Memorandum by the Institute of Practitioners
in Advertising (IPA) (RTA 5)
The IPA welcomes this opportunity to submit
views to the Select Committee on the regulation of TV advertising.
(a) The IPA in Advertising is the trade body
and professional institute for UK advertising agencies, with a
membership accounting for 85% of the UK's advertising agency business.
(b) As an organisation, we are vitally concerned
with the health of UK media (TV, press, posters, online etc) since
these provide the vehicles through which our members deliver their
clients' commercial messages to the public.
(c) Having said this, we are also extremely wary
when ownership is consolidated in any medium such that this might
threaten the ability of our members to buy time/space in an open
and competitive environment.
II. SCOPE OF
(a) We do not believe ourselves qualified to
pass judgement on whether the entirety of UK regulation
in the television sector is appropriatehowever, we would
draw a distinction between:
(i) Outmoded restrictions from a bygone
age, when commercial broadcasting was viewed with suspicion and
authorities believed it should be rigorously controlled (eg the
prohibition of product placement);
(ii) More recent regulation relating to
competition issues, which we believe remains valid to prevent
the danger of abuse from a dominant player.
(b) Recognising our restricted expertise and
our direct interest in maintaining a competitive marketplace,
the following paper therefore concentrates on the Contract Rights
Renewal Mechanism as a key element in the Select Committee's Reviewhighlighting
our belief that little has changed to diminish ITV's market dominance
since the remedy was introduced in 2003 and concluding, as a result,
that the need for CRR remains as vital now as when it was first
III. THE STRENGTH
OF ITV AND
(a) The Contract Rights Renewal Mechanism was
introduced following the merger of Carlton and Granada in 2003
to prevent the ITV sales force abusing its position of power.
As such it recognised:
(i) ITV1 possessed a dominant share of
advertising revenues (52.7%)
(ii) Its immense strengths as an advertising
channel were unmatched by any of its competitors;
(iii) These strengths made it unsubstitutable
by any other channel, or combination of channels;
(iv) The historically aggressive stance
adopted by the ITV salesforce meant that without some form of
protection, there would be a real risk of the broadcaster abusing
its share/ non-substitutability to the detriment both of advertisers
and its broadcasting competitors.
IV. ITV'S POWER
(a) Despite the arrival of online advertising,
televisionas a wholehas retained its vital importance
(b) Although the TV sector has grown dramatically
in terms of channel availability since 2003 (2003: 300 channels;
2010 500 channels), almost half the population (47.7%) has access
to only 45 channels.
(c) Within the market, the big players (ITV1,
Channel 4 plus Digital, Five and Sky) continue to dominatewith
ITV1 actually strengthening its "must have" status for
|% Top 1000 Advertisers in the UK|
Spending on ITV1
(d) By trading its "Family of Channels" (ie ITV1
+ ITV2,3,4) in terms of pricing/value and access to audiences,
ITV's dominance remains undiminished, with the broadcaster still
almost double the size of its nearest competitor in terms of share
of revenue ("ITV Family": 45.3% versus "Channel
4 Family": 23.8%).
(e) Likewise, ITV1 continues to be unsubstitutable based on:
(i) Its continued and unchallenged ability to deliver
mass audiences rapidly;
(ii) Its exceptional programming environment (big,
"famous" programmes capable of generating "water-caller"
(iii) Its continued size and status (which grants status
to new brands and reinforces the status of established products).
(iv) While ITV has shown it is theoretically possible
to buy around ITV1 using a basket of channels, the above factors
make this impractical in real terms.
(v) The creation of "media agency buying groups"
has not countered ITV strength, with the largest such group (Group
M) only accounting for 29% of total TV expenditure, while the
freedom of action of such operations is restricted by:
Clients who have their own direct deals with ITV;
The requirement to recommend the most effective channel
mix for individual clients, within which use of ITV1 will be essential.
(a) We do not believe that ITV's power has reduced sufficiently,
such that the removal of CRR would not open the gates to market
abuse, allowing the broadcaster to leverage its size and unique
audience characteristics to increase its revenues by:
(i) Additional share demands;
(ii) And/or additional volume demands;
(iii) Price rises on ITV1 and its other channels.
(b) Which, in turn, would mean agency/advertisers would have
three options open to them:
(i) To accept arbitrary ITV price rises;
(ii) To move monies out of the ITV "Family of
Channels" and suffer punitive price increases on the monies
remaining with ITV;
(iii) To move all the monies on to other non-ITV owned
channels owned channels.
(c) Of the above, it would be difficult for large advertisers,
physically to transfer their monies into other channels (Channel
4, and Sky already put an expenditure limit on deal rates for
(d) Likewise, it would be commercial suicide for agencies
to inform their clients that they could not secure ITV1 airtime
or state this could only be achieved significant cost premium.
Advertisers and agencies would thus be forced into paying whatever
ITV wished to chargeprecisely the anti-competitive situation
which CRR was set up to avoid.
VI. POST SCRIPT
Finally, we are not convinced that CRR is the brake on creative
programming, which ITV has claimed.
We believe that the trend toward more soap operas/overtly
populist programming to maximise audiences had begun prior to
the Carlton and Granada merger.
CRR simply takes account of the size of audiences, which
is and always has been the basic trading currency in commercial
The skill of the commercial programme controller is to commission
programming, which is both creative and appeals to mass audiences.
If he/she wishes to test out formats, it should be possible to
do so on ITV2/3/4 in the same way as the BBC will use its digital
channels for such purposes.
If ITV's goal in seeking the removal of CRR is to be able
to charge the same or more for air-time than delivered audiences
would justifyand to use its unconstrained market power
to force advertisers to accept thisthis is clearly an objective
which neither agencies nor advertisers could ever accept.
I. ABOUT THE
The Institute of Practitioners in Advertising (the "IPA")
is the trade association and professional institute for UK advertising
agencies. Our 265 corporate members are primarily concerned with
providing strategic advice on marketing communications, including
creating and/or placing advertising. Based throughout the country,
they are responsible for over 85% of the UK's advertising agency
business and play a pivotal role in advising the nation's companies
on how they should deploy their total marketing communications
spend of £42 billion.
II. SCOPE OF
As the trade body for UK advertising and media agencies,
we do not believe ourselves qualified to make valued judgements
as to whether the overall level of current regulation on TV advertising
However, having said this, we would draw a distinction between:
(a) Constraints left over from a bygone age, which viewed
commercial broadcasting per se with suspicion and believed
its activities should be rigorously controlled. (This would cover
things like the current product placement rules, which we believe
are outmoded and will soon be removed anyway.)
(b) More recent regulation relating to competition issues,
which we believe remains valid and should be maintained to prevent
the risk of abuse by a dominant player.
This, then, explains why, in the immediate past, we have
firmly supported the removal of the product placement rules on
television and the liberalisation of the broadcasting code on
radiowhile vehemently opposing the abolition of the Contract
Rights Renewal Mechanism.
III. OUR STANCE
One of the fundamental roles of the IPAenshrined in
the Terms of Reference of its main media policy committee (the
Media Futures Group)is that it should "promote and
ensure the continuation of cost-effective commercial media"
for its members and their clients.
The Institute has therefore always been very wary of the
concentration of media power in any medium.
Thus, in 2003 we expressed our profound concerns over the
market dominance which would have resulted from the merger of
Carlton and Granada and, together with ISBAthe advertiser
trade bodywere instrumental in pushing for the safeguards
against potential sales abuse, which emerged as the Contract Rights
Since that date, our members have been protected, to an extent,
from the possible adverse effects of the merger by this arrangement,
with the IPA providing regular reports on its effectiveness to
the CRR Adjudicatorincluding the highlighting of instances
where ITV has sought to work round the mechanism, either in potential
breach of the Undertakings or through the leveraging of its digital
IV. HOW WE
Given the broad nature of the Select Committee's inquiry,
rather than spend time considering things like product placement
or airtime sales rules, where decisions have already been made,
we propose to concentrate on what we believe to be the key issue
under examinationthe Contract Rights Renewal Mechanismand
why, to our knowledge, all but one of our member agencies continue
to believe it plays a critically important role in ensuring the
fair running of the UK television market.
In so doing, we are conscious that a lot of this work will
be going over old ground, drawing on submissions previously made
in this context to the OFT and to the Competition Commission.
Having said this, we believe the observations we made then
remain validalthough, for general readership purposes,
we have not included some of the more detailed computer-generated
schedules which our members generated to counter the various ITV
hypotheses which were floated at that time.
V. WHY IS
CRR IMPORTANT AND
As Members will be aware, the Contract Rights Renewal Mechanism
was introduced to prevent the ITV sales force abusing its position
of power after the merger of Carlton and Granada in 2003.
The decision by the Competition Commission to impose this
(i) That ITV1 possessed unique strengths as a communications
channel, unmatched by any of its competitors;
(ii) That these strengths made it unsubstitutable;
(iii) That the historically aggressive stance adopted
by its sales force in airtime negotiations meant that, without
some form of robust protection, there would be very real risk
In 2007, ITV contested these original criteria, stating that:
(i) The TV market had moved on;
(ii) It was now only one of many broadcasters;
(iii) The constraint was severely and adversely affecting
its financial health and business future.
The IPA sought to show that this was not the case and that
the need for the remedy remained as valid as ever.
Following its deliberations, the Competition Commission concurred
with this viewa decision with which we continue to agree.
(b) Has anything changed in the media/TV market since 2003
and, if so, has this reduced ITV1 (and ITV's) dominance, such
that CRR is no longer necessary?
We believe that the simple answer to this is "no"
for the reasons outlined below:
(i) While the overall media market has changed significantly
since 2003, the importance of TV remains undiminished
The last seven years have clearly seen a major new arrival in
the sector in the form of internet advertising.
From the chart below, it is apparent that online growth has taken
share from all the other main mediaother than "out-of-home"
However, the greatest "hits" have taken place on direct
mail, regional press and radiowith the first two of these
possibly losing direct business to the perceived greater accountability
of the Internet.
TV as a whole, however, has maintained its key position.
THE PATTERN OF ADVERTISING SPEND ON DIFFERENT SOURCES
OF ADVERTISING TOTAL ADVERTISING EXPENDITURE 2009 vs 2003
||2009||2009 vs 2003|
|2009 vs 2003|
|Business and Professional Mags||7.1
(Source: Advertising Association)
Moreover, it is important to note that while advertising
on the Internet has grown massively, the role it fulfils for both
the advertiser and the public is very different to television.
It is estimated that over 80% of the money spent online by advertisers
is on "Search".
The importance of traditional media in building brandswhich
consumers subsequently search for on the Internetcurrently
remains largely unchanged.
(ii) TV revenues have not been constrained by the
growth of the Internet
There is no evidence to suggest that the growth of online (or
added supply in any other media) has constrained the price of
Television represented 57.5% of total media spend for the top
20 advertisers on TV in 2009- only slightly less than the share
for the top 20 advertisers on television in 2003 at 64.9%. (Source:
Over this period, the cost of television fell to mirror the financial
All Adult CPT*
All Adult CPT*
||£4.28||* Cost per `000
| || (Source: Industry estimates)
Whereas, according to industry estimates, the price of online
media fell by 20%.
(iii) While the TV sector has expanded dramatically
since 2003, power still rests with the big players
It has been variously suggested that the growth in the number
of digital channels since 2003 has reduced the importance of ITV1.
Analysis, however, indicates that while the number of digital
channels available to viewers has increased from 300 to around
500, the impact of this growth has, in fact, been considerably
less than might have been supposedwith a significant proportion
of the viewing population having access to only 45 channels (ie
DTT homes, which accounted for 47.7% of homes in the UK in March
Moreover, within the digital and terrestrial channels,
the big players (ITV1+ Digital, Channel 4 + Digital, Five and
Sky) continue to dominate, with ITV1 actually strengthening its
"must have" status for major advertisers:
|% Top 1000 Advertisers in the UK|
Spending on ITV1
| ||(Source: NMR)
(iv) Likewise, within the TV sector, ITV's importance
Given the arrival of the digital channels, ITV1 has inevitably
lost revenue share in the last seven years (from 51.7% in 2003
to 37.0% in 2009).
Having said this, by trading its "family of channels"
in terms of pricing/value and access to audiences, ITV, as a whole,
has retained its position of market dominance (52.7% in 2003 vs.
45.3.% in 2009).
Significantly, this means that ITV plc is still almost double
the size of its next largest competitor (Channel 4 Family at 23.8%)and
by exploiting the combined strengths of its analogue and digital
offering whenever and wherever possible, has continued to be by
far the most powerful advertising-funded commercial TV player
in the sector.
THE PATTERN OF TV ADVERTISING SPEND ON DIFFERENT TV CHANNELS
BROADCAST TELEVISION REVENUES
|% share of|
|£ms||% share adult|
|Index share of|
revenue on share
|% share of|
|£ms||% share adult|
|Index share of|
revenue on share
(v) ITV1 continues to be un-substitutable
As Select Committee Members will be aware, in 2003 the Competition
Commission concluded that ITV1 was non-substitutable for major
advertisers. This was based on:
The ability of the channel to deliver mass market
audiences rapidly. (Key for advertisers seeking to communicate
their messages quickly to large numbers of people);
Its programming environment (big, "famous"
programmes capable of generating "watercooler" discussion);
Its size and status (which granted status to new brands
and reinforced the status of established products).
While it is technically possible to run most
campaigns in non- mass market programming, the vast majority of
advertisers believeswith good reasonthat to be successful,
it needs large audiences and is prepared to pay significant price
premiums to achieve this.
The attached Nielsen spreadsheet reveals that only 1.7% of TV
revenues in 2009 was spent behind campaigns which used no
ITV 1 at all.
The reason for this lies in the importance attached not simply
to the reach levels achieved at the end of a campaign, but the
speed with which that reach is attained. Put simply, almost all
advertisers will want to see their advertising investment having
as much impact as possible, as early as possible, in their activity.
This highlights a fundamental flaw in the substitutability analysis
historically put forward by ITV in that it ignored the importance
of rapid cover build.
Of course, there will be certain categories of campaign for which
generating such reach quickly and in shorter periods of time will
be critical (eg most retail accounts, promotional activity, seasonal
advertisers and new product launches).
However, leaving these aside, there are powerful reasons why all
advertisers would want large programmes on their schedule,
Prestige (both for external reasons eg, status with
the consumerand internal reasons, eg status within the
retail trade and the advertisers' own sales force, staff etc);
Rapid sales generation (advertisers like to know that
a campaign is working);
The driving of trade distribution (retailers expect
significant support to underwrite their stocking of products and
allocating them appropriate shelf facings and favoured locations
in their premises)
ITV has always been proud of its ability to build
brands and to achieve both business and media deliverables quicker
than anyone else, and it has attributed this to the mass audiences
that it consistently delivers over and above its competitors.
ITV "Fame Rating" research published in May 2005 concluded
that TV advertising made brands "famous" and the more
famous a brand, the higher the consumer's intent to purchase.
Behind this research was the implicit assertion that ITV built
this "fame" faster than all other channels through its
ability to deliver mass audiences larger and more frequently than
By contrast, comparatively few types of advertiser can operate
without mass audience programming and will largely comprise DRTV
operators (who will generally use in the daytime) and advertisers
(For further information on ITV Fame research and the importance
of rapid cover buildsee the Appendices A and B.)
To what extent has any of the above changed?
In 2008, in a submission to the OFT, we wrote "to illustrate
how (ITV's strength) has remained largely unchanged over the last
five years, it is worth considering the top 500 programmes by
volume of audience in 2007. Of these 328 (or 66%) were ITV1 programmes,
with 171 being broadcast by the BBC and the remaining one by Channel
4. Even if we were to exclude Coronation Street and the other
"soaps " from the calculation, ITV1 is still responsible
for 196 of the 500 (39%), with only six (1%) being broadcast by
other commercial channels".
As a point of comparison, we have checked the data for 2010, looking
at the week ending 31st May. Of the top 500 rating programmes,
ITV1 accounted 326, while BBC1 accounted for 174.
Clearly there has been no change in the dominance of ITV1 and
BBC1 in delivering large audiences, and the balance of power between
ITV1 and BBC1 in this respect also remains unchanged.
(vi) ITV1 remains vital for a range of key advertisers
As stated elsewhere, we believe that most advertisers are dependent
Having said this, the mass reach and rapid cover build that this
channel can deliver, will be particularly vital for advertisers
in the following categories:
Mass appeal advertisers (eg FMCG brands, with regular
Major spending advertisers restricted from moving
money away from ITV (eg Unilever, COI, Procter & Gamble)
Short-term "sale"/news-based advertisers
(eg retailers/ newspapers/ new product launches)
Seasonal advertisers, including the gift market (eg
Christmas/ Easter/ Mother's Day, weather related products (eg
gardening) and the fixed event related promotions.
ITV would certainly discriminate against these advertisers
in the absence of CRR, by demanding price increases, higher shares
of expenditure and/or volume increases and other measures.
(vii) The creation of media agency "buying
groups" has not countered ITV's strength
In 2008 there were six major trading groups, sharing the investment
responsibility for over 81% of commercial television expenditure.
However, while concentration of "buyer power" has increased
since 2003, it is still limited/weak in comparison with ITV's
Not only has no single agency group gained a monopolistic advantage
(the largest, GroupM, accounts for only 29% of total television
expenditure)such operations are severely restricted in
their freedom of action by the fact that they are only representatives
of their advertiser clients, and as such will be:
Restricted from using overall agency expenditure to
counter ITV strength by clients who have their own direct deals
with the broadcaster;
Required to recommend the most effective" channel
mix for individual clients/campaigns, and in many instances ITV1
will be regarded as essential for effective campaign delivery
from both objective and subjective reasons.
(In this context, Select Committee Members may like
to note the power of agency group buying operations is constrained
more generally by the consolidation which has taken place on the
sales side. In 2003 there were eight TV airtime sales points of
note (Carlton, Granada, Channel 4, Five, Sky, IDS (Flextech),
Viacom and GMTV); today there are just five, and most likely this
will fall to four (ITV, Channel 4, Five, Sky), if the sale of
Virgin TV to Sky is cleared by the Irish regulatory authorities
and IDS VMTV channels are absorbed into Sky Sales. In 2003, four
sales points controlled c81% of TV ad revenues; at the end of
2009 c83% of revenues were controlled by three sales points.)
VI. THE REMOVAL
OF CRR WOULD
As I hope we have shown via this paper, while ITV1's market
position may have declined in terms of its share of commercial
revenue and commercial viewing, in real terms, the power of the
broadcaster remains intact.
This is based on three factors:
(a) ITV's policy of selling its analogue and digital channels
together on a conditional basis
(b) The fact that ITV1 still dominates the delivery of large
(c) The increased value of large audiences as a result of
fragmentation. Although ITV 1's top rating programmes have declined
in absolute levels of delivery, they are just as valuable now/more
valuable because of the overall decline in peak time programme
audiences across all channels.
On this basis, if ITV were released from its CRR obligations
on ITV1, we believe it would leverage the combination of its overall
market trading power and its unique ITV1 audience characteristics
in order to increase its revenues through:
(a) Additional share demands;
(b) And/or additional volume demands;
(c) Price rises on ITV1 and its other channels.
Which, in turn, would mean that agencies/advertisers would
have available to them one of three options:
(a) To accept arbitrary ITV price increases;
(b) To move some monies out of ITV (ITV1 and ITV's overall
family of channels) and then be subject to very substantial and
punitive price increases on the monies remaining with ITV); or
(c) To move all the monies into other non-ITV owned channels
The last of these options would be extremely difficult for
large advertisersindeed certain channels (Channel 4/Sky
Sports1) already put a limit on expenditure at deal rates for
bigger players for inventory management/ income optimisation reasons.
On a campaign by campaign basis, it would simply be impossible
for many campaigns to be delivered (regardless of campaign reach
performance) without ITV1. Many campaigns that run at a high weekly
weight or require weights on specific days would not be able to
get those weights away whilst substituting ITV1. Likewise products
in categories that are heavily advertised would often find it
impossible to substitute ITV1 as most appropriate breaks on non-ITV1
Channels will already feature clashing products. (eg retailers
at holiday times, perfumes at Christmas and cars at registration
Moreover, even if any of the above were achievable, agencies
would be placed in an impossible position since it would be commercial
suicide either to inform their client base that they could not
secure ITV1 airtime, or to say that this could be achieved, but
only at a significant cost premium across all the ITV family of
This inability to move large sums of money away without attracting
inevitable punitive action would mean that advertisers and agencies
would simply be forced into paying whatever ITV wished to chargeprecisely
the anti-competitive situation which CRR was set up to avoid.
VII. FINALLY, HAS
CRR REALLY LIMITED
Having put forward our reasons why we believe it is vital
that the Contract Rights Renewal Mechanism should be retainedwe
should perhaps state that the IPA has as much interest in ensuring
that ITV1 remains healthy, vibrant and attractive to audiences
as broadcasterssince without it, our members' clients,
the advertisers, would lose perhaps the most important single
vehicle for delivering their commercial messages.
Programming is not an area over which the IPA would claim
any special expertise, although clearly we would like to see the
broadcaster producing the best and highest quality output that
is able to afford.
Having said this, we do feel it is possible to make a few
While we are aware that Michael Grade has stated historically
that CRR has acted as a brake on experimentationwhether
under the ownership of ITV, Carlton or Granada, ITV1 has notin
recent yearsbeen a risk taker, particularly with regard
to peak programming.
The trend towards more episodes of soaps, etc., exploiting
strong programmes and programme franchises to maximize audiencesand
quickly removing underperforming programmes from scheduleshad
CRR takes into account audiences tradedand so it is
to ITV's benefit to produce more programming designed to appeal
to audiences that advertisers are targeting more over timeand
less programmes designed to appeal to audiences that advertisers
are targeting less over time.
If ITV's objective in removing CRR were to be able to charge
the same (or more) for airtime in programming, irrespective of
the audience it delivers, then Select Committee Members will understand
the advertising industry's lack of sympathy with this goal.
A. ITV FAME RESEARCH
ITV produced research entitled "ITV Fame Ratings"
in May 2005 to promote the TV sector and combat what it perceived
as "Historical complacency" within the TV market place
and the "Demand for evidence based ROI". It also hoped
that its research would provide some reassurance about TV advertising
and safeguard revenues in the face of the successful growth and
proliferation of both the multichannel TV world and other media,
ITV1 looked across 16 different sectors from a cross section
of advertisers' with different media strategies.
The conclusion of the study found that TV advertising made
brands famous and the more famous a brand, the higher a consumer's
intent to purchase was. Behind this research was the implicit
assertion that ITV built this "Fame" quicker than all
other channels through its ability to deliver mass audiences larger
and more frequently, than all its rivals.
Indeed Jeremy Bullmore, former chairman of both JWT and the
Advertising Association is quoted to that effect in the research,
"A brand, if it is to enjoy genuine celebrity, must
be known to a circle of people that far exceeds what we in the
business so chillingly call its target group ", or to
paraphrase Jeremy Bullmore, the most important thing is being
seen by the largest group of people as possible.
In 2008, ITV1 delivered 92 out of the top 100 rating programmes
on commercial TV and it should be remembered that this only includes
the top incidence of each programme occurring. If we look at absolute
numbers, ie every episode of Coronation Street rather than just
the top episode, ITV1 are responsible for delivering the top 540
rating programmes before we get to a non ITV programme (Peter
Kay's "Britain's Got The Pop Factor", appeared on Channel
4 delivering 6.3 million adult viewers).
B. WHY BUILDING
There are two key reasons for fast coverage build being linked
to business performance:
(1) A key objective of advertising (esp. FMCG advertising)
is to influence as many purchasing occasions as possible (known
as recency). So each rolling 2-3 day period is like a mini-campaign.
The higher the coverage in each rolling period, the higher the
likelihood of strong sales performance. Hence, coverage across
longer periods of time is almost irrelevant, what is relevant
is catching a consumer when they are in the mindset of buying
(2) For longer term branding campaigns, even if 1+ coverage
is not the objective, building 1+ coverage quickly is very important,
as 1+ build affects the frequency distribution across your campaign.
eg. If your effective frequency is 3 exposures, building fast
1+ will do two things: 1) enable you to build the quickest 3+
coverage 2) reduce the length of your frequency tail. If 1+ doesn't
build quickly, your campaign will end up delivering an amount
of 3+ but optimising at a much higher frequency of 6-7+.
In both cases (ie for hard and fast FMCG campaigns and for
longer term branding campaigns) building quick 1+ coverage has
a direct effect on sales and cost efficiency. Some of the theory
and the research studies that have reached these conclusions is
The effect of advertising on sales
Most recent studies on the relationship between advertising
and sales have sought to measure the effect of frequency on purchasing,
the best of these using single source data, where the purchasing
behaviour of a panel is measured (these days generally by scanning
all purchases) and the television advertising exposure is also
measured (generally via a TV set top box)
We have picked out a few of the key studies, some of which
analyses the effect of frequency on sales and some which use other
measures of effectiveness (most often advertising awareness).
John Philip Jones 1990 & 2000's
A significant step was taken in the early 1990's when John
Philip Jones released the results of a large-scale analysis of
ACNielsen panel data. He developed the research technique of STAS
(Short Term Advertising Strength), which compared a brand's share
of purchase occasions in those households where there had been
at least one exposure to the brand's TV ad in the last seven days,
with those households not exposed to recent advertising.
Source: John Philip Jones/Colin McDonald
The analysis confirmed earlier findings from single source
research that advertising was capable of generating immediate
sales. It also came to the surprising conclusion that just one
exposure generated the highest proportion of sales with additional
exposures having relatively little effect (Chart 1).
Source: Colin McDonald
Among the 78 brands in 12 categories, Jones found a considerable
variation in STAS score (Chart 2). For the top 10% of brands,
the average STAS differential was 136%, meaning that the share
of purchase occasions in households who had been exposed to the
advertising was more than double the share in "unexposed"
Erwin Ephron took up the results of this work. He concentrated
on the issue of time rather than frequency and created the concept
of "Recency Planning". This says that all that is needed
is one exposure in the period immediately prior to purchase. This
may not be the first exposure, it may be just one in a long series
of exposures. However, because purchases, and purchasing decisions,
are being made all the time, the ideal plan is a continuous one
maximising both the number of weeks on air and weekly cover. What
counts is whether the consumer is ready to buy, not how many times
he or she has been exposed to the advertising.
In the UK in the early 1990s, research company AGB fused
viewing data from the BARB peoplemeter system on to their grocery
purchasing panel "Superpanel". The data was analysed
to compare the number of brand purchases made by housewives who
had been exposed to the advertising with the number of brand purchases
by those not exposed to it. Allowance was made for "purchase
viewing bias" by examining different weight-of-viewing groups
RESPONSE CURVESESTABLISHED BRANDS
||Saturation level (4 wks)|
| K||Threshold at 3||None
Among the first 24 brands to be analysed, 17 were established
ones and the remainder new or re-launched brands. 15 of the 17
established brands exhibited convex response functions with the
first exposure having a greater incremental effect on purchasing
than any subsequent exposure (Chart 3 & 4).
RESPONSE CURVESNEW/RELAUNCHED BRANDS
||Saturation level (4 wks)|
|G||Threshold at 2||None
In most cases there was little additional effect after 4
or 5 exposures. One brand had a linear response, and the other
a threshold at 3 exposures. Among the 7 new or re-launched brands,
5 showed a linear response.
More recent analysis by the same company (now re-named Taylor
Nelson Sofres) of true single source data has highlighted the
relatively greater impact generated by concentrating exposures
in the period immediately prior to purchasing (Chart 5)
While diminishing returns are seen to exist over a longer
period, they show a benefit of multiple exposures across a 3-day
period immediately prior to purchasing. In these circumstances,
3 exposures will produce an effect many times greater than that
produced by a single exposure (Chart 6)
Over the last 30 years the advertising industry has moved
from away from an almost universal belief in the S-shaped response
curve with effective frequency levels at around 2 or 3. It is
clear from the more recent research that the first exposure can,
and frequently does, have a greater effect than later exposures.
This is particularly true for the larger and more established
brands, suggesting that they can be effectively supported at relatively
low weights of advertising. For newer brands, higher frequencies
may be more appropriate. Here an element of learning is involved
rather than a mere reminder of a brand's presence and its qualities.
In the same way that the response curve of a brand may vary
over time (possibly s-shaped at launch, then increasingly convex
as it matures) it will vary between different consumer groups.
To persuade someone to switch brands may well require more exposures
than just encouraging them to stick with their existing brand.
As important as the number of exposures is their timingparticularly
in relation to the time of purchase or purchase decision. Advertising
seen in the days before a purchase will have a greater effect
than that seen several weeks before. The issues of timing and
frequency need to be considered together. An "effective frequency"
does not really make sense unless it's related to a specific time
The first edition of "Effective Frequency" published
in 1979 by the Association of National Advertisers (of the USA)
concluded "One exposure of an advertisement to a target group
within a purchase cycle has little or no effect in all but a minority
of circumstances". Over twenty years later we can say, with
some certainty, that this is not the case.