Analyzing Rivals to Justify Ad Buys

Jul 14, 2003  •  Post A Comment

The CIA, James Bond and savvy media planners all have in common the need to find out everything they can about the opposition. Media planners don’t make life-or-death decisions, but our jobs certainly affect the financial health of the advertisers we work for. To develop an effective media plan, we must know what the competition is doing. And like the spy agencies, we rely heavily on paid informants-in our case Nielsen Monitor-Plus and TNS Media Intelligence/CMR.
A competitive expenditure report is more than just nice-to-know information. It helps planners justify expenditure levels by showing how much money is needed to be a player in their category. Beyond that, it shows the competitor’s geographic strategy, targeting, creative units, scheduling practices and their media buying philosophy.
While few advertisers mechanically follow a competitor’s lead, it is critically important to know where a given plan fits in the competitive set.
The minimum elements of a competitive expenditure report: The first step is to identify the category. This is sometimes obvious, but more often it involves a core marketing decision. An electronics retailer may think first of Best Buy, Circuit City and Radio Shack. But Wal-Mart, Target and even the major bookstore chains all compete for sales.
When there are many competitors, such as in fast food, planners typically show the top five to 10 brands in the most recent full calendar year, with a subtotal. If the planner’s brand is not a top spender, it is reported next. Finally, a line with “All others” is added to obtain the category total.
Keeping the same brands in the same order so they match the first report, dollars are broken out by medium for the most recent calendar year. If there are substantial differences between the brands in their allocation, then the percent of spending can be shown for each. Otherwise, the percent of total category spending is reported at the bottom.
This report answers many questions. Is there a difference in media used by the primary vs. secondary brands? How do competitors allocate dollars between local and national media? Does one brand avoid the TV crowd by focusing all dollars in radio? Does one competitor limit national television to cable?
Dive deep with supplemental reports: The three minimum reports provide the basic information a marketer needs to set the stage for media planning. But in most cases, additional charts are used to answer a brand’s particular questions. A competitive report might show:
Spot TV spending (or better, GRPs) by market reveals geographic strategy. A fancy way to show this is to make a color-coded DMA map using the mapping feature of Excel or the embedded map function in the Ad*Views software of Nielsen’s Monitor-Plus.
Spending or GRPs by ad size or creative execution show pool rotation strategy.
Vehicle selection (magazine titles, program selection, cable channel) can indicate a competitor’s target audience.
Spending or GRPs by week shows seasonality, promotional activity or product introduction strategy.
TV storyboard and consumer magazine creative executions show creative strategy.
A few caveats: Accuracy varies by medium and by the way you look at it. This is like a portrait: When you get far enough back everyone looks good; close-ups show every flaw.
TV accuracy overall is typically within 10 percent, but weekly GRPs or dollars in one market will be much less accurate.
Accuracy also varies from medium to medium and by the way each is measured by the different services.
Data availability varies by medium and by the type of information requested. TV occurrences and ratings are typically available in a few weeks, but it takes at least two months for everything to be reported. Both services show the dates of the most recent information available.
Brand coding is a judgment by the research services, but users can combine brands to reflect the way a given advertiser views the competition.
The creative description is a judgment. A trained coder looks at each ad and comes up with a name for the execution that seems reasonable. But it usually does not match the name given by the agency’s creative department or the commercial monitoring services.
And the cardinal rule: Since all prices reflect industry averages, not confidential negotiated rates, always compare your measured spending with the competitor’s measured spending; never compare your actual with the competitor’s measured.
To sum up, competitive intelligence is essential to the planning process. Such tables, plus a cover note with highlights, key observations and advertiser-related insights, will help the media team produce the most effective plans for their clients.
Roger Baron is senior VP, media research director, FCB/ Chicago.