TV Ads Don’t Soften Impact of Discounting

TRA Inc. and DunnhumbyUSA have released the results of a study that demonstrates a methodology for optimizing the mix of television advertising and in-store marketing using single-source, household level data.

The groundbreaking research was presented this week at the Advertising Research Foundation’s Re:think Conference in New York.

A methodology for optimizing product price, in-store marketing and television advertising together and measuring how they work in tandem never previously existed. “The TRA/DunnhumbyUSA study shows how the three main drivers of positive brand purchase work together on the household level,” says Bill Harvey, TRA’s chief research officer. “This research dispels some common industry myths and illustrates how household level analysis can be leveraged by marketers to maximize sales and optimize a media spend that is both repeatable and predictable.”

Leveraging the DunnhumbyUSA database of the anonymous household level purchase behavior data from 60 million households across the United States that is matched to second-by-second measurement of TV viewing habits from more than 2 million set-top box households provided by TRA, the study focused on heavily advertised consumer packaged goods brands that average upwards of $20 million in television advertising within the categories of toothpaste, yogurt and cereal. While marketing mix modeling analyzes the market average level, this analysis was performed at the household level and involved approximately 2,500 retail stores.

Among the TRA/DunnhumbyUSA findings presented to ARF audiences:

- TV advertising does not soften impact of price discounting: It has been commonly believed that TV and a temporary price reduction should not be used at the same time because TV reduces the impact of discounting. The study found that to be an inaccurate assumption. In six case studies, approximately 50 percent of all households exposed to TV were also impacted by the temporary price reduction and exhibited higher sales increase than the remaining half, reached only by TV. The study also found temporary price reduction to be a significant driver overall with an 11.83 percent average further sales lift over what only TV achieved.

- Using all in-store marketing tactics with TV simultaneously maximizes brand sales: Using TV in combination with a temporary price reduction (TPR), feature and display simultaneously maximizes sales response. The study found a combined average of more than 11 times the sales effect of TV alone.

“Marketers, media planners and researchers have sought to understand the relationship between in-store marketing tactics and television advertising for many years and the TRA/DunnhumbyUSA study is a game-changer for the industry moving forward,” said Matthew Keylock, senior VP of new business development and partnerships at DunnhumbyUSA. “This type of household-level analysis allows us to understand under what conditions and for which product categories there is a positive synergy between tactics. Further, it allows us to understand how different consumer groups respond to these levers which will significantly help to optimize campaigns and overall marketing ROI.”

TRA Inc. is a media marketing and analytics software company whose products help advertisers, agencies and television networks improve advertising targeting, accountability and return on media investment.

Dunnhumby is the leader in personalizing the world’s experience of retailers and brands. DunnhumbyUSA is a joint venture with the The Kroger Co.