which tracks packaged goods purchases, and by means of additional surveys. Data are being collected in aggregate form to provide a holistic understanding of participants’ media interactions and their resulting shopping and purchase behavior.

With company boards increasingly demanding more accountability on the part of marketers for money spent on advertising and finance controllers always making a big hullballoo over the issue of measurable returns on investment from advertising, Indian marketers would do well to encourage market research agencies provide them with similar service as is being provided by ‘Project Apollo’.

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