Media Mix Optimization - The Starting Point for Customer-Centric Communications

Helping Marketers Find Answers • Media Mix Optimization is a comprehensive and dynamic strategic capability that enables marketing practitioners to scientifically and quantitatively measure, plan, manage and optimize marketing resources and investments • MMO helps marketers to regularly capture insight to: – Drive business results through better strategic planning and execution of the marketing process – Identify opportunities to increase margin through improved ROI on existing marketing investments – Improve collaboration, brand positioning, coordination and consistency of analyses across lines of business, brands and geographies – Align resources to execute customer-centric strategies 2 © 2009 Acxiom Corporation. All Rights Reserved.

Media Mix Optimization – what it is and what it is not What it is What it isn’t An application A process and journey model or event Refinement to campaign strategy or optimization Organization change of a budget for a particular department Transformational Incremental efficiency business model improvement 3 © 2009 Acxiom Corporation. All Rights Reserved.

Approaches Applied to… Goal… Inferred Attribution Traditionally above the line Seeks to correlate media spend marketing spend (Print, TV, with sales results, accounting for: Radio) seasonality, competition Direct Attribution Traditionally below the line Seeks to close the loop on marketing spend (Direct: IPTV, channel specific campaigns, Mail, Email) then optimize across Normative Performance How do I perform against my Introduces benchmarking into vertical market, geo, or market the equation to create an at large? “open system” 4 © 2009 Acxiom Corporation. All Rights Reserved.

Linking Media Strategy to Customer Lifecycle Above the line spend Below the line spend Customer Value Intelligently Prospect Lengthen and Deepen Identify and Address to Minimize CPA Customer Value Potential Attriters Y1 Y2 Y3 Y 4 Time Y0 Acquisition Strategies Retention and Growth Strategies Attrition Strategies Inferred Attribution Direct Attribution Direct Attribution Normative Performance Normative Performance Adopted from: Dr. V Kumar 5 © 2009 Acxiom Corporation. All Rights Reserved.

Social Interaction Triggers Incremental Device and Additional User and Consumer Lifecycle Incremental Device Consumer Value Content Purchase Device Music Registration Transmitter Lifecycle Relationship Feature Strategy Service Next Device Upgrade Device Purchase Purchase Ņ Cliff Ó The Consumer Life Channel e Strategy SE SE Operator Operator WEBSITE SMS Email STORE STORE Key Opportunity Revenue Impact Margin Impact Avenue Revenue Per User (ARPU) Increase in ARPU Marketing Spend Per Device Shipped Increased Margin Per Device Value Relationship Improved Sales Mix Increased Revenue Per User Increased Margin Per User Devices Sold per User Increased Revenue Per User Increased Margin Per User 6 © 2009 Acxiom Corporation. All Rights Reserved.

Connecting the dots… Inferred Redeployed Redeployed Attribution Media Mix #1 Media Mix #2 1 3 10-15% Reduction 6 Up to 30% Reduction off in Media Spend original media spend Enhanced Channel Lifecycle Direct Customer Propensity Marketing Attribution Profiles Models 2 4 Up to 20% top 5 7 10-15% reduction in line growth direct spend Normative The “last” 5% Performance 8 7 © 2009 Acxiom Corporation. All Rights Reserved.

A Comprehensive MMO Solution Marketing Investments Baseline Offerings Included with Baseline Offerings (or stand alone) Media / Marketing Media Type Marketing Cannibalization Competitor Mix • Television Channel Mix Optimization Spend Assessment Impact • Newspaper Interplay Modeling Benchmarking Assessment • Magazine • Radio Single or • Out-of-Home Multiple Peer Determining Assessing • Cinema comparison of impact on competitive marketing revenues from marketing • Strategy • Analytics investments other activity • Direct Mail • Response • Segmentation Channel and return channels impacts • Teleservices Attribution • Optimization • DR Broadcast • Predictive • Digital Modeling • DR Print Single or • Mobile Multiple Quantitatively-based, Continuously Assessed Output • Optimal marketing investment mix to • Scenario planning - reach the most profitable consumers • Quantifies halo effects - with the right product and offer • Consolidates all marketing analyses into a single • Single product or full portfolio optimization database • Forecasting • Provides effective, relevant reporting 8 © 2009 Acxiom Corporation. All Rights Reserved.

Our Approach • Advanced analytics cover descriptive, diagnostic, predictive and prescriptive analytic work • Provide strategy, insights and execution on all direct and digital channels and are building capabilities based on customer preferences • Leverage our data and knowledge-base recognition capabilities to avoid the garbage in, garbage out trap • Automate the customer recognition process and provide the data at a moments notice; analytics are replicable, repeatable and scalable; partner with model visualization specialists 9 © 2009 Acxiom Corporation. All Rights Reserved.

In summary… • There are multiple approaches and definitions of MMO • You should pick an approach that is consistent with your goals • To get the best return, you should link above the line and below the line MMO efforts • Normative performance expands your horizons • It’s a journey, not an event 10 © 2009 Acxiom Corporation. All Rights Reserved.

Appendix

Key Messages • Solving the extremely complex and dynamic problem of measuring the performance of media and channel combinations • Focusing on consumer-level media attribution • Helping marketers document their business impact … verifiability, accountability, measurability and return on investment • Providing marketers with accurate media usage data and consumer insight to drive consumer-centric media planning • Media mix optimization leverages Acxiom’s demonstrable expertise in data, analytics, technology and consulting 12 © 2009 Acxiom Corporation. All Rights Reserved.

Changes In Media and Consumption Are Generating Vexing Questions From Marketers • Insight – Which media mix drove the most volume – What’s the ROI for each marketing investment – Why share is up or down for this brand or line of business • Forecasting – What volume and profit will my current marketing strategy drive – What would be the impact of a change in marketing mix – How will a competitor’s marketing investment affect my profitability • Optimizing – What plan maximizes volume for the same spend – How can a marketer maximize revenue after a budget cut – How best to invest a windfall 13 © 2009 Acxiom Corporation. All Rights Reserved.

Inferred Attribution – Top Down Is right when: • You have two, preferably three years of weekly sales and marketing data • You have a large and highly diverse marketing mix • You go to market primarily via indirect channels Work best when: • They correlate sales and marketing activities using linear and multivariate regression analysis • Quantify the impact of multiple demand drivers – environmental (i.e. gasoline prices, temperature) • Reveal incremental impact and marginal return • Can be viewed by geographic, media, or brand level budget allocations 14 © 2009 Acxiom Corporation. All Rights Reserved.

Direct Attribution – Bottom Up Efficiency Curve Maximize Return Is right when: • You have (or can develop) rich customer profiles • You have multiple products that can be cross/up sold • You have shopping basket data that allows for Fixed Marketing Spend collaborative filtering analysis Efficiency • You go to market primarily direct Curve Fixed Return Work best when: • They discretely isolate a customer action (i.e. additional information inquiry) • You spend the time to understand the decision making process Minimize Spend • They are used in a test and control methodology • Can be viewed by geographic, media, or product level budget allocations 15 © 2009 Acxiom Corporation. All Rights Reserved.

Normative Performance– Outside In Is right when: • You have either: – Mature mix models (Inferred or Direct) – Or no clue where to start • You use them to get the last mile out of marketing spend • You operate in a competitive or saturated market • You need an objective, independent case for change Works best when: • They are applied at a fundamental unit level such as CPA, allowing a apples to apples comparison • They are viewed at the vertical, and geo level 16 © 2009 Acxiom Corporation. All Rights Reserved.

Tool Examples – Inferred Attribution Intuitive Easily create constraints based scenarios Transparent Allow complex manipulation of the models “Under the hood” where appropriate Actual Vs. Forecast Ability to contrast results against the model predictions Constraints based optimization Allows user to input spend/activity and smooth a result to revenue, or profit targets Side by Side contrast Ability to contrast one planed scenario against another in an easy to interpret interface 17 © 2009 Acxiom Corporation. All Rights Reserved.

Tool Examples – Direct Attribution Dashboard Summary 11/ 01/2006 Š 11/30/ 2006 [-] Configurable Dashboards Provide rs Se le c te d [+ ] Me dia Type s Se le c te d [+ ] Sum m a ry Se le c te d [+ ] American Express D irect Mail Average C ost Per Touch : $0.83 Avis Magazine Total Outbound Solicitations : 12,367,972 Delta D ental Hartford H ome Email Outbound Telemarketing D irect Mail Magazine 1, 367,972 1, 000,000 Point of View, Point of Time Reporting Statistical Analysis New York Life Email 10, 000,000 more ... more ... Solicitation Summary [-] Monthly Solic ita tion by Provide r Provide r Solic ita tion Sta tistic s [+] Use of complex concepts to create Readable Visual Results Provider D irect Mail Magazine Email Total % Total American Express 1,367, 972 1, 367,972 1,367, 972 1,367, 972 33% Avis 1,367, 972 1, 367,972 1,367, 972 1,367, 972 17% D elta D ental H artford H ome 1,367, 972 1,367, 972 1, 367,972 1, 367,972 1,367, 972 1,367, 972 1,367, 972 1,367, 972 25% 25% more ... Top Demographic Analysis Inquiry /Response Summary [-] Net out top segments such as; age, income, and Monthly Inquiry by Provide r Provide r Inquiry by Me dia Type Provider D irect Mail Magazine Email Total [+ ] geography Real Time Reports American Express 2,304 / 4% 1,304 / 2% 1, 304 / 1.5% 4912 / 2.3% Avis 2,304 / 4% 1,304 / 2% 1, 304 / 1.5% 4912 / 2.3% D elta D ental 2,304 / 4% 1,304 / 2% 1, 304 / 1.5% 4912 / 2.3% Up to the minute/day campaign information makes H artford H ome 2,304 / 4% 1,304 / 2% 1, 304 / 1.5% 4912 / 2.3% more ... Product/ Conversion Summary Provide r Produc t C onve rsion Sta tistic s [-] [+ ] decisions nimble Provider N umber of C onversions % C onversion R ate American Express 1, 523 9% Avis 1, 523 9% D elta D ental 1,523 9% H artford Home 1, 523 9% UI Ergonomics A ggregate C ost Per A cquisition C onversion B y Product Type $236. 08 $236. 08 $236.08 $236. 08 Focus on simplifying interpretation, faster decisions more ... Key Metrics Top marketing metrics like CPR, CPA in real time 18 © 2009 Acxiom Corporation. All Rights Reserved.

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Media Mix Optimization - The Starting Point for Customer-Centric Communications

by Acxiom Corporation on Oct 20, 2009

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Media Mix Optimization - The Starting Point for Customer-Centric Communications — Presentation Transcript