Top 20 Reasons Why Agent-based Modeling is Disrupting Marketing Mix
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Misallocated ad dollars may be costing brands more than 25 percent in lost sales. Based on an analysis of ThinkVine customers with average annual sales of more than $1 billion, we found that companies were spending too much or too little on specific media 85 percent of the time. By optimizing their marketing budgets, the companies added anywhere from 7 to 81 percent in additional revenue attributed to marketing activities – an average of 28 percent. Don’t lose out on the additional sales your marketing could be driving. Brands have been relying too heavily on outdated, backward-looking marketing mix methods that leave money on the table. Companies are now turning to agent-based modeling to make better strategic decisions that will deliver the results they need, and here is why.
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Top 20 Reasons Why Agent-based Modeling is Disrupting Marketing Mix
- 1. S IS WHY THI ling is d Mode nt-‐base Age ng Mix Marke8 T NOW RIGH
- 2. Marke8ng Mix Modeling is a specialized use of data and advanced analy8cs to analyze, forecast and op8mize marke8ng performance
- 3. Some Business Ques8ons Marke8ng Mix Answers How much should we invest in marke8ng? Which tac8cs worked well? Which didn’t? What mix maximizes sales? What about marke8ng ROI? What results can we expect from each marke8ng plan?
- 4. MARKETERS NEED HELP NOW • Today’s marketplace is more complex and more compe44ve in every way • Consumers are in charge • There are many tac4cs marketers could try • The rate of change is accelera4ng • The C-‐suite is demanding accountability • Data is everywhere, but people need more than just data to make good decisions
- 5. 5% 8 ing line item of market not optimal udgets are b Vine) study by Think 2013 (according to a
- 6. MIX HAS BEEN DONE VIA REGRESSION • Regression finds an equa4on that describes the historical rela4onship between marke4ng spending and sales • It forecasts by extending that historical rela4onship forward So, regression works best when the future is just like the past
- 7. SOME “ISSUES” WITH REGRESSION • Because regression is “top-‐down” it does not provide the granular, ac4onable informa4on marketers crave • Few regression models deliver info about how marke4ng affects consumer groups to enables targe4ng and tuning • None provide info for tac4cs you haven’t already tried • Especially when things are changing rapidly, the half-‐life of forecast accuracy can be short • Responses, updates and changes oSen take a long 4me • Very sophis4cated types of regression do address some of the known issues, but no one type addresses them all
- 8. BUT Agent-‐based Modeling is Different
- 9. WHAT IS Agent-based Modeling? A proven way of combining data, business rules and analy4cs to re-‐create, gain insight into, and predict complex phenomena by simula4ng the behavior and interac4ons of “agents.”
- 10. IN MARKETING MIX… • The “complex phenomena” is how consumers respond to marketing, including buying (or not buying) products • Each “agent” represents a person or a household
- 11. In some ways agent-‐based modeling and regression are similar. Each… Has the same goal Starts with data about Provides insight about historical marke8ng ac8vity and past marke8ng ac8vity sales results, and can use data about pricing and distribu8on Tunes the model using data and diagnos8c tests Can incorporate external factors like the weather or the economy
- 12. Each company’s agent-‐based model is different Each uses different data, includes different marke4ng science, does different calcula4ons, etc. The differences maVer both in terms of the results you get and how easy it is to get them For the rest of this deck, we’ll look at the reasons why top marketers choose ThinkVine’s agent-based solution
- 13. arketplace Model the m All the ac)on takes place in the marketplace ThinkVine creates a simulated marketplace that accurately mirrors your real-‐world marketplace. It includes consumers, your compe44on, external factors, distribu4on channels and more.
- 14. objectives Achieve your Most marketers want to know what budget they need and how to use it to meet sales goals ThinkVine’s solu4on provides you with that informa4on and can help you know what to do to achieve other objec4ves, such as leads, new customers, and life4me value.
- 15. consumers Focus on Marke)ng is about reaching and engaging consumers You get the best results because ThinkVine models consumer behavior using data about who consumers are, how they are exposed and respond to marke4ng, and how they purchase.
- 16. l marketing Include al Marketers know that consumers’ path-‐to-‐purchase is a winding road You see the big picture across all on-‐ and off-‐line marke4ng, not just media, and understand the effects of pricing, distribu4on channels, trade promo4ons, compe44on and more.
- 17. consumers t and engage Targe The many differences among consumers ma=er ThinkVine makes it easy for you to effec4vely target and efficiently reach consumers by providing ac4onable informa4on about them, what they respond to, and how they buy.
- 18. Look ahead Historical insight is a good thing, but you can only change the future ThinkVine enables you to understand what has happened and, more importantly, what is likely to happen by simula4ng the effects of marke4ng on consumers.
- 19. rketing ROI Quantify ma Measuring ROI is the key to accountability You can confidently answer the tough ques4ons with objec4ve info about ROI within a budget year, long-‐term ROI and marginal ROI by tac4c, group and channel.
- 20. anular info Get gr Target consumers, create campaigns and buy media by consumer group ThinkVine’s “boVom up” approach from consumer behavior gives you ac4onable, mul4-‐dimensional info by demographic, marke4ng type, product, geography, 4ming, etc.
- 21. ile marketers Be ag Marke)ng is moving relentlessly towards real-‐)me. Is your planning? Succeed in a fast-‐moving world where compe44on and pressure for results have shrunk decision cycles by using ThinkVine’s analysis, targe4ng, planning and forecas4ng solu4on
- 22. hat If?” Ask “W You’ve got an idea. Or, your agency does. How well will it work? ThinkVine’s solu4on enables any marketer at any4me to quickly do “What if” analysis of ideas and see mul4-‐dimensional informa4on about the likely results.
- 23. attribution oss-channel t accurate cr Ge Cross-‐channel campaigns reach consumers wherever they are, whatever they are doing Discover how each on-‐ and off-‐line marke4ng tac4c contributes to your sales results with an integrated approach that provides accurate aVribu4on overall and by consumer group.
- 24. ects next year ’s marketing aff r nd how this yea Understa Marke)ng that builds the brand and/or occurs late in the year sets the stage for be=er results the following year. Other tac4cs may drive current year sales at the expense of next year’s. ThinkVine quan4fies the trade-‐offs.
- 25. ptimization sy-button” o Do “ea Some)mes you’re in a hurry and just want the data to give you the answer ThinkVine’s exclusive “SmartMix” gives you fast answers about the budget needed to meet a goal, or the mix that drives the most sales or the highest ROI.
- 26. and rollouts o-you tactics ulate new-t Sim You’re thinking of trying something new. Is it likely to work well? To scale? You can make smarter decisions faster because each marketplace includes consumers who respond to various tac4cs, not just the tac4cs you’ve already tried.
- 27. ect over time rketing’s eff Discover ma People’s preferences and decisions are based on what happened before and today You will understand the cumula4ve effect of marke4ng and how 4ming affects your results with ThinkVine’s consumer-‐focused, 4me-‐based approach.
- 28. t research er & marke erage consum Lev Don’t let valuable consumer and market research sit in a binder on a shelf ThinkVine builds your research about consumer behavior and preferences into your marketplace, including it in every simula4on and informing every forecast.
- 29. ces change how preferen Understand As great as your marke)ng is, people will forget about it over )me ThinkVine paints a more realis4c picture than regression can by using data to quan4fy how people’s brand preferences are affected when you “go dark” and by compe4tor’s marke4ng.
- 30. antify the Qu e of media ng-term valu lo Some tac)cs, like adver)sing, strengthen brands and build awareness, but don’t always lead directly to sales. You can make smart trade-‐offs because ThinkVine uses your data to quan4fy the long-‐term value of each tac4c.
- 31. aboratively Work coll Marke)ng op)miza)on is an itera)ve, collabora)ve process ThinkVine’s soSware makes it easy for your staff (and agencies) to work together, includes role-‐based security and facilitates fast prepara4on of presenta4ons.
- 32. same page yone on the ver et and keep e G De-‐hassle marke)ng planning and preserve organiza)onal knowledge ThinkVine ensures key parameters are consistent across forecasts; automa4cally documents assump4ons; and saves plans, ideas, forecasts, results, and even guidance in one place.
- 33. DO YOU WANT TO IMPROVE RESULTS? • ThinkVine’s marke4ng mix op4miza4on solu4on combines agent-‐based modeling and expert guidance so you can achieve your goals • Now, leading B2C marketers in many industries are improving their results by using ThinkVine’s solu4on to analyze, forecast and op4mize their marke4ng • To learn how ThinkVine can help you now… Call (513) 842-‐5900 or visit www.ThinkVine.com
- 34. You May Also Be Interested In • Agent-‐based Modeling: A Breakthrough Approach to Marke4ng Mix Op4miza4on hVp://thinkvine.com/s/1410 • An Overview of ThinkVine’s Agent-‐based Modeling hVp://thinkvine.com/s/1419 • Using Consumer Behavior Research to Power Marke4ng Mix Op4miza4on Webinar hVp://thinkvine.com/s/1417 • Trendy Fashion Retailer Uses ThinkVine to Find the Best Mix and Timing of Offline and Online Tac4cs to Drive Sales hVp://thinkvine.com/s/1415