To maintain sales brands need a share-of-voice appropriate for their share-of-market. What about the situation when a brand wants to grow its market share: should it then invest MORE than its appropriate share-of-voice? Could you provide any evidence or facts regarding this point?

 

 

Video Transcript

Kelly Vaughan: Hello and welcome to the Question of the Week. My name is Kelly Vaughan, and today I am going to answer a great question we received recently. We were asked: 

I understand that to maintain sales, brands need a share-of-voice appropriate for their share-of-market. What about the situation when a brand wants to grow its market share: should it then invest MORE than its appropriate share-of-voice? Could you provide any evidence or facts regarding this point?

The short answer is yes – if you want to grow, spend more than your ‘fair’ Share of Voice. The evidence demonstrates that long-term overspending of Share of Voice is linked to growth, and long-term underspending is linked to decline. But we need to stop for a moment to consider how we define ‘over and under spending’.

These spending behaviours are most commonly described as a departure from the naïve approach of Share of Voice=Share of Market. With this approach excess Share of Voice (SoV) is defined as anything above the brands Share of Market (SoM). For example, a brand of 15% SoM would be considered overspending if its SoV was anything above 15%. This approach is easy to understand, simple, and widely used in industry. 

We recommend, however, using a different approach drawing on Jones’ seminal work, which introduced the Advertising Intensity relationship that demonstrated larger brands can afford to underspend the benchmark of SoV=SoM, and that smaller brands need to overspend just to maintain their current market share. 

The key difference of the Advertising Intensity derived approach it is based on the responsiveness to advertising and the total spend in each specific market. This is an important point as evidence shows Advertising Intensity relationships can and do vary considerably between categories, and also within categories from year to year. Typically the Advertising Intensity relationship is negative/downward sloping, as originally demonstrated by Jones, but there is also evidence of positive/upward relationships. So it’s important the Advertising Intensity relationship used to establishing brand’s budgets is drawn on the brand’s own market conditions and is also monitored over time.

In relation to overspending against this Advertising Intensity benchmark, evidence from Institute research demonstrates that long-term overspending is linked to growth. Two studies, one published and one forthcoming, found brands who overspent over five or six years increased on average in Share of Market. The sample of these studies cover brands in 25 different categories from 11 countries with advertising spend spanning seven different media and it provides evidence that brand growth is linked to spending more than your ‘fair’ Share of Voice. However, it is important to stress, that spend is only one piece of the puzzle, and overspending will not guarantee brand growth – it may be a necessary but it’s not a sufficient condition. 

Advertising also needs to be well-scheduled, prioritise high-reaching media, be clearly branded and leverage the brand’s existing mental availability. Then of course there are all the Physical Availability considerations to increase the likelihood of growth such as presence, prominence and portfolio, but that’s a topic for another day! 

Thank you for listening.