Using MMM to evaluate performance
There are a lot of products and services out there driven heavily by e-commerce and online purchases. Consumer Packaged Goods (CPG), however, are bought both in stores and on a brand’s website. Because of this, digital analytics alone can fall short when assessing marketing performance. To gain a better understanding of overall performance, advertisers use market mix modeling (MMM), a standard, industry-wide practice. MMM is a measurement strategy that applies statistical analysis to certain data such as sales, ad expenditure, and promotions, to help marketers estimate the impact of specific strategies and determine a campaign's effectiveness.
To show exactly how significant Snapchat’s role is in growing sales for CPG advertisers, Snap commissioned three analyses from Nielsen — an industry leader in global analytics and MMM services for businesses — to quantify the sales Snapchat Ads have driven for advertisers across CPG, and within the sub-categories of Food, Beauty and Non-Alcoholic Beverages in the UK. More details on the methodology are outlined at the end of this blog.
Snapchat delivers high ROAS across CPG categories
Snapchat’s impact on driving sales for our advertising partners is clearly significant. Looking at Nielsen’s Compass benchmarking database; across all of CPG in the UK, Snapchat ROAS is £2.23, which is 34% higher than linear TV and 21% higher than the Total Media benchmark1.
In addition to being efficient, Snapchat Ads are more effective at driving incremental sales for brands; generating 1.6x more sales than social media averages, and 1.18x more than the average of all media channels.
Snapchat predicted ROAS exceeds other Beauty and Food advertising benchmarks
When evaluating specific advertisers within Food and the Personal Care and Beauty category, the same story holds true — Snapchat provides a higher predicted return on investment than all other channels tested, including linear TV. In fact, Snapchat’s predicted return on ad spend compared to linear television for the Food category is 2.35x, and 1.7x within Beauty and Personal care2.
Augmented reality isn’t just about metrics — it’s an immersive experience
Augmented reality plays a massive role in creating connections and experiences between Brands and Snapchatters. AR provides an innovative insight into what brands have to offer and they are highly effective.
When evaluating advertisers in the non-alcoholic beverage category, AR Lenses were one of the most effective forms of advertising measured when it comes to driving awareness and sales. Snap Lenses consistently outperformed other media channels at driving awareness. Through a variety of different executions, the brands evaluated were able to balance playfulness and games along with practical uses that significantly outperformed other media vehicles.
Within the non-alcoholic beverage category, Snap AR Lenses are 1.83x more effective at driving sales than the average of social media channels. This means that Snap generated higher revenue per impression compared to Social channels.
CPG companies use Snapchat to grow
MMM is a valuable tool in helping advertisers measure the effectiveness of their Snapchat campaigns. The results above show that Snapchat is the platform through which CPG brands in the UK can drive sales and grow their businesses. And because of Snapchat’s immersive nature and engaging ad formats, Snapchatters can discover new products wherever they are — driving them closer to purchase in just a few taps.
Further details on the Methodologies
Snap commissioned three analyses from Nielsen to quantify Snap’s impact on CPG effectiveness. First, we analysed return on investment (ROI) benchmarks using Nielsen Compass’s MMM Normative Benchmarking database during the period of 2017-2021 across the total CPG category.
Second, Nielsen used benchmarks to predict Snapchat’s ROAS within the Food and Beauty and Personal Care categories. They used a media performance measurement solution that enables sophisticated ROAS measurement and planning through the use of machine learning algorithms to estimate the outcome of an existing or potential media plan.
Lastly, we selected a representative set of five UK advertisers within the Non-Alcoholic Beverages vertical, and Nielsen built large training data sets for each brand, containing three years of sales, media spend, brand-health tracking, and other data, along with individual advanced econometric models.This dataset — constructed at a weekly level — examined information from January 2018 to April 2021. Nielsen measured what factors contributed to sales and compared information between businesses.