Every week, retailers unleash significant advertising and promotion efforts in the perpetual competition to engage shoppers, drive trips and grow sales. Annual retail sales and market share are the result of the competition that played out in the preceding 52 individual weeks, and many companies highly value “winning the week.” But some weeks can be much more competitive than others, creating challenges for retailers also facing strong pressures to be efficient and limit costs. Based on our research, there can be significant differences in the share of budget needed to dominate advertising in a specific category for different weeks. By comparing weekly share of voice relative to weekly share of budget, retailers can determine if they are maximizing their investment.
In fact, by aligning the share of voice and share of budget metrics with weekly sales and promotional lift analysis, retailers can identify weeks that may yield a greater return on their advertising and promotion investment, rather than concentrating on weeks that may seem strategic for purely seasonal or competitive reasons.
Each year, retailers spend billions of dollars on advertising and promotion. In 2012, retailer advertising increased 4% versus 2011 across 18 media monitored by Kantar Media (e.g., television, internet, radio, newspaper, magazine and outdoor). Retailer promotion also increased during this period with retailer participation in free-standing insert (FSI) coupon pages increasing 5% and digital coupons distributed on retailer websites increasing 50%. As the retail advertising landscape becomes even more crowded and competitive, it is critical that retailers understand whether their strategies are achieving maximum impact. Weekly variances in tactics provide an important perspective that helps retailers truly understand which shoppers, categories and trips were being targeted by their competitors.
Retailers do not control their relative weekly “share of voice,” which is the result of their level of advertising and promotion activity as a share of total competitive activity, and is thus impacted by how much competitors spend. However, retailers do control their weekly “share of budget,” which reflects the allocation of their advertising and promotion activity throughout the year. Comparing share of voice versus share of budget may uncover more efficient advertising and promotion opportunities that avoid some of the head-to-head competition vying to win the shopper’s attention.
To illustrate relative efficiency based on these share metrics, Kantar Media analyzed more than $2.5 billion in retailer advertising and promotion activity that occurred in 2012 across 26 leading retailers.
Our research shows that weekly share of voice may have a significant impact on weekly shoppers, trips and sales, since by dominating the promotions seen by shoppers in a given week retailers can encourage more trips to their specific stores. In 2012, the mass channel had nearly $1.5 billion in advertising and promotion activity, which represented 55% of total share of voice within this analysis. The mass channel was followed by the food (21%), drug (17%), pet (5%), value (1%), club (1%) and convenience (fewer than 1%) channels. However, share of voice increases substantially for each of these channels during key weeks.
For example, the week ending December 3, 2012 — a critical time during the holiday shopping season — was the top week for the mass channel. Mass merchandisers spent more than $60 million in advertising and promotion activity during this week, representing a 72% share of voice and resulting in an index of 131 versus the 55% weekly average. This $60 million represented more than 4% of total annual advertising and promotion budge