Integrating Metrics


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Integrating Metrics

  1. 1. As seen in p2pi.orgBest Practices inSHOPPER MARKETING MEASUREMENTPart 4:IntegratingMetricsUnderwritten by: © GregoryBy Liz Crawford, Senior Industry Analyst Executive SummaryThe following is the fourth installment in a six-part series examin- n The ability to truly compare in-store and out-of-store effortsing best practices for the measurement of shopper marketing. This could transform the accuracy of ROI analysis, as well as thearticle looks at effective ways to integrate metrics. Subsequent effectiveness of marketing strategies themselves. But estab- lishing true comparison metrics remains the single biggestarticles will cover retail collaboration and directions for the future. challenge in measuring performance across platforms.To read the first three articles in the series, visit n Marketing mix modeling uses multivariate regression analysis to understand the relative impact of various marketing efforts (in- store and out-of-store) on sales. It has been an invaluable toolT he ability to truly compare ing Research for an In-Store Metric” but has never been used to make shopper-level observations. the results of in-store and (P.R.I.S.M.) project, which sought to n Asa practical matter, one of the hardest aspects of running out-of-store marketing ef- establish a common industry metric marketing mix models is getting accurate inputs upfront.forts – apples to apples – has been for gauging in-store audiences (“op- n Using a statistical method to examine ROI can be deceptive ifthe Holy Grail for a generation of portunities to see”) that could be data is interpreted incorrectly. ROI is not an absolute.marketers. Such leveling of measure- compared with classic media adver- n One obvious drawback to a typical marketing mix model isment would transform the accuracy tising measures. While the project that it does not reveal buyer profiles. Decomposing volumeof ROI analysis, as well as improve ultimately foundered on costs and to understand shopper profiles is imperative.the effectiveness of marketing strat- business issues, its potential initially n The usefulness of a model can dramatically improve if theegies themselves. Yet establishing attracted the biggest players in the analysis is run frequently.universal measures remains the big- industry, including Procter & Gamble n Aligning the objectives of above- and below-the-line effortsgest challenge in assessing perfor- and Walmart. doesn’t need to be overly complicated. Using shopper cardmance across marketing platforms. Only a year before P.R.I.S.M. was data as a parallel to national panel data is one way to gauge success on the retailer and national level. Past efforts to equalize measure- shuttered, a similar fate befell “Proj- n Adding single source data into marketing mix models providesment serve as ominous reminders of ect Apollo,” the name of Arbitron’sthe difficulty and expense in trying to effort to track a wide range of me- more real-world tracking and fewer forensics. Marketers will begin to see relationships between shoppers and programsachieve this goal. Probably the most dia exposure on a per-person basis like never before.notable of these was the “Pioneer- using “Portable People Meters.” © Copyright 2012. Path to Purchase Institute, Inc., Skokie, Illinois U.S.A.  All rights reserved under both international and Pan-American copyright conventions. No reproduction of any part of this material may be made without the prior written consent of the copyright holder. Any copyright infringement will be prosecuted to the fullest extent of the law. 1
  2. 2. SPECIAL REPORT Real World MMM Volume & Marketing Activity As a practical matter, one of the hardest as- pects of running marketing mix models is getting the right inputs upfront. (The devil is Volume in the details.) To be worthwhile, the inputs Merch Support need to be accurate, and must include the in-market start and end dates for all events, the specific brands and SKUs participating, and the final version of the tactics used. While not difficult to understand, such ba- sic information can be hard to marshal and requires contributions from the brand team,Select members of Nielsen’s household panel other activity. The landscape portion is the ad agency, shopper marketing agency andscanned all of their purchases and wore the passage of time from left to right. finance group.meter, which attempted to record a wide To date, this statistical method of looking Furthermore, it is difficult for many manu-range of media exposure, from radio spots, at sales revenue holds sway in the industry. facturers to tease out the costs and impactto outdoor billboards, to in-store communica- The practice is fairly inexpensive, easy to un- of trade promotion for a specific brand. Thistions. However, the cost for a national rollout derstand, actionable and – statistically, at means that the relative effect of trade promo-of the methodology was far too steep, even least – bridges the gap between in-store and tion versus shopper marketing can be hardfor the project’s seven prominent backers out-of-store programs. In absence of perfect to gauge.(one of which was P&G). causal information, marketing mix analysis is Ken Madden, executive vice president of the next best thing. However, there are issues strategy & analytics at OgilvyAction, is oneGood Enough: Marketing Mix with this valuable technique. practitioner making headway in this area.Models Marketing mix modeling itself has an under- Madden described the recent analysis of aAlthough such efforts to monitor and mea- lying fissure: It essentially is a forensic exercise, shopper marketing program and how hissure the shopper’s exposure to marketing on with sales being the examined “evidence.” Lump Profit Figures team responded to the issues.a 360-degree basis stumbled during the first Cause and effect dynamics are actually sta- “When the analytics group broke out profitdecade of the new millennium, marketers tistical correlations that attribute portions of and ROI by trade factors versus marketingwere not without tools: marketing mix mod- sales to specific advertising or promotional factors, it seemed clear that the program’seling had been a well-established practice for activity. But in traditional MMM, these cor- success was being driven by trade [see chart,most CPGs for more than 20 years, and one relations are not tracked on a “per shopper” below left]. However, the brand team felt thatstill used widely today. basis. Therefore, it is not certain if the same the marketing program was responsible for Marketing mix modeling (MMM) is a sta- shopper who saw an ad on television subse- a lot of the trade success. They said that thetistical tool that uses multivariate regression quently redeemed a coupon, for example. trade support was above CRM Profit average because Trade Profitanalysis to understand the relationship of var- Additionally, since statistical models use the retailer responded very positively to the ROI: 2.14 1.61ious marketing efforts (in- and out-of-store) sales as the measurement, other program marketing sales. Regression analysis uses an indepen- effects aren’t captured, such as the impact “To examine this, we gathered historicaldent variable to help predict a “response vari- on brand attitudes or shopper behavior benchmarks from similar promotions at theable” (in this case, sales). The “multivariate” (measurement of which was examined in same retailer. We modeled typical trade sup-part refers to the presence of several “predic- the second and third articles in this series. port against typical sales lift [and] found thattor” variables – media advertising, temporary Visit 65% of the trade profit could be attributed toprice reductions, and so forth – that can influ-ence sales. The output of MMM usually looks like ageological cross-section of a mountain land- Lump Profit Figures Profit Breakdownscape (see chart, above). Each stratum in the Tradecross-section shows the amount of sales that profit fromare attributable to a particular marketing marketing 65%tactic. The layers are typically broken down “synergy”into “baseline sales,” which are located atthe bottom of the mountain and presum-ably would occur without any advertising or 35% 100%promotion (but have been shown to erodeover time if a brand is starved of all sup- Trade Profit CRM Profit Trade Profit CRM Profitport); and the upper-layer incremental sales ROI: 2.14 1.61 ROI: 2.14 1.61that result from advertising, promotion, and Source: OgilvyAction 2
  3. 3. SPECIAL REPORT Trade vs. Shopper Rachael Norton, vice president, shopper soccer team while on the field or after the marketing, at ConAgra Foods, discusses game. This is a program that addresses an the relative impact of trade vs. shopper unmet need. The “solve” is for the shopper, marketing events based on her extensive the retailer and the brand. It is a triple win. experience using custom marketing mix models. Q. What if we got away from the analysis and just used common sense to develop Q. What kinds of programs have been and run programs? your best ROI generators? Norton: We have used this as a starting Norton: A straight trade event is usually point for some ideas. For example, we the best ROI. The sheer impact on ROI can know that some of our shoppers’ share of be less with a targeted program than with a stomach goes to [quick-service restaurants]. hot price point. [But the shopper program’s] McDonald’s offers a meal for one or two impact on a specific target can be huge. And bucks. So to compete in a practical way, that is what it’s about: long-term behavioral ConAgra created displays that featured change and meeting shopper needs. It’s like “The $2 Meal” or “The $3 Meal.” This is a micro-marketing on a mass scale. For exam- common-sense approach to appealing to ple, we offer moms a meal solution for the shoppers.the above-average trade support [see chart, generate buyer profiles. McMahon used this age of shopper moms on SNAP, the in-storebottom right of page 2]. We call this the ‘Mar- example to explain the need for decomposing messaging might center on stretching meals,keting Synergy Effect,’ when the retailer’s sales volume: for example.enthusiasm for a particular program drives “Many CPG brand teams would be sur- “Additionally, these folks aren’t readingextra trade support and thereby boosts per- prised to find out who is actually buying their newspapers, because they aren’t buyingformance.” products. If you decompose your volume – newspapers. Therefore, FSIs dropped in the now versus four years ago, say – you might local paper won’t be redeemed by theseNo Absolute Answers find that a sizable portion of your current shoppers. The list of such implications goesUsing a statistical method to look at the re- buyers are SNAP [Supplemental Nutrition As- on and on. It is imperative to know who theturn on a marketing investment can be de- sistance Program] users [because that] now shopper is.”ceptive if the data is interpreted incorrectly. includes families with incomes greater thanAccording to Mike McMahon, president of $50,000 and three kids. Once a Year, Needed or Notresearch house Spire, Monroe, Conn., and “SNAP families have government-issued Usually, marketing mix models are run an-former senior vice president of marketing at money during the first two weeks of the nually, just before the next year’s businessConAgra Foods, “Many people look at the month. People plan their shopping trips plan. The retrospective analysis shows theROI as an absolute. This is a mistake. It is a around this cycle. If a brand knew its percent- impact of various investments over the yearmeasurement at a point intime. This is a number to acton, to improve upon, [but] notan absolute.” Marketing mix models area backward-looking analysis “Many people look at the ROI asof activity. While some arealso used for scenario build- an absolute. This is a, models are not accuratelypredictive enough to be used It is a measurement at a pointin profit & loss statementswith assurance. Instead, the in time.”numbers should be used di-rectionally. Mike McMahon, president, Spire One obvious drawback to atypical MMM is that it doesn’t 3
  4. 4. SPECIAL REPORT Alignment of Shopper and Brand Measures Strategic Brand Retailer-Level Goals Objectives Shopper Measures Brand-Level Measures Penetration TRIAL Switching Shopper card data National panel data New category users Frequency Units per purchase REPEAT Shopper card data National panel data Usage rate Loyalty percentage Pre/post-shop interviews; store traffic counts; Longitudinal studies; pre/post Awareness distribution/execution audits, advertising studies eye-tracking Shopalongs; mobile panel studies; UNIVERSAL Consideration pre/post interviews Annual, longitudinal brand studies In-store video; Navigation NA shopping cart tracking Brand Imagery Interviews Longitudinal brand studieson a national basis. However, a typical large information can help marketers change direc- recommends conducting a quarterly or evennational model doesn’t capture most shopper tion mid-year to increase the effectiveness of monthly analysis, so that ROI results can bemarketing efforts, such as regional programs programming. shared with teams on a regular basis and pro-or short-term, single-retailer programs. To develop a retailer-based, custom mar- grams can be improved “on the fly.” If that’s But, brands that have developed propri- keting mix model, a brand and its agencies a bit too ambitious, gathering the informationetary, custom models at the retailer level are sometimes pool their resources of talent and at least can help marketers make adjustmentsable to measure ROI against specific programs data. At least two years of scan data are that affect the current year instead of waitingto fill in knowledge gaps. Developing a model needed, along with the dates and details of until the next to make improvements. Brandsthat uses historical brand and retailer-level advertising and retail-level promotions. Solid that use a measure, learn, change approachdata is the best way to unlock the power of quantitative skill and experience is needed in a disciplined way also can keep pace withthis technique, according to Agustin De Dios, as well. Just as often, development is out- retailers, which continually optimize their pro-director-global analytics at Kimberly-Clark. sourced to a service provider – who still needs gramming, he suggests.(To hear more of De Dios’ views on adapting data inputs from the client. In whatever way What’s more, this approach can help jus-MMM for shopper marketing, visit www. the smaller model is built, the granular ap- tify spending on shopper marketing proach is the best way to ensure effective use quickly. According to Rachael Norton, vice As importantly, the usefulness of the model of MMM for shopper marketing programs. president of shopper marketing at ConAgracan dramatically improve if the analysis is run McMahon, who developed custom MMMs Foods, the company shifted marketing dol-more often than annually and at a retailer- for ConAgra, believes that best practices take lars from above-the-line activities to shopperspecific level. Obtaining quick and accurate a “measure, learn, change” approach. He programs because the transparency provided 4
  5. 5. SPECIAL REPORTby frequent ROI reporting brought credibilityto the discipline across the organization. the impact on the larger marketing objective. One simple example is to report the number About the Author of coupons redeemed without understandingAligning Brand and Shopper Goals whether the effort rewarded current users,As has been stressed throughout this series, induced trial among new users, or convertedsales aren’t the only measure of success for switchers. Another is to track the number ofshopper marketing programs. Achievement “shares” online without knowing whetherof other objectives is often at least as impor- they drove conversions or awareness. Savvytant. In shopper marketing, most objectives marketers keep critical brand objectives frontcan be expressed in terms of shifts in shopper and center when evaluating program perfor-behavior. This can include brand switching, mance.alterations in purchase or occasion frequency, Aligning the objectives of above- and be-or changes in list making. low-the-line efforts doesn’t need to be overly But marketers are challenged when they complicated. The chart on page 40 is a simpli-attempt to measure shopper performance fied model identifying how they might line up Liz Crawford has more than 20 yearsagainst overall brand objectives. Perhaps the and where the data could be sourced. of brand management and consultingbiggest stumbling block is the temptation to The shopper card data acts like a kind of experience with a concentration inuse tactical measurements and thereby miss mini-panel of shoppers for a particular retail- strategic innovation. Over the last er. This smaller panel might generate data us- few years, Crawford has focused ing swiped frequent-shopper cards or mobile on developing integrated shopper devices – handheld devices or smartphones marketing strategies for Fortune 500 Series Schedule with apps, or even retailer apps. clients. Currently, Crawford is an While this sort of alignment isn’t perfect, it analyst and contributing writer for the Part 1: Rationalizing the can at least help keep the brand on track to Path to Purchase Institute. McGraw- Investment attain success benchmarks (assuming they’ve Hill released her book, “The Shopper been clearly articulated at the outset). Economy,” in March. Part 2: Measurement of Shopper Behavior Next: Single Source Input The next step should be a big boost to mar- JWT/OgilvyAction Inc., conducting Part 3: Measurement of Brand keting mix modeling: single source data and business under the OgilvyAction and Impact cross-media tracking. As discussed in the sec- JWT Action brands, is a fully integrated, ond article of this series, single source data end-to-end shopper marketing and ex- Part 4: Effective Integration refers to tagging a specific shopper’s activities periential marketing agency with main Practices across media platforms and retailers. Adding offices in New York, Chicago and Akron, this data to MMM delivers more real-world Ohio. It is part of the WPP Group. Part 5: Retail Collaboration tracking and fewer forensics. Marketers will begin to see relationships between shoppers Part 6: Directions for the and programs like never before. This concept Future will be discussed in detail in the final article of the series. 5