Supermarkets

Overview

Supermarket clients invest heavily in media, spending close to £600 million in 2017. Traditionally heavy newspaper spenders, supermarket brands cut print allocations substantially in 2014/5. Although print newsbrand share has since stabilised somewhat, low spend in digital newsbrands means that total newsbrand share remains at 2015 levels.

Benchmarketing’s analysis shows that lower than optimal spending on both print and digital newsbrands is depressing achievable profit returns. A re-balancing of digital display budgets, to allocate a little more to high-performing digital newsbrands and a return to 2014 levels of print spend, would significantly augment profit returns.

To maximise PROI it is recommended that a minimum of 19% of the total media budget is allocated to print newspapers and 2.1% to digital newsbrands.

Analysis shows that TV-led multimedia campaigns using a wide variety of media are most successful at generating maximum PROI.

Supermarket clients are losing out on £246 million potential profit through underinvesting in newsbrands, particularly print.

19%
Print newsbrands' minimum recommended share of budget
2.1%
Digital newsbrands' minimum recommended share of budget

Adspend patterns

Supermarket category advertising expenditure has shifted noticeably in the last two to three years. TV share is down by over 10 percentage points, out of home has more than doubled and print newsbrands have rallied a little since 2015.

After a step change in 2017 online media now accounts for almost a quarter of all media spend. Digital display has risen from 11.9% in 2015 to 20.2% in 2017.

Newsbrand spend appears to have stabilised a little recently, but at 16.3% is still eight percentage points lower than in 2013.

The fall in print adspend is far steeper than the decline in circulation and this sharp fall is also at odds with the growth in the overall weekly newsbrand audience, which now stands at 41.3 million, according to latest PAMCo data.

Campaign PROI: print

Supermarket advertising campaigns generate strong profits – but these could be increased by around 60% if the spend in print newsbrands was raised by a minimum of four and up to 11 percentage points to achieve maximum campaign profitability.

Average print newsbrand spend currently sits at just under 16% of overall media budgets, so it falls into the lowest third (tertile) of cases analysed. Campaigns in this tertile generate respectable returns, with a PROI multiplier of 2.26.

However, to achieve optimum PROI, newsbrand print spend needs to be close to 2014 levels, with an average allocation of between 19.4% and 31.3% of total campaign media spend. When print newsbrands are included at this level, the PROI multiplier for the campaign is 3.61.

PROI is 3.61
when print newsbrands are at optimum level

Campaign PROI: digital

For the first time, the profitability of adding digital newsbrands to finance campaigns specifically can be quantified.

The findings show that adding digital newsbrands at the current average level of 0.7% of overall budget has a positive impact on PROI for the total campaign, but that this small share is not providing optimal campaign profitability. Campaigns utilising digital newsbrands at less than 1.7% of overall budget deliver a PROI of 3.07. Campaign PROI is significantly higher, at 4.70, when digital newsbrand spend allocation is between 1.7% and 2.5% of total media budget.

PROI is 4.70
when digital newsbrands are at optimum level

The profit gap

The current average 15.6% investment in print newsbrands elicits a campaign profit of £204 million. If the average rose to the recommended 19.4% minimum share of media spend to optimise overall campaign profit levels, the additional profit released could be as much as £201 million.

The recommendation is that digital newsbrands should take 2.1% of overall campaign investment. This would elicit potential additional profi t of £45 million.

Missing profit
£57.2m - £12.2m = £45m
Missing profit
£405.6m - £204.2m = £201.4m
Potential campaign profit
£25.4m x £1.07= £27.2m
Potential campaign profit
£112.4m x £3.61 = £405.6m
Recommended average
investment in online newsbrands

2.6% = £25.4m
Recommended average
investment in print newsbrands

19.4% = £112.4m
Campaign profit
£23.4m x £1.07 = £25m
Campaign profit
£90.3m x £2.26 = £204.2m
Current investment in online newsbrands
2.4% = £23.4m
Current investment in print newsbrands
15.6% = £90.3m
Current supermarkets category spend
= £579m
£246m
Total missing profit =

Where should the money come from?

Two pieces of further analysis in addition to PROI calculations have informed the recommendations for budget realignments in the supermarkets category – adstock and response curves.

In the supermarkets category, most established media achieve good adstocks, including TV, cinema, print newsbrands and magazines. Higher adstocks are typically associated with a long-term branding message.

In the supermarkets category digital display is the most effective channel, followed by TV, digital search and print newsbrands. This supports the recent increased investment in this channel.

Digital newsbrands form a relatively small recommended proportion of this total (2.1% out of a total of 20.2%). However, we know from other evidence that digital newsbrands are more effective than general digital display.

The recommendation is therefore to adjust online budgets to allow for a greater proportion of digital newsbrand display and to reinstate print newsbrands at the most effective and efficient spend level in the overall media budget.