Mar 8, 2016 - Abercrombie & Fitch had a 1% increase in same-store ... At its spring membership meeting CEO John Venh
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Tuesday, March 8, 2016
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CUTTING TV ADVERTISING HURTS SALES LOST SALES THREE TIMES AD ‘SAVINGS’
There’s been growing evidence that digital advertising produces significantly lower ROI than television for consumer packaged goods (CPG) brands. Now independent research by 84.51° spells out just how much it costs CPG brands in sales when they shift TV budgets to digital in an attempt to “save” money. The study, conducted along with TiVo Research, found that most of the brands studied lost about three dollars in sales for every one dollar they had reduced television ad spend. The study analyzed 15 random brands that had reduced TV spending by at least 25% between 2013 and 2014. The brands analyzed by 84.51° (a consumer engagement consultancy owned by Kroger) covered a variety of categories including beverages, candies, snacks, ingredients and others. The research was sponsored by cable network owners Turner (part of Time Warner) and A+E Networks. Reduced TV ad spend led to a combined $94 million loss in return for 11 of the 15 brands, accounting for 69% of the 2013 incremental sales attributed to TV advertising. Brands averaged a 25% weekly reach, leaving 75% open to competition. And reduced TV ad spend resulted in reach and frequency declines for 11 of the 15 brands, leading to the drop in sales and ROI. On average, the 11 brands spent $3.1 million less on television advertising during the comparison period. At the same time they lost an average $8.6 million in sales. Average quarterly frequency fell from 11.6 to 6.8 per household. Previous TiVo Research studies have found that a frequency of three per week is typically optimal for maximizing ROI on TV spend. The report notes that three exposures per week equates to a 39 average frequency per quarter—“dramatically higher than the 6.8 average found in this study.” On average, the brands reached less than 7% of their purchasers in the optimal 3-5 weekly frequency range, leaving 93% of their markets open to being picked off by competitors. “This number was low to begin with in 2013 (8.4%), but declined further in 2014 as a result of reduced TV spend,” the 84.51° report stated. The conclusion from the report: “Cutting TV budgets may seem like an easy way to save money, but as this study shows, brands stand to lose more in sales than they stand to gain in media savings.” 84.51° also urges comprehensive ROI analyses for all Continued on Page 2 PAGE 1 www.CableSpots.tv
ADVERTISER NEWS
Just as McDonald’s sales got a boost when it introduced all-day breakfast, Burger King may have hit a home run with its recent introduction of hot dogs. Nation’s Restaurant News reports that in a conference call the CEO of Carrols (BK’s largest franchisee) noted an “overwhelming response” to the menu addition, saying “We are selling between 80 and 120 grilled hot dogs per store per day” even before the start of advertising for the new item……In a related note, NRN says lower prices for beef have led restaurants to offer lower prices (such as BK’s 5 for $4 deal and Wendy’s 4 for $4 deal) or to use a higher quality of meat than previously offered. One purchasing exec expects more of the same with meat prices due to fall another 1023% this year, depending on the cut of meat…… Automotive News says February was the industry’s most fleet-heavy month in almost six years. We had reported last week about General Motors’ decision to cut back on fleet sales in order to concentrate on more-profitable sales, but fleet sales were up 39% for Fiat Chrysler, 42% for Ford and 54% for Nissan……Cadillac has a big launch coming up next month: the XT5 crossover replaces the SRX, which accounts for almost 40% of all Caddy sales in the U.S. While overall Cadillac sales trail luxury imports by a significant margin, the SRX was second in the midsize luxury crossover segment and was up 29% last year to over 68,000 sales……Abercrombie & Fitch had a 1% increase in same-store sales for the quarter that ended on 1/30, the first positive since the third quarter of 2012. It expects flat to slightly positive comps this year…… American Eagle had a 4% same-store increase and expects mid-single digits gains this year. There’s some thought however that same-store gains for surviving stores may have been helped by the closings of other stores…… Although same-store sales for domestic Ace Hardware members were up 4.6% last year, the co-op says most of its stores have missed fourth quarter sales opportunities. At its spring membership meeting CEO John Venhuizen told attendees Ace has spent exactly $0 on national TV advertising in December over the last 89 years, but this year has budgeted over $13 million for November-December television. He also suggests members look for new and innovative merchandise, saying, “If all we sell is the same undifferentiated crap you can buy online, we’re dead”…… Research firm Acosta reports health and beauty care sales at grocery stores are improving after years of decline, with about 18% of the $84 billion market done there.
CABLENET CHATTER
PROGRAMMATIC AD BUYING MOVING IN-HOUSE
NBC Sports Group has partnered with Premiership A survey conducted by the Association of National Rugby on an exclusive multi-year U.S. media rights Advertisers (ANA) and Forrester finds that the number agreement. Per the deal, which begins with the 2016-17 of marketers using programmatic ad buying has exploded season, NBCSN and NBC Sports Live Extra will combine since a previous survey in 2014, with 79% of respondents to present more than 75 Aviva Premiership Rugby saying they have made programmatic buys in the past matches each season, highlighted by “Game of the Week” year—more than twice as many as in the 2014 survey matchups……Freeform picked up a fourth season of the (35%). That growth has come despite serious concerns original comedy series Young & Hungry. Production on the among marketers about digital ad fraud and a perceived new season begins this week. Season to date, Freeform lack of transparency. As a result of their concerns, 31% says Young & Hungry is cable TV’s #1 scripted original of respondents said they have expanded their in-house series in its time period in target Adult capabilities to manage and oversee 18-34 and Adult 18-49 demographics… programmatic ad buying. …E! has ordered a second season of Programmatic buying in the past Hollywood Medium with Tyler Henry. year was highest for online display, In Orange County, a college The series follows the 20-year-old go-to online video, mobile display, and mobile student ate In-N-Out for 30 clairvoyant of celebrities, Tyler Henry, video. In the next year, the media straight days and only gained as he brings his clients messages from with the most anticipated growth are two pounds. That’s right, he beyond. The network recently extended social video, social display, mobile went from 398 to 400. the season one order with two additional video and television. Respondents episodes and is currently airing new to surveys in both years indicated episodes every Sunday at 10:00 pm the leading benefits of programmatic Conan O'Brien (ET). Hollywood Medium with Tyler buying were better targeting and realHenry premiered Sunday, January 24 time optimization. as E!’s most watched unscripted series On the negative side, almost 70% launch in three years with total viewers, excluding spin- of respondents cited higher bot fraud in programmatic offs. The series has continued its momentum averaging buys as a concern. At the same time, varying numbers nearly 900K P18-49 and 1.6M total viewers in L3s…… of respondents said a lack of transparency regarding the Craig Robinson has been cast as a recurring guest star costs associated within the programmatic supply chain, a in the second season of USA Network’s drama series Mr. lack of inventory and data transparency, and a dearth of Robot. Robinson will star as “Ray,” a neighborhood local information about whether an agency reaps financial gains who reaches out to Elliot in his time of need……Jessica from the media seller by using the client’s funds all posed Camacho, who currently co-stars in FOX's series Sleepy challenges to the overall programmatic experience. Hollow, has been cast in the Discovery miniseries Harley “While programmatic buying indeed offers benefits, it and the Davidsons to air later this year. Camacho will suffers from complexity and a lack of transparency,” said portray “Reya,” a strong and fearless member of an early Bob Liodice, president and CEO of the ANA. “And that is Harley-Davidson motorcycle club. She joins a cast that wasteful,” he added. currently includes Michiel Huisman, Robert Aramayo, Bug Hall and Stephen Rider…...Worlds collide as GETTING SKINNY IN OHIO the voice cast of the 1980s Turtles, Cam Clarke, Rob Cincinnati Bell is the latest MVPD to roll out a “skinny Paulsen, Barry Gordon and Townsend Coleman, join bundle” product, declaring that “It’s time to love TV again forces as Leonardo, Raphael, Donatello, and Michelangelo, with MyTV!” The new offering launched yesterday gives respectively, in ''Trans-Dimensional Turtles,'' a new episode consumers customized, genre-specific bundles. The basic of Nickelodeon's Teenage Mutant Ninja Turtles debuting service for $18.99 per month (for the first 12 months) Sunday, March 27, at 11:00 am (ET). In this new half-hour includes local affiliates of the Big Four broadcast networks episode, the Turtles are transported to another dimension and 48 other cable and broadcast networks. The highest where they meet their '80s alternate-reality counterparts. rated cable nets, though, are generally in the $25 per month Actor Pat Fraley also reunites with the '80s cast for the “Essentials” add-on pack and nine other add-on packs for first time since the original series premiered to reprise his MyTV range from $6 to $10 per month. role as Krang……Bravo Media's loud-and-proud Persian Americans are back when Shahs of Sunset premieres THIS AND THAT on Sunday, April 10, at 9:00 pm (ET), shifting to its regular comScore’s stock price plunged Monday after the timeslot at 8:00 pm (ET) the following week. This season ratings company announced it was delaying filing its brings highs and lows, as relationships are put to the test annual report with the SEC to deal with “certain potential for Reza Farahan, Asa Soltan Rahmati, Mike Shouhed, accounting matters”......U.S. consumer credit rose by Mercedes ''MJ'' Javid, Golnesa ''GG'' Gharachedaghi a seasonally adjusted 3.58% in January—the slowest and Shervin Roohparvar. As they each embark on a new pace since March 2013. life journey, they face challenges in business, love and lifelong friendships......Robot Chicken's Season 8 midCUTTING TV ADVERTISING HURTS SALES season premiere is set for this Sunday, March 13, at 11:30 Continued from Page 1 pm (ET) on Adult Swim. marketing, noting that all media needs to be evaluated in a broad context against sales and ROI to create the optimal PAGE 2 mix. “The results of this study should give brands pause before cutting TV budgets: moving money out of TV Tuesday, March 8, 2016 advertising clearly results in negative sales impact.” www.CableSpots.tv
