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Spending Smart: Why It’s More Important Than Ever Before

Written byMegan Harris
September 7, 2020

It’s budgeting season again. Wait, please don’t go — we promise you will like this.

As an integrated communications partner, FIG is used to helping our client brands put together rational budgeting forecasts that are sensible, comprehensive, and meant to make your internal “fundraising” a painless process for the year ahead. Around here, we look forward to budgeting season, as it’s a time to reflect on the great work our clients have accomplished — and identify even more opportunities to help our clients grow and meet their brand goals and objectives. And in today’s uncertain times, brands are trying to find clever — and not excessively spendy — ways to grow. 

At FIG, as Storytellers for the Information Age, we firmly believe in the power of storytelling to help brands grow. Storytelling is a broad term made up of three main levers we can pull: Media, Message, and Execution. In this article, we will explore the first lever: getting your spend right. 

We know what you’re thinking: Revolutionary — a media team is telling me to spend more. But read on. There is no brand that doesn’t struggle with the concept of increasing spend for paid media, especially in a world of “more for less.” But without proper spend, your story will languish, struggling to convert from a fun theoretical idea into one that encourages consumer action and loyalty.

With that in mind, we’d like to introduce something called Excess Share of Voice (ESOV): one of the most important marketing effectiveness concepts to rationalize increased spend for real business growth.

ESOV determines the level of a brand’s market share growth. And the higher a brand’s Share of Voice (paid media spend) is relative to its Share of Market, the more a brand will grow. For example, if your market share is 20% and your paid media spend within your category is 40%, your brand will hold an excess shared voice of +20%, which is tangible growth. If your paid media spend within your category is lower than your market share, however, your brand will not grow, or worse, it will stagnate or decline. 

Much research has been conducted to prove the validity of ESOV, but the study from Nielson and IPA (see graph below) is most compelling. The study set out to quantify just how much market share grows when advertisers increase their SOV; it analyzed around 100 brands across 30 categories, and confirmed that ESOV drives growth.

So what’s the sweet spot when it comes to the optimal ratio between SOV and SOM? The short answer is, it differs by category as well as by brand size (the study authors noted smaller brands have a harder time growing market share through SOV alone, so will need ad campaigns with above-average effectiveness to succeed).

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At this point, you may be wondering if your brand has to spend a lot in order to gain traction and increase market share. The good news is, that is not necessarily true. Although media spend is one dimension of growth, it’s not a controlling factor. Even at lower budgets, campaigns with longer durations and a diversified channel mix are more effective (The Effectiveness Code. From Cannes Lions & WARC. 2020). Deploying an always-on flighting approach, diversifying channel mix to include high-reaching/awareness-driving tactics, and defining audience segmentation based on behaviors rather than demographics are levers to pull for immediate, measurable impact.

Lastly, remember: the goal here isn’t to quadruple your media budgets and spend sleepless nights waiting for a payoff. It means committing to a measured, meaningful media strategy that has the right balance of spend, duration, and channel mix. And even more importantly, it means taking the sting out of that “s” word, as you can now use the ESOV model to tie it directly back to business growth. 

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