The principle of market share is fairly self-explanatory to the majority of businesspeople. Investopedia defines it as the percent of total sales in an industry generated by a particular company. So if you run a professional hockey team and they have 1,500 season ticket holders, while there is a total of 15,000 season ticket holders across all the professional sports team in your region, your market share is 10%. Easy enough.
A less commonly discussed concept outside of the marketing sphere is share of voice. According to Brandwatch, share-of-voice is traditionally determined by how big your share of advertising is compared to all of your competitors. If we’re sticking with the same scenario as above, let’s assume the hockey team spends $150,000 a month on advertising and the total regional professional sports team ad spend per month is $2,000,000. That makes their share-of-voice 7.5%.
As important as these two metrics are independent of each other, the relationship between the two is both interesting and crucial to acknowledge. It’s no secret that advertising is a driving force behind sales. It follows, then, that share-of-voice has a similar relationship to market share. Because both metrics are relative to the specific competitive market, the share-of-voice percentage can be seen as an indicator of whether the market share percentage will go up or down.
Think of share-of-voice as a force that pulls market share to itself. All other things being equal, if share-of-voice is higher than the market share, you can expect that market share to go up. Conversely, if share-of-voice is lower, it will pull the market share down towards it. Taking a look once more at our fictional hockey team, we can infer that since the market share is 10% and the share-of-voice is 7.5%, market share is in danger of being dragged down. The team in question may want to reevaluate their ad spend to bring their share-of-voice up to or higher than 10%.
Granted, share-of-voice is not the be-all and end-all in this case or in general. The quality of the advertising that the money is spent on cannot be neglected in favor of simply raising the budget. That quality must also be on par or superior to that of competitors’ ad quality. However, share-of-voice does have significant validity as an indicator and should be monitored to ensure that market share does not regress as a result of it. Keeping this in mind will aid you in determining the appropriate budget to assign to maintain or raise market share.