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Vodafone claims it knows how ‘truly accountable’ all its media spend is for sales

Vodafone claims it has cracked the one question that has mystified most marketers – how to prove its media spend is undoubtedly generating sales.

Conversations between senior marketers and budget holders at the mobile carrier are changing; Instead of marketers saying ‘what I think I can deliver on a budget’ they are showing what they can deliver through a media buy, according to David Still, head of brand strategy and operations at Vodafone.

Speaking at today’s (5 November) launch of a Thinkbox report conducted by GroupM, the brand boss gave attendees a glimpse into how the business “stepped out of the world of marketing and into the world of science” to come up with an “accurate reflection of what we can spend at any given level and what we can sell”. That model has come from the unlikeliest of places – the pharmaceuticals sector.

Test and learn

Where many marketers are all too willing to use “received wisdom to inform their media strategies, Vodafone wants to, like all the world’s biggest drug and cosmetic companies do, bake testing into everything it does," said Still, who has spent the last 18 months trying to convince the business to get on board with the plan. And it’s paid off; now the business is conducting hundreds of tests across the country to determine the causal impact of each media channel.

Still gave an example to explain the model. Over 12 weeks, the company might run a test in one TV region where it's doing TV, online and display with high, medium and low levels of media spend respectively, while in another region everything during that period is at a low level. It’s a snapshot of hundreds of experiments happening over that 12 week period, that aims to test every possible permeation of spend that Vodafone can muster. In isolation the tests mean nothing, but when combined it paints a clearer picture of how hard the mobile marketer’s media is working. And because Vodafone can see its sales at a geo-level it’s able to quantify the impact of its media across most of its channels.

However it’s an expensive model, with Vodafone testing up to sixteen times what it would normally spend. It’s why the model could only ever work for a business of a similar size to the telecoms and smaller advertisers will need to carry on searching for an alternative better suited to them.

“I’m truly accountable at every one of my media channels and what they will deliver in terms of sales,” added Still.

He went on to hail the impact of TV, adding that the “amount that we can spend on TV is less than we are currently spending” – suggesting that TV has more headroom for spend than most of its other channels in a way eschews the traditional but broken way of planning TV campaigns.

The source code

Vodafone, as well as industry experts from Sky Media, Ebiquity and Mediacom, agreed at the event that hitting the same people repeatedly in a limited time span during specific day parts was pointless. Given the breadth of data and myriad of media channels, that money would be better spent increasing the range of coverage and serving people at more times during the day – a complicated task for advertisers.

All the test results are pumped back into Vodafone’s econometric model, which in turn is used to spawn more detailed questions for more detailed tests. And while this approach is being pioneered in the UK, the mobile business is starting to see its other markets take up the reins, taking it into media and combining it with price elasticity.

“The future for us as a business is to get right under the skin of the media and get more granular and specific with our tests,” said Still. “Whether that involves us looking at effectiveness’ or efficiency but also understand how it works in combination with things like pricing."

Admittedly, Vodafone’s approach is geared to anlayse the shorter term effects of its advertising, with the business competing in one of the fastest-moving and dynamic sectors. Measurement tends to be done at a campaign level rather than a media channel level, although it does have similar type of control and exposed methodology for understanding the longer-term effect.

“We do look at it in the round and invest our money accordingly behind the campaigns that provide the biggest bang for the buck [for the longer-term] and not just in the short term,” said Still. “Clearly different times of the year, different market conditions mean at some points we will have to put more money in shorter-term metrics – that’s consistent with other businesses.

The hidden effects of TV advertising

The telecoms business rebooted its TV creative earlier this year, appointing Grey London as its lead creative agency across all its £53m UK business. It is likely upcoming tests will involve the new creative as the business looks to trumpet the freedom its 4G service offers is customers.

Vodafone’s show and tell was meant to reinforce TV’s status in splintering media mix. Thinkbox, the country’s cheerleader for commercial TV, used the same event to launch its report the “hidden effects” of TV’S role in response campaigns. It claimed that TV advertising is responsible for 44 per cent of media driven Facebook interactions for brands and that it creates the most short to medium term sales.