Solutions by Industry

Improving Returns on Print Advertising: A Case Study

As newspapers declined, a leading big box retailer turned to APT to reduce newspaper advertising spend while minimizing the impact on revenue.

  • Faced with declining newspaper ad effectiveness and a shrinking marketing budget, the retailer turned to APT to determine where costs can be trimmed.
  • Using a sophisticated test and control approach, APT determined which markets did not drive enough sales to cover the cost.
  • Removing underperforming markets eliminated an additional $5M in waste from the marketing budget while having minimal impact on revenue.
The Company:

A leading big box retailer with over 1000 stores

The Challenge:

Over the last couple years, newspaper subscriptions have experienced double digit declines. Many marketers are exiting newspaper advertising in favor of new media. For this retailer, however, exiting newspapers was not an option. Newspaper advertising was a key vehicle for reaching customers. Its customers had learned to look to these advertisements for the latest products and promotions, and about half of its $100M annual marketing budget was spent on circulars. Under budget pressure, senior management wanted to reduce the circular budget but was nervous about losing sales.

Management knew that sales often went up when circulars were run. But they never knew how much of the sales increase was actually driven by the circulars versus being driven by pricing, competitor actions, or other factors. Complicating the picture, circulars were often run during the busy times of the year. The company turned to APT to isolate the incremental sales attributable to circulars adjusting for these other factors.

The Solution:

To do this, the client employed sophisticated techniques available in APT's Test & Learn for Ads™ solution to adjust for pricing, competitor actions, and seasonal trend, providing a clear scientific measurement of the incremental impact of circulars.

APT found that, on average, newspaper advertising did not pay back. However, some markets have a positive ROI.  The top driver of higher returns was cost per store. The wide range of cost per store came from the company’s wide range of market saturation. In markets with low presence, the cost per store far exceeded the incremental margin dollars created by the circular. With APT’s help, the company removed markets below break even, greatly increasing the ROI of the circular.

The Results:

Removing underperforming markets eliminated an additional $5M in waste from the marketing budget, while having minimal impact on revenue.