With rivals Coles and Woolworths cutting back on their advertising spend, Aldi have upped their game in the supermarket price war, increasing their annual advertising spend to $34.7 million.
With billions of consumer dollars at stake, let’s take a look at how Aldi might effectively measure their advertising spend.
Understand the strategy
When evaluating the effectiveness of advertising, companies must first consider what the objectives of the campaign are (Iacobucci 2013, p. 168). Furthermore Clark and Ambler (2011, p. 16) state that ‘Different strategies demand different metric dashboards’
This asserts that before Aldi identify metrics, they must be clear on the objectives. Is it to increase market share? boost sales? change attitudes? perhaps all of the above?
Whatever the objectives, Aldi must identify metrics that will measure how effective the advertising is in reaching these goals.
Aldi TV Commercial
Multiple, balanced metrics
Ambler and Roberts (2008) argue that to effectively evaluate marketing performance, companies must consider both short-term gains (E.g. profit or cash flow) and changes in brand equity (E.g. quality and value of the corporation).
Sharp (2013) also asserts that while sales and profit are important metrics, they are not enough on their own and additional metrics are required to explain why changes in sales or profit may have occurred.
In considering the above theories, it is clear that Aldi must implement multiple metrics. The next question is, how do they choose the right ones?
Sharp (2013) identifies that a thorough metrics system should be balanced across different dimensions. Using Sharp’s theories and definitions, table 1 identifies possible dimensions and metrics Aldi could select from and develop a system to measure their advertising spend.
Clark and Ambler (2011, p. 18) state that ‘identifying key audiences and understanding their information needs is an important aspect of developing a good metrics portfolio’. Therefore Aldi must consider what information will be relevant to top-level management and what will be relevant to other staff throughout the organisation.
Clark and Ambler suggest that top-level management may require a handful of key metrics based on important financial indicators such as ROI and non-financial indicators such as brand equity, market share, capabilities, etc. while a metrics system for middle management and below may ‘convey key metrics and goals and how employee activities contribute to those metrics and goals’ (Clark and Ambler 2011, p. 19).
For Aldi’s metrics to be meaningful they must be benchmarked.
Sharp (2013, p. 111) states ‘to interpret a metric score, marketers need to know what to expect’. Benchmarks will vary but may include market size, previous sales, forecasting, competitor data, etc. Clark and Ambler (2011, p. 18) identify that ‘metrics can help an organisation only when they are in context’.
Benchmarking will allow Aldi to place their metrics in context and identify how effective the marketing is against objectives.
Farris et al. (2010, p. 3) warns that ‘to use multiple metrics effectively, marketers must appreciate the relationships between them and the limitations inherent in each’.
Aldi must be aware of this warning and develop a balanced portfolio of metrics that provides meaningful data to all staff (including top-level management & board) that can be used to positively influence decisions and actions on both a strategic and day-to-day basis.
If Aldi do just that, they are sure to be a worrying opponent for their rivals.
Blog by Chris Noonan, WordPress Username: cnoona, email: firstname.lastname@example.org
Ambler, T and Roberts, J 2008, ‘Assessing marketing performance: don’t settle for a silver metric’, Journal of Marketing Management, Vol. 24, Iss 7-8, 2008
Clark, B and Ambler, T 2011, ‘Managing the marketing metrics portfolio’, Marketing Management, Fall, 2011
Farris, P, Bendle, N, Pffeifer,P , Reibstein, D 2010, ‘Marketing Metrics: The definitive guide to measuring marketing performance’, Second Edition, Pearson Education, New Jersey, USA
Iacobucci, D 2013, Marketing Management, student edition, South-Western Cengage Learning, Ohio, USA
Sharp, B 2013, ‘Marketing: theory, evidence, practice’, Oxford University Press, Melbourne, Australia
Images & Video:
Aldi online banner: https://www.aldi.com.au/en/shopping-at-aldi/
Aldi TV Commercial: https://www.youtube.com/watch?v=R3AFZb-mTXw
Aldi Print Ad: http://www.adnews.com.au/campaigns/bmf-says-don-t-knock-it-till-you-try-it-for-aldi-liquor