tv is popular

2007 Performance ITV Family continues to Grow

The Case for TV:

TV is as popular as ever

TV amplifies other media and works across platforms

TV remains the most effective medium

TV pays back

TV is as popular as ever!

Source: IPA Touchpoints Hub Survey (other media) and BARB for TV Monthly Reach by Hour

Monthly Reach by Hour

TV still takes up most of peoples media dayand because its as popular as ever and is still loved by the masses it is still the key media for driving the fame, talkability and emotional connections between consumers and brands.

It is the best place for your brand to be seen by all at the same time and therefore create those day after Watercooler moments. It gets brands talked about, gives them kudos and universal meaning.

It forms the hub of mixed media campaign amplifying the work of other media and driving people online.

TV viewing hours unchanged for 15 years

Source: BARB/TNS Infosys Individuals

Average Daily Hours Viewed

and if we look over time, TV viewing has remained unchanged. Despite all the hype that traditional television is dead the data proves that this isnt the case at all.

TV is constantly on the consumers radar!

Bringing up Children 24%

Crime, Law and Order 25%

Source: Television Opinion Monitor Q1-Q2 2007/ Sample UK adults (1224)

Cost of Living 26%

Family and Friends 34%

Sport 25%

Television Programmes 29%

TV programmes remain the second most talked about subject after friends and family and this position has remained unchanged for the last 10 years.

The DTR has enhanced TV viewing

Sky+ homes watch 20 mins more TV per day and 21% more commercial TV than non-Sky+ homes

Most viewing is still live (88%+) in pvr homes

Most time-shifting programmes watched on same day as recording

42% of time-shifted breaks viewed at normal speed

DTRs increase commercial impacts by 5%!

Thinkbox 2007 Engagement Study found a much higher concentration on the TV screen when commercials are being Fast forwarded

Source: BARB, ACB/LBS and Skyview, Thinkbox

and the DTR has enhanced TV in peoples lives. It has helped people to love TV more and make it their own.

People in DTR homes are watching more TV as they can better tailor it to their needs. As they are watching more TV they are watching more TV advertising.

Research carried out by Thinkbox on how viewers engage with TV showed that if people do fast forward through the ad break (and a lot didnt!) viewers concentrate even more on the screen and still talk about what is zipping past their eyes.

Sponsorship bumpers are seen to work even harder in this environment as viewers are looking for the bumper to know to stop zapping as they have nearly reached the programme. The bumper therefore becomes even more closely associated with the programming.

One flat-screen TV sold every six seconds

Over 3 million sold in 2006

Average screen size growing by an inch per year

45% of new TVs bought in last year cost 500+

The celebration bit...

Consumers are investing in TV

The importance that TV still has in peoples lives means they are investing in better ways to enjoy their TV experience.

TV and ad content delivered via the internet

Hard disk based on demand and interactive services & advertising

EPGs, Sky Active menus

Interactive TV services and ads

Server based on-demand servicesand ads

Personal Video Recorders (PVRS)

Video On Demand (VOD)

Internet Protocol TV (IPTV)

Interactivity

Guides & Interfaces

Mobile TV

Server, broadcast and download based mobile content services

New Functionality Supporting TV Viewing

Consumers are starting to celebrate the set in the corner of the room again.

Consumer activity shows that all the new functionality acts as a support, not a replacement for broadcast TV.

TV content is working on these new platforms, extending peoples experience of it and any brand that is associated with TV content therefore also spends more time with the consumer.

ITV has the unrivalled ability to create
viewer response and engagement

Source: BARB/ITV Consumer/YouTube (Youtube average 647,000 views per video), ITV Interactive Tracker

Approx. applications to enter the shows auditions:

50,000

Approx. competition entries to win tickets to the shows:

1 million

TV ratings for final of Britains Got Talent:

16.1 million

Red button interactions:

1 million+

George Sampson videos on YouTube:

4,850+

Top 20 video views of George Sampson on YouTube:

30 million+

Together all these different platforms give ITV a unique ability to interact with viewers.

To take just one example, last years final of Britains Got Talent got almost 13 million viewers, 3 million of whom voted. Even more spectacular, Paul Potts winning performance is as far as we can tell the most downloaded clip on YouTube worldwide. There were more than 500 different videos uploaded, with total views topping 30million plus.

0800

On bus read Piers Morgans blog
via BGT WAP site

0900

Catch-up on latest goss in
Friends Reunited BGT group

1100

E-mail clips to my friends from ITV.com

1300

Lunchtime catch-upshow on ITV2

1930

Share mobile clip inpub with friends

2100

The show!

2145

Vote via Red Button. Please dont letPaul go out just yet.

2200

Talent Extra on ITV2

1630

Watch exclusive
behind-the-scenes video
on itv.com

1500

Watch best clips on BGT branded
You Tube channel

1800
Receive email newsletter

with link to show preview

TV content works across many platforms
ITV 360 - The Viewer Experience

Continuing with the Britains Got Talent example this chart shows there are various ways that a viewer can interact with one of ITVs programmes.

A viewer could read Piers Morgans blog on her mobile or email clips to her friends via ITV.com or watch a lunchtime catch-up show on ITV2. She could be watching exclusive backstage videos on ITV.com or sharing mobile clips with her friends.

Indeed, there are no doubt some people interacting with the programme in all of these ways.

This 360 degree viewer experience around water cooler type shows are now a reality and ITV can deliver them better than any of our commercial rivals.

Engagement with TV Content Online

% Done in last 6 months

Source: nVision Research The Future Of TV - Base: All Internet users aged 15+, 2007

When looking at the consumption of TV related content online we can see that it is the younger consumers who are leading the quest for more TV content.

The young are still spending more time with TV

Source: TV BARB 01Jan-12Oct08 / Press TGI Q3 2008 / Radio RAJAR Q2 2008 / Internet Comscore Aug 2008

1534 - Daily Minutes Viewed / Visited

* Each bar is based on the people viewing, listening or accessing each medium.

...and it is understandable that they are the ones leading in downloading and sharing TV content as from the figures here we can see they are spending more time with TV than other media.

Despite all the hype that the younger audiences are spending more time on the internet at the expense of TV, they are still spending much more time (nearly 3 times as much) per day with the TV.

Thinkbox research shows that online access and TV viewing work well together for the younger audiences with nearly half of them surfing the net and watching TV at the same time.

and they are less ad averse

% Agree

Source: Other Lines/TGI

Whilst the younger audiences are spending more time with TV than the internet, they are also much more positive about TV advertising

Recent work carried out on TV and Youth audiences by Other Lines of Enquiry shows that 8-21 year olds are almost 3 times more likely to enjoy TV ads than adults. They accept advertising as part of commercial TV and talk about TV ads with enthusiasm.

When asked what their favourite adverts were 805 of the ads mentioned were TV ads.

15-34s - Daily Reach

Source: TV BARB Weeks 1-41 2008, 3+ mins reach / Press TGI Q3 2008 / Internet Comscore Aug 2008

Reach in millions

Page

And we also deliver strong reach against 15-34s.

Every day 3.9 million 15-34s watch ITV1 - easily outstripping the Sun and Facebook. Once again ITV2 performs well reaching 1.5m 15-34s every day.

16-34 viewing has remained consistent

Weekly Reach in Millions

Source: BARB/TNS 2003-2008

Their viewing of TV hasnt dwindled over the years.

and they are switched on for just as long

Average Daily Hours Viewed

Source: BARB/TNS 2003-2008

Their TV attention hasnt dwindled over the years

TV Amplifies Other Media

The true return of each medium needs to be identified

Source: Mediacom / Thinkbox Event / Example Client

Whilst it is easy enough to look at media return in isolation, it goes without saying that the knock on effect of one will have an impact on the effectiveness of the others. Medicoms DART tool highlights this.

The agency measures how effective different media channels are at generating response.Each channel has its own phone number so the cost per customer can be measured and so the value of each channel assessed (blue bar).So, for example, the cost per customer is 40 for DRTV and around 5 for search

However, it doesnt take into consideration the effect of one media channel on another.TV has a big effect on other media, particularly search. We know that when a TV spot has been transmitted, there is a huge surge in search so if we only look at the costs assessed in the blue bars on this chart, we are missing the real effect of TV because of its influencing role. Mediacom did an econometric analysis on the response data, that built in the effect that different media channels have on each other . Once adjusted, the cost per customer for DRTV was significantly reduced to 12 per customer (the red bars) and infact brought down the cost for all other media too because of the huge role it plays.

So its important to look at how TV effects the response in other media in order to assess the true vale of the investment made.

TV can drive consumers online

You may not believe this but last week I stood in front of a major media agency and 50 or so of their clients and sold TV.

I told them that TV & search are highly compatible & that money should be taken from below the line and pushed back into TV alongside (obviously) massive growth in search.

This is a common theme of mine as we see huge spikes in query volume following TV exposure both editorial & ads.

Mark Howe, MD Google Media Sales

TV works exceptionally well with online...driving people to websites. You dont know they are out there until you hear about them on the TV!

Media Spend -

Unique Users
000s

Source: Comscore and NMR Ad Dynamix

TV Spend and Unique Users Relationship

Another clear example here on TV driving people online is for Ocado.com.

There is a clear relationship between the periods of TV advertising spend and the unique visitor numbers.

More and more online brands are now realising the power of TV.

TV is becoming more effective over time

The launch of multi-channel is making it easier to reach consumers

Average market share gain (% points) where TV is the lead medium

Source: IPA - Marketing in the Era of Accountability

With the onset of digital meaning tighter targeting opportunities and an increase in commercial impacts, TV is getting more efficient over time. The IPAs work demonstrated that the average increase in market share where TV is the lead medium in the 80s was 6 points back in the 1990s but this has jumped to 8.5 in the noughties.

ITV, like many others, has realised the importance of this with ITV2, ITV3, ITV4 taking advantage of the library of quality content we have and new commissions to better target and entertain our wide range of audience demos.

TV prices have continued to fall in the last 7 years

Real CPT (1985 = 100)

Year Base 100 = 1985


The rise of multi-channel means more competition making TV more cost efficient

In addition the cost of using TV has fallen in real terms. According to the IPA, the relative cost of buying TV is now as low as the 1980s meaning its never been a better time to plan or buy a TV campaign.

ITV1 prices have continued to fall in recent years

Real CPT (2001 = 100)* ITV Costs indexed against 2001

Year Base 100 = 1985

Source: ITV Salesnet, CPTs indexed on 2001 figures

And ITV has also seen reductions on cost, with CPTs lower than they were in 2001.

TV Pays Back !

Thinkbox: Payback in the Third Age of Television

The Main Drivers of TV Effectiveness and Value

Amplification of Other Media

Fame and Awareness

Emotional and Implicit Associations

Immediate Benefits and Long Term Value

The Power of Emotion and Fame

The IPAs Marketing in the Era of Accountability research demonstrated that the most effective campaigns of all are those emotional ones that work by getting the brand talked about, connected with, and made famous. Such campaigns outperform others on almost every metric - especially price sensitivity and profit.

Being seen to be bigger than you are and punching above your weight was a key driver of large business effects from bottom line sales to profit and loyalty. Of course, creating emotional brand connections and making brands famous are what TV advertisings all about!!

Lets consider the success of 118 118 campaignOver half the budget went on TV in the March 2003 campaign, and By Aug 2003 the moustached characters were national icons. In the month leading up to the 192 switch off 16.9 million calls were received. In the month after 118 118 took over 53.4 million calls were received! It was the most recalled ad since 1997 and the 11.5 million adspend generated a 45.4 million income.

And the Honda Cog campaign another talked about creativeLaunched in March 2003 in ITVs Grand Prix this ad got tongues wagging immediately. It was downloaded 2.3 million times from Hondas website and soon became advertising legend. It was shot 606 times to get right and won 37 awards. The overall Power of Dreams campaign (which included the cog) saw worldwide sales increase from 2.6 million to 3.2 million a year. UK sales went up 28% and even sales of used Hondas increased.

Following are a few clips to remind ourselves of some of the great adverts that have been on our screens over the last few years

Source: Guardian, Campaign, Marketing, Telegraph, FT Nov-Dec 2007

Case Study :

2006 - 45 million advertising campaign

Food category exclusively TV

Every execution outperformed branding and recognition tracking norms

National stampede on hot chocolate puddings!

Food sales up 8.4%

Halo Effect - UK sales up 9.1%

IPA Grand Prix and Gold Winner 2006

The voice and images of the M&S food ads definitely appealed to peoples emotional side of thinking about eating the mouthwatering food and as M&S said in the clip, they literally wanted people to want to lick their TV screens!

For their food range M&S chose to exclusively use TV to enforce their premium positioning.

Source: Guardian, Campaign, Marketing, Telegraph, FT Nov-Dec 2007

Case Study :

Started in August 2007

Initially multimedia then 100% TV

Youtube received 500,000 page views in the first week ad went on air

By end November 2007 had been viewed over 6 million times

Weekly sales up 9% year on year during period on air

Exceeded revenue growth targets of 4-6%

Whilst the M&S food ad is a great example of connecting with our emotional side, the Cadbury Gorilla ad is a great example of creating talkability and buzz.

TV created that talkability and drove the viewers to watch the ad again on Youtube.

Case Study: Hovis

TVs longest commercial:

122 seconds

Launched in Coronation Street

3 fold increase in buzz around the brand

Source: Media Week 14Oct08

and the 122 second Hovis ad is a fantastic example of successfully engaging people emotionally and also creating buzz!

Source: IPA - Marketing in the Era of Accountability Oct 2007

%

Brands that shout louder grow faster!

Also in the IPA study, brands that invested in shouting louder than their competitors were seen to increase their market share.

From various studies that the IPA analysed (aswell as their own) they came to the rule of thumb that for every 1 point of market share a brand seeks to gain, its share of voice needs to be around 10 points above its market share. For very successful brands they can expect to see the market share grow by 2 points for every 10.

TV enhances campaign efficiency

Market share % point gain per 10% point excess share of voice


and if they aim to shout louder using TV (which as we have seen makes other media work harder) then their market share will increase at a greater rate.

TV leads to greater business successes

% Reporting very large business effects over the last 26 years


Immediate Benefits and Long Term Value

% Increase in FMCG purchasing within 4 weeks

Source: TNS Mediaspan, database of case studies, 1995-2002

New brands

Established brands

For large established brands& staples, % sales growthis much smaller but in s is significant

TV advertising works very well to drive sales of launch brands

Brands in high interest categories e.g. Toiletries, Ready meals tend to show higher than average % sales growth

On average, TV Advertising generates a 4.4% sales uplift within 4 weeks

Avg: 4.4%

TV Works methodology Dec 2003

Single source piece of research covering:FMCG purchasingTV viewing

Conducted independently by TNS3000 homes nationally5 million purchases / 28 FMCG product categories = 243 brands3 years of data to December 2003 / Results analysed in terms of purchase occasions-------------------------------------------------------------------------------------------------------------

Immediate Benefits

This chart shows from ITVs TVWorks Study that TV advertising is effective at all stages of a brands lifecycle.

Within the first 4 weeks of advertising, launch brands see significant increases in sales and high interest categories see above average increases too.

Although established brands see smaller % increases, these are significant in value terms due to the size and volumes already sold.

Source: ITV Wales December 2007

Case Study :

December 2007 campaign 2 weeks ITV1 Wales only

Budget under 15,000

Campaign seen by 1.3 million adults

Footfall raised by 20% when most Cardiff retailers struggling

This was the first time wed been on TV for over 10 years and the help and service we received from ITV throughout the entire process was second to none. We worked with a production company who produced a high quality product at a very good price and the results were fantastic. Although television is a more expensive option it was well worth it. Mark Nott, General Manager

Gloomy Christmas promises miserable new year for retailers

Source: Telegraph, Guardian, IGD Retail Analysis Feb 2008

Case Study :

14 million national TV campaign

Christmas ad featuring Lulu, Denise Van Outen etc

Strongest Xmas results ever delivered

Double level of growth than Tesco, Sainsburys, Waitrose

4 million more shoppers attracted over 6 weeks to 06Jan08

Year on year sales up 9.5%, and operating profit up 50%

On a larger scale the Morrisons Xmas campaign is a great example of the immediate benefits on TV advertising

Low Loyal Consumers respond most to TV Advertising

Contribution to Sales Uplift 57% 27% 15%

% increase in purchasing in first 4 weeks

Source: tvWORKS, Jan01-Dec03, saw at least 1 spot in prior 28 days, loyalty reflects spend on brand as % of spend on category, low loyal = 0-10%, medium loyal = 10-39%, high loyal = 40-100%

tvWorks

Morrisons increase in new customers over the Christmas period emphasises how low loyal consumers are most effected by TV advertising and are the ones that drive the increases in sales.

Low Loyal Brand Buyers respond most to TV advertising because: they know least about the brand TV advertising has the most to say to them

These buyers are important since they may become the core buyers of your brand in the future.

Low Loyal consumers are most effected by the absence of TV Advertising

Sales index

Minimum days elapsed since advertising was last seen

Source: tvWORKS, 2 years to Jan03, loyalty reflects spend on brand as % of spend on category, low loyal = 0-10%, high loyal = 40-100%, the sales index compares the amount of purchasing of the brand at each point in time to the amount of purchasing at the control

As low loyal consumers drive the increases in sales after TV advertising, they are also heavily effected when that advertising stops.

The effects of TV last for a longer term

Nearly 45% of TVs revenue effects are delivered after the year of the investment.

Source: PWC/Thinkbox Payback Study Oct 2007

The tvWorks study also highlighted the long term significance of TV advertising:

Effect of TV advertising works way beyond the first month after the ad seen.

For every brand bought, as a result of advertising, a consumer is likely to make 4 more repeat purchases than expected of that brand within the year.

Looking at the effect of advertising in the first month alone under-values the power of TV advertising by excluding these extra purchases. Over the long-term advertising builds brand equity and value

One of the main findings from PWCs Payback Study (to be discussed in the next few slides) was that TV pays back over the long-term. In fact 45% of TVs revenue effects are delivered after the first year of investment, with the overall effects still being felt even into the third and fourth years after investment.

The TV results arent that surprising when you consider the long term emotional associations that come with TV advertising. For example, most of us can remember fantastic advertising from decades ago and virtually all of us still think of chocolate puddings in relation to M&S, bouncing balls with Sony and white horses with Guinness even though the ads are all over 2 years old.

Thinkbox and PWC analysed long term effectiveness


Car Insurance

Auto x 3*

Hair-care

Fruit Juices

Cereal

*lower medium, upper medium, premium exec

706 brands, 10+ years of data, 41 brand surveys, 7 categories (significant spend, various price points)

volume, pricing & ad data

The aim of PWCs Payback Study was to provide an assessment of relative marketing effectiveness in the UK from an economic and financial perspective.

The project involved a mix of Econometric Modelling and Conjoint Analysis through 41 brand surveys.

Econometric:Analysed volume sales across 10 years using regression/correlation analysis to attribute changes in sales to media spends.

Conjoint Analysis/Brand Surveys:Asked people about their brand and willingness to pay choices to determine a hierarchy of importance people attach to each element of a brand can therefore calculate the underlying brand strength and what price premium they can command over and above what they would be able to charge if they were a generic or commodity brand. Then correlated the brand values with the marketing investments made in the last 5 years to see which media is associated with creating the most financial value.

10 Year + Period:Looked over 10 years of data as from previous studies it has become apparent that real payback is not just short-term sales uplifts which can be unprofitable but it is at least sustained revenue gains from advertising investment. Its the long term effects that generate real business value

Longevity is key to long term value. Most brands are short lived.


Take the cereal market as an example

born post 91 & dead pre 06

49%

born post 91 & alive post 05

25%

born pre 91 & dead pre 06

15%

born pre 91 & alive post 05

11%

4.1 years

7.2 years

8.9 years

14.5 years

Lifespan

There are two main ways to identify and define long term payback. The first is in Longevity.

The longer a brand lives, the longer the brand specific cash flows roll in and so shareholder value can be maintained.

If we look at this cereal market example from the study you can see that you need to look over a period of years to really unlock the value of a brand.

Over the course of a decade, many brands were born and died. Only 11% of the brands born in 1991 remain alive today.

Those brands that have lived the longest perfectly correlated with TV Share of Voice and TV spend taking the greatest % of their media spend.

Brand value is just as important as longevity


49p400m per year

31p1m per year

The second way to define payback is BRAND VALUE.

60-80% of the FTSE 100 shareholder value is in the brand itself in the intangible, the magic that TV has helped to create.

Where the payback lies in terms of brand value is in the difference between what would be paid if a product was not advertised and was just a commodity (like these value baked beans) and what IS paid for a well known and highly advertised brand.

If you just have a commodity product, the sales and profit are limited. Not as many people desire it and they dont want to pay a lot for it.

If a product becomes a brand more people desire it and a higher price can be commanded.

This willingness to pay for brands was again perfectly correlated with TV spend. The higher the brand value the higher proportion of media budget went into TV.

TV core medium for nearly all leading brand value owners

m


Looking at the brand leaders (those with the highest brand value scores) for each of the categories and their overall media investment, you can see that they all (bar the 5 Series) used a disproportionate amount of TV than the average.

TV was an endemic part of driving not only sales, but overall brand equity as well as providing more pound for pound value in terms of bottom line revenue than any other media

TV investment delivers a clear increase in revenue

On average a 1m increase in TV investment yields a 4.5m increase in revenue


So, what else did PWC find?

Overall, they found that TV is the most efficient driver of revenue with every 1m invested generating a 4.4m increase in revenue. This obviously differed massively by category and brand so returns fluctuate between 3.19 and 5.9m but overall return is nearly five times the investment which is great news for practitioners.

The only other media which showed a significant level of return was press, with an average return of 3.5 million for every 1m invested. No other media showed significant levels of return. This could be down to variations in data or adequacy of the campaigns, but the most likely explanation is that investment in other media offer shorter-term returns and benefits rather than creating long-term value.

TV and ITV1 has clearly helped the Anchor Butter brand to grow

3.9m

6.5m

(+68%)

Anchor sales up 14% from 65.6 million to 74.5 million

Those highly exposed to ITV1 accounted for 90% of the increase in sales value.

spending over a third more on Anchor than those with very little exposure to ITV1

Source: NMR Own Costs and TNS Worldpanel Sales for Anchor BUTTER Brand Set (Highly exposed to ITV1 = would see 90% of any advertising exposures as calculated by weights of viewing by daypart/dayand frequency)

Anchor Share of Spend 2007 vs 2008

ITV1 spend up 253%

Anchor Butter increased their TV spend by 305% year on year and their ITV1 spend by 263%. They increased their share of advertising budget into ITV1 from 15% to 31%. This change is strategy helped lead to a 14% increase in sales an extra 8.9 million.

Those customers who were highly exposed to ITV1 contributed 90% of the additional sales value (8 million). Those hardly exposed to ITV1 at all only contributed 10%.

ITV1 has worked hard for the Anchor brand.

Immediate effects on sales at all stages of a brands lifecycle

4.4% increase in FMCG sales within the first 4 weeks of TV advertising with 4 more repeat purchases

Lead medium for most successful brand value owners

Delivers its value over a much longer time frame (45% after year 1) which is financially useful

A 1 million increase in TV investment yields a 4.5 million increase in revenue

Source: PWC/Thinkbox Payback Study Oct 2007 / tvWorks Dec 2003 / IPA Marketing In The Era of Accountability 2007

TV Pays Back!

TV remains central in the lives of consumers and in the success of brands

TV still as popular as ever and so drives emotional associations between brands and consumers

TV amplifies other media works on many platforms

TV pays back

Immediate sales benefits

Long term brand and shareholder value

ITV remains the nations most popular commercial channel

The Case for Continuous TV Advertising

Consumers are making careful brand choices, staying in more and watching more TV so now is the time to take advantage of, and get an advantage with, TV advertising

41%going to pubs orrestaurants less

Source: GfK NOP July 2008

38%cutting down ontravel plans

Effects of Advertising During Recession

Source: Profit Impact of Marketing Strategy, IPA Breakfast Conference 18 Oct 2007, Data2Decisions

Share % change in first 2 years of recovery

Advertising during recession

A potential recession tends to focus attention on the need to understand the long term impact of advertising and to ensure full accountability

This is a simplified model here shown at an IPA Breakfast Conference in October 2007 but what is shows is the average pattern of recovery after recession depending on different advertising spends.

Growth is much faster when conditions improve if advertising is maintained or increased.

Advertising presence (particularly on TV) during this time sends a strong signal to the consumer of a companys commitment and confidence in their business and the trust or equity consumers have in the brand can be established and maintained by consistent communications.

This is a time to take advantage of the competition reducing their share of voice. As their share may be less it is financially easier to shout above them! If consumers are becoming more choosy on what they spend their limited budgets on then it is even more crucial to persuade them that your brand is the right brand!!

The strengths of TV advertising in driving awareness and fame, driving sales and long term brand equity and value mean that CUTTING TV spend, even in a period of recession, can have a detrimental effect on a brand.

30

20

10

0

250

0

GRPs

1years

Advertising awareness

People remember advertising

and people forget advertising

We all know that people remember advertising. Take this advertising awareness line it goes up when the advertising starts and is still well above the pre-advertising level for some months after the advertising has finished.

The same is true of sales people cant always go out and buy a product immediately after seeing the advertising. It may not be until the end of the month that we actually see a response to our advertising.

BUT people also forget advertising and forget about brands and choose competitors. (Remember the cereal market example with few brands that had lived longer than 10 years and the average lifespan being 4 years).

Ultimately, if advertising is halted or significantly reduced then a brand will be impacted negatively in the long term. The short term savings will soon be outweighed by the longer term losses and difficulty in recovery as consumers have bought different brands / elsewhere.

No TV Advertising for a year produces a 13% decline in Purchasing

Minimum days elapsed since advertising was last seen

Sales index

Source: tvWORKS, 2 years to Jan03, the sales index compares the amount of purchasing of the brand at each point in time to the amount of purchasing at the control (when advertising had been seen in the last 28 days).

This chart taken from ITVs TVWorks Study shows the effects on FMCG brands when TV advertising is stopped.

On average sales decline by 13%.

The effects of TV last for a longer term

Nearly 45% of TVs revenue effects are delivered after the year of the investment.


Lets remind ourselves of this chart again

Of all advertising media, TV has the longest impact due to its mass reach, popularity and way it is consumed bypassing the conscious part of the brain straight into the long term memory area and stimulating the emotional areas too.

With this in mind, its not surprising that to cut TV spend will have an even greater effect on the success of a brand when market conditions recover.

m

TV Helps Maintain Brand Thrust

During a recession

Build market share at lower cost

Strong signal of commitment and confidence in brand

Increased revenue & profit when conditions improve

Increase/maintain ad spend = maintained shareholder value

Source: Paddy Barwise/London Business School, Advertising in a Recession, 1999.

Continued TV investment helps maintain brand thrust, particularly in times of economic instability.

Brands can build market share at a lower cost than when the market is growing.

It sends a strong signal to consumers and maintains brand equity

Ultimately, any reduction in short-term financial performance is soon outweighed by increases in revenue and profit when market conditions start to improve, leaving businesses more buoyant and in a better position to compete in a stronger market.

Research conducted by the London Business School showed that the most successful companies maximise long-term shareholder value by maintaining their advertising investment when the economy slows down and their weaker competitors cut back.

Appendix extra charts

Fame Metrics 2006 - Objectives

A continuation from the Fame Ratings project of 2005 pioneered by BBH and licensed to ITV

Statistical analysis of the 110 brands rated in the 2005 Fame Ratings project:

Market share

Communications spend

Purchase frequency

Test effects of brand fame on profitability and market share

Explore the roles of different media in driving fame

3 key industry specialists used: OMD Metrics, PIMS and Pravda

Fame Ratings 2005

Methodology pioneered by BBH in the US and licensed to ITV in the UK130 Brands3,180 Face-to-face interviews in homeConducted by NOP World

----------------------------------------------OMD Metrics quantifies the effect of every strand of marketing activity, from spots to sponsorship, word of mouth to leaflets, direct response to brand/Corporate activity and integrates the results forward into future communications and business planning

PIMS - Analysis of competitive strategy. Part of business culture: numerous strategy books draw from the fundamental PIMS principles. Their approach clearly quantifies how non-financial measures like customer value and market structure drive performance.

Pravda - A joint initiative from PIMS and OMD, sourcing marketing data at a more granular level. Pravda allows examination of how communications strands impact on Key Performance Indicators (KPIs) such as market share, sales growth, long-term profitability, consideration and spontaneous awareness.

TVWorks Study

Single source piece of research covering:

FMCG purchasing

TV viewing

Conducted independently by TNS

3000 homes nationally

5 million purchases

28 FMCG product categories = 243 brands

3 years of data to December 2003

Results analysed in terms of purchase occasions

Methodology

Each panel household was given set top meters to record their TV viewing and a bar code scanner to collect the details of all grocery products brought into the home. All brands within the 28 FMCG categories which had been active on TV were selected giving a database of 243 brands. Thus there was no bias in the brands chosen and it was the world as found.

The research looks at the effects of advertising in the first month after it was seen. The effect of TV is calculated by comparing the number of purchase occasions of brand X in homes that saw advertising for that brand in the last 28 days with the number of purchase occasions of brand X in matched sample homes that did not see advertising.

So, if the homes seeing Brand A's advertising are responsible for 210 purchase occasions of Brand A, and the homes which did not see Brand A's advertising are responsible for only 200 purchase occasions, the difference is +10 in favour of the group that saw TV advertising. This represents +5% incremental uplift on the "expected" level of purchasing of 200 and is attributed to the effects of TV advertising.

The uplift can be attributed to TV advertising because the effects of price promotion, previous brand loyalty & weight of viewing have been removed by the matched sampling.

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