New Research Reveals The Sweet Spot For CPG Ad Frequency

Macroeconomic headwinds are dealing CPG marketers a double blow: Consumers may be rethinking their purchasing behavior, and companies may be tightening budgets. In the face of an unofficial recession, it is all the more important that every CPG dollar provides a maximum return on ad spend (ROAS). An optimal strategy will be one that Goldilocks would appreciate, in which brand impressions are not too many, and not too few…but just the right frequency.

Is it more effective to remind target audiences once a week to make a purchase, or several times a day or week as they consume media across various platforms? If they want more bang for their buck, marketers will want to consider taking the first route because ad frequency of more than once a week has a much lower ROAS and incremental dollars per impression (DPM).

That’s according to research from NCSolutions (NCS), whose parent company is Nielsen. The research and development team at NCS, led by Chief Research Officer Leslie Wood, a pioneer and innovator of advertising analytics, found that recent advertising exposure — aka “recency frequency” — is more effective at increasing incremental sales for CPG brands than repeat, or iterative, frequency.

Less Can Be Good (Really)

For CPG marketers, the need to do more with less is good news — even if it requires a mindset shift to let go of the idea that inundating consumers with messaging is a must-do for brands to get noticed.

Many marketing teams are likely going to face budget constraints in the year ahead. According to eMarketer, CPG brands in the U.S. have been ratcheting up ad spending significantly over the past several years, including for digital and mobile campaigns. But research from global media investment and intelligence company MAGNA suggests an unfavorable macroeconomic outlook may result in verticals like CPG slowing their ad spending in 2023.

NCS’s finding is also likely to be relevant to any marketer looking to take advantage of the fast-growing retail media trend. Retail media advertising occurs within retailer sites and apps and is designed to grab consumers’ attention when they’re close to making a purchase and choosing from competing brands. GroupM forecasts that retail media will reach $110.7 billion in 2023; the media investment management company also projects that retail media will become the fastest-growing digital investment channel over the next five years.

Putting the Research to Work

So, what do marketers need to understand about the concept of “recency frequency,” so they can use it to shape and guide their marketing strategies for CPG brands in the new year?

To answer that question, I recently interviewed NCS’s Leslie Wood for my podcast, The Groove. She spoke in-depth about her team’s research, including the key finding that while ad frequency can drive higher sales lift, its diminishing returns and costs are more than the lift it delivers.

Here are a few highlights from our discussion — along with Wood’s advice for marketers:

What’s the most important factor in driving sales when it comes to ad frequency?

Wood: In truth, to drive sales, consumers need to see your ad on a regular basis before they go to the store. But in our research, we saw a tremendously higher return on ad spend for campaigns delivered once a week versus the same reach and frequency delivered in bursts at the beginning, or all at the end.

If you have a highly seasonal brand, you should vary your frequency. Make sure that you’re delivering your message right before those seasonal upticks. You want to follow where your sales are so that you’re delivering messages in recent and close proximity to a purchase. There’s the trick.

Your study separates frequency into two types: recency and iterative. How are they different, and why is it valuable for the marketing industry to look at them separately?

Wood: Let’s take a period of time — say a week. The first exposure in that week is a recency exposure. It’s “Boom! I’ve reached my target audience in that week.” All the additional exposures in that week are called iterative. They’re the pounding. They’re the repeat.

When we separated them in our study, we saw that the campaigns with high levels of once-a-week exposure do far better. Now, for some campaigns, in terms of per-household incremental dollars, it might be better for a consumer to see an ad three times instead of once. But as soon as you say per impression, once a week is much better. When you look at the return on ad spend, it’s much, much higher — like vast multiples higher — for once-a-week exposure.

What is the ideal mix of channels for delivering messaging?

Wood: I think human beings all have different ways they learn. For you, it might be visual. For me, it might be hearing. So, for marketers, the more varied your message can be across the different ways that messages are delivered, the more likely you are to reach all consumers.

Whatever you do, make sure to include the brand. So, you need to have the name of the brand at the beginning, and definitely at the end, so that once you have somebody’s attention, they actually know what you’re selling.

Given what you’ve said about the importance of recency, and learning that too much frequency can lead to diminishing returns, what’s your advice to marketers?

Wood: Again, have the best creative that you can possibly get. Put your best foot forward. Make sure it really does make your brand shine, right? That’s first.

Then, I would say work to reach likely buyers, likely consumers, to the largest extent possible. Try and reach them once a week, not more often. Your budget will decide how much reach you can buy, and your budget will decide for how many weeks. But it’s much better to spread it out across more consumers and across more weeks than delivering a tight punch to a small group of people.

This interview has been edited and condensed for readability. Check out my full interview with Leslie Wood, and learn more about her fascinating career in advertising analytics, NCS’s research on how advertising works, and how marketers can put the findings on recency frequency to work.