Marketers, raise your (extra share of) voice!

The Cogs of Empirical Marketing, Part 5

Welcome back to the Cogs of Empirical Marketing — a better map to help you diagnose problems, drive strategy, develop tactics and grow your brand.

Because once you know exactly where you are, you can chart a course for precisely where you want to go.

As we’ve said before, marketing is a pay-to-play-to-win game. It’s also your brand’s profitability and growth engine.

This week, we’re talking about Extra Share of Voice. So let’s get loud. And let’s get nerdy.

Back in the late 1980s, Professor John Philip Jones (25 years at the J. Walter Thompson agency in Europe, 19 years at the S.I. Newhouse School of Public Communication at Syracuse University) looked at more than a thousand brands, mostly in FMCG categories. He noticed that many smaller brands were overspending on media relative to their share of the market.

That’s because they had to. Larger brands have more brand fame, more regular buyers and a lot more light buyers.

Smaller brands — Jones called them “investment brands” — do not. So they spent more relative to their market share.

Larger brands with a market share above 12% — Jones called these “profit-taking brands” — tended to underspend relative to their share of the market and pocket the difference.

In his research, Jones established a strong empirical link between Share of Voice (SOV) and Share of Market (SOM).

He also demonstrated that when a brand’s SOV exceeds its SOM, the brand is likely to grow market share. If, however, SOV is lower than SOM, the brand risks losing market share.

Your share of voice (SOV) is the amount you spend on advertising in a given period of time as a percentage of the total ad spend of your category.

Extra Share of Voice (ESOV) is the difference between your SOV and your Share of Market (SOM) over a given period of time.

SOV (%)-SOM (%) = ESOV (%)

To exaggerate, let’s say your brand has 20% of the total ad spend in your category but only 10% market share. Your ESOV is +10%, and you’re more likely to grow year over year.

(There’s a catch. Let’s say you spend $500,000 on advertising, and the entire category spends $10,000,000. Your share of voice is 5%. Is that good? Maybe. It depends on how many competitors you have. If you have 20, you’re doing great! If you have two competitors, well, you’re being wildly outspent.)

There was one glaring problem with Professor Jones’ work … the future.

In the late 1980s and early 90s, Google was not a thing. Netflix and YouTube weren’t possible. Amazon did not exist. Mark Zuckerberg was about 9 years old. The iPhone was almost two decades away.

There was one glaring problem with Professor Jones’ work … the future.

In the late 1980s and early 90s, Google was not a thing. Netflix and YouTube weren’t possible. Amazon did not exist. Mark Zuckerberg was about 9 years old. The iPhone was almost two decades away.

You could count the number of channels available on one hand — TV, radio, OOH of various shapes and sizes, direct mail and print. Okay, two hands. Still …

Back when Jones was doing his research, it was much easier to gauge your media spend relative to your market share and your competitors. And ESOV was predictable as well. Planners could set their watches by it: Spend X% more relative to your market share and grow by Y%.

Today, you can spend more in a million different directions and have little to show for it. That’s why it is so important to have a good media team. We have a staggeringly great media team here at SRH. Just sayin’.

So what does this mean for you? Do you need to spend more to grow? Maybe.

It is entirely possible you’re not spending enough on ads and media relative to your competitors. But there are other things to look at first:

Are you playing both the short and the long game?

Are you spending all of your budget on direct response ads solely designed to drive short-term, immediate sales?

Or are more of your ads designed to drive long-term, lasting business effects like profitability, pricing power and incremental growth?

To be clear, the long and the short work together. There’s actually a multiplier effect, which we’ve talked about before.

We can help you find the right balance.

Are your creative campaigns both effective and consistent? Is your creative good? Are your campaigns built around a big idea like “You’re not you when you’re hungry” or “America runs on Dunkin’”? Does every ad — long and short — live in your campaign universe? Are you running your campaigns for years?

Are your media strategy and tactics sound? Not all reach is equal. Are your ads showing up on high-quality placements and high-attention channels? Is each ad created specifically to work on those channels? Is search doing what it needs to do?

You might need to spend more, you might not. If you can’t spend more, you might need to shift your existing budget one way or the other. Or you might need a wildly great strategy, creative and media agency to help you out. Hint, hint.

The Cogs of Empirical Marketing will help you figure out where you are so you can diagnose problems, drive strategy, develop tactics and grow your brand.

And what if you don’t want to grow? What if you’re happy where you are? Great! We love that for you. The Cogs can tell you exactly where you are so you can be confident in your happiness. We’d love that for you even more.

See you next time!

Sources!

“Ad Spending: Maintaining Market Share” – John Philip Jones, Harvard Business Review
“Share of Search: The most important metric you’ve never heard of” – WARC
“Marketing in the Era of Accountability”, Les Binet & Peter Field, IPA