One of the most basic principles of marketing effects is that it takes investment in marketing to grow. The key metrics are your market share, share-of-market (SOM), relative to your share of total communications investment in the category defined as share-of-voice (SOV).
Simply put, research has shown that if your SOV is greater than your SOM your market share increases over time. Conversely, if your SOM is greater than your SOV, there is a high risk that you will lose share to your competitors. The key concept is usually defined as ESOV, i.e., Extra Share of Voice, which is simply SOV – SOM.
Among other things, there is a mathematical formula that says that if your ESOV is 10%, you can expect your market share to grow in the range of 0.5 to 0.7 percentage points per year. The English analysis company System1 has proven that for emotional and creative advertising, the correlation between ESOV and growth is even stronger.
These simple equations should be great news for all marketers – and for their management teams and boards. All you must do is plug in some simple numbers about your communications budget and your company’s market share, and you can see what your expectations should be for next year’s results in terms of revenue and growth.
However, there is a small problem.
As we now put nearly 60% of our total advertising investment into digital channels, it is increasingly difficult to get a relevant view of total media investment in a category. The reason is that there is simply no aggregated information on how much different players are investing in digital channels. Moreover, even for those media channels where data on volume is available, there is a challenge because these figures provide SOVs based on gross prices, not what companies actually pay.
But there is relatively readily available data that gives us good guidance on how to manage our efforts and budgets. Les Binet, commonly referred to as the “Godfather of Marketing Effectiveness” along with his colleague Peter Field, has explored what digital metrics can help guide investment questions and proposed a solution for how we can deal with the problem SOV when traditional data does not exist. The solution is called SOS or Share of Search, which is the brand’s share of Google searches.
It is common knowledge that investment in media, especially broad mass media, is reflected in the search volume for the brand in question. There is also a clear correlation between a brand’s market share and the brand’s share of Google searches. But these two correlations mean that if we track the evolution of SOS over time and relate that evolution to our communication efforts and market share, we have a tool to help us interpret the evolution in the market. If SOS is higher than SOM, there is a good chance that we will grow. And conversely, if SOS is lower than SOM, there is a great risk that we will lose market share.
This analysis model should therefore be a natural part of ongoing market monitoring and tracking.