Do not misinterpret the Excess Share of Voice analysis

by Nigel Hollis

Various studies find that there is a consistent relationship between share of voice this year and market share change next year. The more a brand spends compared to its market share, the more likely it is to grow over time. But within a category some brands will fail to obey the general relationship and it is important to understand why.

The Excess Share of Voice (ESOV) analysis has been used for decades to demonstrate when brands spend more than their fair share on media this year they are more likely to grow next year. By punching above its weight, a brand is more likely to make its offer meaningful to a wider audience and ensure it is salient in relation to new needs and occasions.

At first glance, this finding might suggest that brands with bigger budgets are destined to win because they have deeper pockets, however, that is not the case because it is the “excess” that matters. Big brands often spend less in share of voice than they have market share, and while existing mental and physical availability might insulate them from competition, lower share of voice than share of market may still increase the probability of future decline.

Similarly, when brands do deviate from the category relationship it is tempting to assume that great creativity is the cause, but that is not necessarily the case. While it is true that great creativity will leverage media spend more efficiently, there are other factors that will also influence how well excess spend translates into market share gains. So, brands can also outperform category norms (and underperform) because of their:

1.     Underlying business strategy – a disruptive strategy ought to yield greater returns,
2.     Nature of the brand positioning – a brand that is out of sync with today’s culture will likely, underperform
3.     Media channel selection – choices that create positive synergies will overperform,
4.     Activation at point of sale – failure to create instant recognition will mean the brand underperforms.

In other words, it is not just weight of spend that matters, it is against what it is spent. It is perfectly possible for a brand to spend more than its fair share and still not grow because its offer is not meaningfully different from the competition, or people perceive it to be too costly. Similarly, a disruptive brand may grow faster than expected simply because the relevance of its offer is immediately obvious when people come to buy the category. Finally, categories with low proportions of switching will not see the same strength of relationship between increase in market share and share of voice simply because share change is slow.

Of course, it is likely that all the factors identified above will be correlated. A disruptive business strategy opens the opportunity for a great creative campaign and effective activation at point of sale, however, it is not guaranteed, so rather than assuming excess share of voice will lead to growth, brands still need to make sure that all the other elements of the mix are working too.

So, what do you think of this analysis? What other factors might be at work?