Share of voice: setting the advertising budget against market share.

SUPPORTED DECISIONPosition the advertising budget against market share and competitors' share of voice, then test the effect of a change in ESOV rather than assume it.

Key distinctions

Three conditions before calculating.

A share of spend, not of attention

Share of voice counts the euros invested, not the attention obtained. Two brands with the same budget do not have the same voice if their creative work and media differ in quality.

An average benchmark, not a law

The relationship between ESOV and growth is an average observed across many brands. It varies with the category, creativity and competitive position, and allows no precise forecast for any one brand.

Brand size changes the reading

Large brands can hold their share with a negative ESOV; small brands often have to spend above their share to grow. Comparing ESOVs without taking size into account is misleading.

Method

Calculating and using share of voice in four steps

01Define the category
Set the competitors, media and period included. A share of voice calculated on television alone, or without digital, does not describe the real pressure.
02Estimate spend
Gather competitors' advertising spend from monitoring services, panels or industry estimates, and document their margin of error.
03Calculate SOV and ESOV
Divide the brand's spend by the category's, then subtract the market share for the same period and scope.
04Test before generalising
Vary the pressure in a few regions, measure market share against control regions, and decide the national budget on that result.

ORIGINAL ASSET

Share of voice, market share and ESOV in a category

Five players in the same category. ESOV positions each budget against market share; it does not yet say whether the spend is profitable.

Player	Market share	Share of voice	ESOV	Reading
Leader	35%	28%	−7 points	Spends below its share: possible decline over time
Challenger	20%	30%	+10 points	Invests above its share to grow
Brand C	15%	15%	0 point	Pressure in line with its share
Small brand	5%	12%	+7 points	Small brand investing to grow
Other brands	25%	15%	−10 points	Collective underinvestment

IPA average benchmark: about 0.5 point of market share a year for 10 points of ESOV.

A benchmark for positioning a budget, not a forecast for any given brand.

ILLUSTRATIVE EXAMPLE · SIMULATED DATA

The benchmark gives the direction, not the profitability

01 · SITUATION

Illustrative example: a category invests €50m a year in advertising. The brand holds a 12% market share and a 10% share of voice, i.e. €5m against €45m for its competitors. It targets an ESOV of +5 points, in a €800m market with a contribution margin of 40%.

02 · CALCULATION

Target share of voice = 12% + 5 points = 17%. Budget = 17% × €45m ÷ (1 − 17%) = €9.2m, i.e. €4.2m more. Expected average gain = 5 ÷ 10 × 0.5 = 0.25 share point a year, i.e. 0.25% × €800m × 40% = €0.8m of annual margin.

03 · DECISION

The investment costs €4.2m more for €0.8m of margin in the first year. It is justified only if the share gain holds for several years, which a regional test can check before any rollout.

Acceptance conditions

What must be true to act.

01
Calculate share of voice and market share on the same scope and over the same period.
02
Present ESOV as an average benchmark, never as a market share forecast.
03
Weigh the expected margin gain against the additional cost before raising the budget.
04
Test any increase in pressure in some regions before rolling it out everywhere.

Limits

What this analysis does not prove.

Competitors' spend is an estimate, often incomplete for digital.
Share of voice ignores creative quality and the effectiveness of the media chosen.
The average relationship between ESOV and growth also reflects the way brands set their budget according to their size.
An effect on market share can take several years to appear and exceed the measurement horizon.

References