CBS Corporation (NYSE: CBS.A and CBS), Kellogg Company, and Nielsen Catalina Solutions (NCS) announced today the results of a ground-breaking study that challenges a long-held industry rule of thumb that has been used for over 20 years: that the long-term effect of advertising on revenue is, on average, two times the short-term effect.
At the Advertising Research Foundation’s Audience Measurement Conference today, CBS, Kellogg’s and Nielsen Catalina Solutions presented new findings on the long-term impact of advertising on revenues. The study shows that the long-term impact may well be greater than two times the short-term impact, and that it can vary substantially from brand to brand and campaign to campaign.
Through this collaboration, five brands in the Consumer Packaged Goods category, including Kellogg’s Special K, were studied to determine the specific “multiplier” for each of the brands, using true single-source methodology that integrated television exposure with actual retail sales in a single-source dataset.
For certain Kellogg’s Special K advertising, it turns out that the multiplier to get from the short-term effect to the long-term effect on sales is actually higher than the industry norm, “multiplier of 2.” The multiplier that is developed using the single source methodology is then added to the short term sales impact to get the complete value of advertising.
“We’ve always known that advertising builds long-term sales and brand equity, not just short-term sales, though we didn’t know the full extent,” said Jeff Doud, Director of Marketplace Analytics at Kellogg Company. “Kellogg got involved in this study to better understand the longer-term impact of advertising on retail sales. This type of research helps us to make well-informed decisions on marketing strategies.”
“The industry has watched marketing budgets gradually shift from paid advertising to promotions, often due to the short-term sales effect and measurability of promotions,” said David Poltrack, Chief Research Officer, CBS Corporation and President of CBS VISION. “In the past, research confirmed that television advertising provided a long-term, brand-building value that had not been captured by these short-term measures. Through new single-source data we are finally able to precisely measure the long term effects of television advertising. CBS is dedicated to helping advertisers employ these new measurement resources to ensure our client’s advertising reaches its full potential. This research is an important first step in that process.”