Marketing Optimization Modeling Maximising ROI with your current marketing budget
About Us Bottom-Line Analytics LLC is a consulting group focusing on marketing optimization modeling. Our modeling experts have a total of over 100 years of direct experience with marketing optimization modeling. This includes direct experience in over 35 countries and dozens of product categories. We are dedicated to the principles of innovation, excellence and uncompromising customer service. Most important, however, we are dedicated to getting tangible and positive business results for our clients.
What is Marketing Optimization Modeling?• A mathematical technique used to indentify and quantify the relationships between your sales and the factors that influence them Macro- Economic Factors Social Media Distribution Other Earned Price Digital Media Sales Mass Media: Paid Digital TV, Radio, Media Print, OOH Promotion Seasonality
Visualize!• If you will, a system whereby you can accurately predict the impact of your marketing plans in advance.• A tool which will provide a precise estimate of the return- on-investment from your marketing budget and no more cat fights with finance.• A capability where you can be confident that every marketing expenditure for each of many initiatives is deployed to generate maximum growth.• A Pipedream? Let Bottom-line Analytics prove to you how this vision can become reality.
MMO helps to answer basic questions What are the most effective marketing channels – TV, Radio, Outdoor, Print or Digital? What has been the ROI of paid search and banner ads? How effective is social media? Which marketing messages are most effective in driving sales? How responsive are my customers to changes in price? What is the most effective month-by-month plan for deploying my paid and earned media? Does moving from a 30 to a 15 second commercial rotation make economic sense? What is the best way to allocate my marketing budget?
What makes us different?1. We can help to reduce the waste in your marketing spend by optimizing it across media channels with the highest ROI.2. Our unique modeling approach allows us to quantify the synergistic effects of multi-channel integrated marketing. Traditional media mix methods do not allow for simultaneous and synergistic effects to be determined.3. We have pushed the boundaries in modeling excellence and are able to measure the impact of social buzz by incorporating our proprietary SEI (Social Engagement Index)4. We can show you how to increase sales between 4 – 8% with your current marketing budget alone.5. Our project turnaround time is only 6 weeks (subject to data availability)
A Highly Predictive Sales Model Our modeling technique proves to be highly predictive. We deliberately holdout approximately 10% of the dataset to test for accuracy.700,000600,000500,000 Overall predictive accuracy = 97.8%400,000 Actual Model300,000200,000100,000 0 01.02.05 02.06.05 03.13.05 04.17.05 05.22.05 06.26.05 07.31.05 09.04.05 10.09.05 11.13.05 12.18.05 01.22.06 02.26.06 04.02.06 05.07.06 06.11.06 07.16.06 08.20.06 09.24.06 10.29.06 12.03.06 01.07.07 02.11.07 03.18.07 04.22.07 05.27.07 07.01.07 08.05.07 09.09.07
Overall Sales Decomposition Decomposition of sales provides a snap shot of the overall importance of media and marketing in driving total sales. In this case, 31% of total sales revenues are “due to” marketing expenditures. 68.9% 31.1%
Sales Decomposition over Time Decomposition of sales across time enables us to view the incremental revenue contribution of marketing and promotional activity for specific campaigns.70,000,000 Incremental impact of back-to-school marketing efforts Online Paid Search Branded60,000,000 Online Banners Events Radio Seasonal50,000,000 Print Multi-Advertiser Coop Print Branded Xmas Promo DM Campaign40,000,000 Winter Care DM Capaign Summer Care DM Campaign30,000,000 Spring Skin DM Campaign Valentines Day Campaign20,000,000 Media TV Branded Media TV Events10,000,000 Media TV Seasonal Baseline sales momentum Media TV Multi-Advertiser Coop 0 Media TV Single-Advertiser Coop 05/01/2007 02/03/2007 27/04/2007 22/06/2007 17/08/2007 12/10/2007 07/12/2007 01/02/2008 28/03/2008 Macro-Economy Baseline
Marketing Return-on-Investment The first step in improving marketing productivity is to determine precise financial returns to marketing spending by campaign/activity. Least efficient channels/investments
Optimal spend solution across all channelsWe conduct a mathematical optimization of your marketing spend and show you how togenerate between 4-8% higher revenues without increasing total marketing investment. 100% 90% Xmas Promo DM Campaign 80% Fall DM Campaign Summer-DM Campaign 70% Spring DM Campaign Valentines Day DM Campaign 60% Online.Pd.Search. Branded Online-Banners. Events 50% Radio-Seasonal Print-Branded 40% Print-Multi-Advertiser Coop Media-TV-Multi-Advertiser Coop 30% Media-TV-Single Advertiser Coop Media-TV-Branded 20% Media-TV-Events Media-TV-Seasonal 10% 0% Incremental Revenue 000 Current Spend 000 Optimal Spend 000
Play out marketing scenariosWe can provide an interactive dashboard that allows you to simulate differentmarketing mix scenarios and the resultant impact on sales.
Innovations: Multi-dimensional Media Measurement Long Term Effects Message Mix Copy Short-Term Quality Effects Effects Social Synergistic Media Effects Buzz Effect
Assess marketing synergies Marketing synergies can be assessed through simultaneous activation of campaigns. The results of combined activation are always greater than the sum of the parts. This is a clear indication of synergies from running truly integrated campaigns. Print Media & Paid Search Synergies Direct Mail & Email Synergies Revenue (£)Revenue (£) +31% +23% Print Media & Online banners Synergies Outdoor & Online Synergies Revenue (£) Revenue (£) +42% +28%
Measuring Social Media Using linguistic theory we have devised a metric that captures the behavioral patterns of social networks. Our net positive social-media "engagement" (SEI) mirrors company seasonal patterns suggesting that the metric captures more than just social networks, with a correlation of 87% The SEI is used as a reflection of total "word-of-mouth" and the consumer experience
Developing the Social Engagement Index (SEI) 1. Mine all brand related social media reviews and commentary. 2. Parse into positive & negative Positive Negative review groups Reviews Reviews 3. Apply Social Engagement Index algorithm to “score” reviews Net Positive SEI Index Positive Negative Scores Scores 4. Time code by week and aggregate metrics
ACID TEST: SEI has proven linkage with brand sales The linkage & correlation to sales over time shows that SNI has predictive power When incorporate this metric into a full marketing mix model we see evidence that this measurement is representative of “word-of-mouth” effects on brand performance.
Relative Importance of Social-Media Channels in drivingconsumer engagement and brand salesMuch like other marketing and media metrics, we can deconstruct the differentelements of our SEI metric into the channels driving social engagement and brandsales. Source: Nielsen BuzzMetrics data as of November 27, 2011
Case Study One: A Retail BankBusiness objective: A mid-sized retail bank saw consumer loans drop 30% duringthe Great Recession. Now, due to efforts by the Central Bank, consumer loan rates have beendropping. Current rates of 6% are expected to drop to as low as 4% over the next two years. Thebank now has decided to step-up its marketing spend and efforts in order to reverse trends in loansales.Solution: We undertook a comprehensive marketing-mix modelling effort which quantifiedthe impact of media, direct marketing and digital advertising on loan demand. Inaddition, variables like GDP and consumer APR rates were included in the predictive model.Result: Our modelling efforts estimated that every 1 percent reduction in consumer interestrates has about a +11% impact on loan demand. Because of the “synergy” between media andinterest rates, this growth could multiply by almost a factor of 2X. One year afterimplementation, the bank’s loan demand increased +27 percent and the client also increased itslocal market share for consumer loans from 18 to 23 percent!
Case Study Two: Major USA based beverage & food retailer Business objective: Client has suffered 18 months of declining sales due to the global recession. They needed a new idea that would help re-charge sales and growth, across their network of 15,000 stand alone retail stores. Our task was to measure and compare returns from test markets for a new product. This product was a radical departure from their common product offerings and many in their marketing department were sceptical of its success. The test involved two markets. One market had minimal marketing and merchandising support, while the other had the national equivalent of $50 million in marketing and advertising. Solution: The marketing mix models were developed and set up such that we could measure not only the impact of media and marketing on the new brand, but also the incremental impact or lift this product launch had on total outlet sales. Result: Our models found a high return to the heavy spend marketing of $7.89 per dollar investment. We also found that this product launch actually stimulated a +3% increase in total store or system sales. One quarter after launching this product nationally, this client reported its first quarter of profit increase and growth in same-store sales in 18 months.
Case Study Three: A Hotel ChainBusiness objective: Client is a major hotel chain consisting of 350 properties rangingfrom extended-stay type of units to very high-end luxury hotels in resort areas. In 2009, this chainwas just coming off of a major downturn due to a lapse in business travel and conventions fromthe Great Recession. They needed to follow the path outlined by Tom Davenport’s Competingwith Analytics and leverage marketing-mix models in order to gain competitive advantage in theirhighly competitive industry.Solution: We have conducted a series of three marketing-mix models by property and regionfor this client. Each engagement identified opportunities to optimize their marketing spend andgenerate growth from +8 to +12% by moving budge funds from less to more productivemarketing activities.Result: From the initial engagement, the clients annualized rate of growth has acceleratedform -3 to +6 to +11 percent increase in revenue bookings year-over-year. The improved growthand profitability has further enabled the chain to free up capital in order to make a key acquisitionthat will expand their total footprint capacity by 20 percent.
Journey to increase ROI and Sales • Initial meeting. A critical meeting where we understand your currentStep 1 business strategies and campaigns and jointly develop project objectives • Data collection. We will work with local IT, Data warehouse experts andStep 2 media agency to collect all relevant data. • Data assimilation and review with client. Review and approval of all dataStep 3 inputs. • Analytics & Modeling to provide key deliverablesStep 4 • Face to face presentationStep 5 • Ongoing follow-ups and delivery of interactive simulatorStep 6