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Mixing Your Marketing in Real Time Ross Link, President, Nielsen Marketing Analytics Josh Kowal, Senior Vice President, Nielsen Marketing Analytics MARKETING MIX CHALLENGE: DECLINING DOLLARS / GROWING PLATFORMS MEDIA CHANNELS 100% BUDGET 80% 60% 40% 20% 0% 2002 2006 2012 MEASURING SUCCESS REQUIRES FACT-BASED LEARNING QUANTIFYING MARKETING RETURNS IS NOT SIMPLE SOCIAL MEDIA TRADITIONAL DIGITAL MASS • REACH GRANULAR • TACTICAL THE SOLUTION • MARKETING MIX IS STEP 1 • GRANULAR DATA + COSTS + CLIENT DETAILS = FORWARD-LOOKING, PRESCRIPTIVE OPTIMIZATION • MAGNITUDE OF RESULTS ARE SURPRISING REI – A UNIQUE CORPORATE CULTURE BIKING KAYAKING SKIING ECOFRIENDLY CUSTOMER SATISFACTION FACT-BASED INSIGHTS = OPTIMAL RESULTS ROI 59% 1 2 3 MEASURE EVERY TACTIC IN A MEANINGFUL WAY NON-BRANDED BRANDED DIGITAL PAID TV RADIO PRINT PAID SEARCH COMPARATIVE SHOPPING ENGINE UNPAID MEASURE ALL SALES CHANNELS BOTH TRADITIONAL AND ONLINE TRADITIONAL RETAIL STORE SALES DIGITAL REI.COM SALES BY DMA COMPLETE TACTIC PERFORMANCE FIND THE TRUE SOURCE OF AN INCREMENTAL PURCHASE AND OVERCOME THE “FALLACY OF LAST TOUCH” EXAMPLE #1 Marketing mix models would correctly give credit to TV EXAMPLE #2 Assigning credit by tracking click thru patterns would incorrectly give credit to Search Marketing mix models would correctly give credit to Display KEY PROPERLY CREDITED IMPROPERLY CREDITED Because there is no way to directly track clicks from display to retail, credit would be “lost” 3-STEP PROCESS TO ANALYZE CURRENT BUSINESS PERFORMANCE MARKETING MIX MODEL- METHODOLOGY STEP 1 SALES DIRECT MAIL TV TIME 3-STEP PROCESS TO ANALYZE CURRENT BUSINESS PERFORMANCE MARKETING MIX MODEL- METHODOLOGY STEP 2 SALES DIRECT MAIL TV ATTRIBUTE SALES TO ACTIVITIES OCCURRING WHEN SALES INCREASED Print TV DIRECT MAIL Online Core 3-STEP PROCESS TO ANALYZE CURRENT BUSINESS PERFORMANCE MARKETING MIX MODEL- METHODOLOGY STEP 3 ANALYZE RESULTS EXPLAIN CHANGE VS. YEAR-AGO CALCULATE ROI CUSTOM OPTIMIZATIONS IDENTIFY BEST POSSIBLE INVESTMENT MARKETING MIX MODELS MARKETING COSTS AND PRODUCT MARGINS OPTIMIZED PLAN TV PRINT ONLINE BY ACTIVITY BUSINESS RULES BY WEEK BY BRAND BY CHANNEL OPTIMIZATION: SAME BUDGET, BETTER RESULTS Current Spend Optimal Spend 40,000 40,000 35,000 35,000 30,000 TV Online 25,000 20,000 15,000 INCREMENTAL IMPACT INCREMENTAL IMPACT Cut $500k Lose 2,500 units 30,000 25,000 20,000 15,000 10,000 10,000 5,000 5,000 0 Add $500k Gain 12,000 units 250 500 750 1000 1250 SPEND IN CHANNEL ROI = $1.25 1500 TV Online 0 250 500 750 1000 1250 1500 SPEND IN CHANNEL ROI = $1.42 #C360 CONTINUOUS IMPROVEMENT = IMPROVED PERFORMANCE REFINE MODELS MORE GRANULARITY NEW TACTICS MAKE STRATEGIC SHIFTS IN YOUR TIMING MAKE STRATEGIC SHIFTS IN YOUR MARKET RADIO MARKETS DIGITAL MARKETS TV MARKETS ALL TACTICS MARKETS CHICAGO MADISON MILWAUKEE SAN FRANCISCO BOISE AUSTIN BOSTON SEATTLE SALT LAKE CITY MINNEAPOLIS ATLANTA SAN DIEGO ACCOUNT FOR DIFFERENCES ACROSS SALES CHANNELS RETAIL SALES BUDGET 2.9% REVENUE (8.7%) (2.5%) 14.7% ONLINE SALES HOW TO IMPLEMENT • KNOW NOT ONLY WHERE MARKETING DOLLARS WENT, BUT WHERE THEY SHOULD GO • INCREASE PRECISION WITH MORE GRANULAR DATA AND MAKE MORE SUCCESSFUL STRATEGIC DECISIONS • CONTINUOUSLY REFINE/IMPROVE BASED ON THE CHANGING ENVIRONMENT
