Marketing ResponseUnderstanding the complete marketing ROI for Sony AustraliaMay 2011                                     ...
Sony	  Australia	  Background	     •  Sony	  Australia	  operates	  through	  mul3ple	  online	  and	  offline	  channels	  ...
About	  the	  Project	  Research	  Objec>ves	     •  To	  understand	  and	  quan3fy	  the	  effec3veness	  of	  Sony	  Aus...
Methodology	  Econometric	  Modelling	                         World-­‐Class	  Marke3ng	  Science	  +	  Real-­‐World	  Ind...
The	  Offline	  World	  What	  are	  the	  drivers	  of	  Bravia	  offline	  sales?	                                          ...
Drivers	  of	  Bravia	  offline	  sales	  Offline	  Sales	  Volumes	  September	  2009	  –	  August	  2010	                   ...
Drivers	  of	  Bravia	  offline	  sales	            Offline	  Sales	  Volumes	            September	  2009	  –	  August	  2010...
Marke3ng	  ROI	  How	  to	  op3mise	  media	  spend	  and	  maximise	  sales	                                             ...
Understanding	  the	  effec>veness	  of	  marke>ng	  spend	  Methodology	    •  Econometric	  models	  take	  advantage	  o...
Marginal	  ROI	  –	  Where	  to	  spend	  the	  next	  dollar	  to	     get	  maximum	  return?	       At	  the	  margin,	...
Op>mising	  Media	  Budgets	       TV	  and	  Subscrip>on	  TV	       To	  maximise	  ROI,	  Sony	  Australia	  should	  r...
Op>mising	  Media	  Budgets	       Print	  and	  Radio	       To	  maximise	  ROI,	  Sony	  Australia	  should	  increasin...
Op>mising	  Media	  Budgets	       Outdoor	  and	  Paid	  Search	       To	  maximise	  ROI,	  Sony	  Australia	  should	 ...
Op>mising	  Media	  Budgets	  –	  Total	  Campaign	       With	  the	  same	  budget,	  an	  op3mal	  media	  mix	  delive...
How	  many	  Sony	  TV	  sales	  would	  an	  incremental	     weekly	  investment	  of	  $10k	  drive?	                  ...
Project	  Summary	  	  Op3mum	  Alloca3on	  for	  2011	                                                         Google Con...
Move	  towards	  Digital	       Recommenda>on	  for	  op>mising	  budgets	  in	  2011	         2010	  Media	  Mix	        ...
Summary	           Sony	  customers	  are	  almost	  equally	  responsive	  to	  TV	  and	  online	      1    marke3ng	  (...
Appendix	                               Google Confidential and Proprietary   19               Google Confidential and Pro...
Bravia	  TVs	  Situa>on	  Analysis	     •    Evolu3on	  of	  Bravia	  from	  LCD	  to	  3D	  over	  2009-­‐2010	  coincide...
About	  MarketShare	  World-­‐Class	  Marke3ng	  Science	  +	  Real-­‐World	  Industry	  Exper3se	    •  Strategic	  analy...
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Sony australia understanding complete marketing roi

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Sony australia understanding complete marketing roi

  1. 1. Marketing ResponseUnderstanding the complete marketing ROI for Sony AustraliaMay 2011 Google Confidential and Proprietary
  2. 2. Sony  Australia  Background   •  Sony  Australia  operates  through  mul3ple  online  and  offline  channels     •  Online:  products  are  distributed  directly  via  Sony  Style  (online  shop)  and  indirectly   via  retailers/dealers     •  Offline:  full  product  informa3on  and  demonstra3ons  are  available  in  Sony  Centre   showrooms  as  well  as  at  other  retailers/dealers     •  Major  spor3ng  events  are  used  as  a  theme  for  promo3onal  campaigns:                                                                                             release  of  the  new  BRAVIA  3D  was  joint  with  FIFA  World  Cup  2010   •  Offline  Media  predominates  in  marke3ng  and  communica3ons     •  TV  and  Print  are  the  largest  propor3on  of  total  marke3ng  investment   Google Confidential and Proprietary 2 Google Confidential and Proprietary 2
  3. 3. About  the  Project  Research  Objec>ves   •  To  understand  and  quan3fy  the  effec3veness  of  Sony  Australia’s  marke3ng   and  media  spend  in  driving  Sony  TV  sales,  par3cularly:   •  To  evaluate  the  role  of  paid  search  in  Sony’s  marke3ng  ecosystem   •  To  understand  the  role  of  Sony’s  paid  and  owned  media  (e.g.  website)  in  driving  sales   •  To  op3mise  the  marke3ng  and  media  mix  to  generate  greater  revenue  from   the  same  level  of  investment   Google Confidential and Proprietary 3 Google Confidential and Proprietary
  4. 4. Methodology  Econometric  Modelling   World-­‐Class  Marke3ng  Science  +  Real-­‐World  Industry  Exper3se     All  data  analysis  was  conducted  by  MarketShare  in  December  2010  • •  Using  Sony  Australia’s  internal  and  proprietary  data  (May  2007  –  Aug.  2010)     •  Sony  TV  sales  volumes  and  revenues  (split  by  TV  screen  size)   •  Pricing   •  Website  data  (visitors,  conversions)   •  Marke3ng  and  Media  costs   •  Search  volume  data  from  Google.com.au   •  MarketShare  proprietary  marke3ng  database  •  Mul3ple  econometric  models  (mul3plica3ve  logarithmic  3me  series)  were  constructed  to   understand  total  Marke3ng  ROI  by  media  channel  and  inform  future  op3mal  media   resource  alloca3on   Google Confidential and Proprietary 4 Google Confidential and Proprietary
  5. 5. The  Offline  World  What  are  the  drivers  of  Bravia  offline  sales?   Google Confidential and Proprietary 5 Google Confidential and Proprietary
  6. 6. Drivers  of  Bravia  offline  sales  Offline  Sales  Volumes  September  2009  –  August  2010   TV,  Print,  Outdoor   Pricing   Paid  Search   +3%   Seasonality   Base  Sales    33%   October November December January February March April May June July August 2009 2010 Google Confidential and Proprietary 6 Google Confidential and Proprietary
  7. 7. Drivers  of  Bravia  offline  sales   Offline  Sales  Volumes   September  2009  –  August  2010   79%  of  offline  sales  are   non-­‐marke3ng  driven   3% 5% 2% 2% 7% 1% 1% 35% 2% Print, TV and Paid Search are the top 3 drivers 21%  of  offline  sales  are   of offline sales. influenced  by  marke3ng   9% 33%‘Other’  Category  includes  sponsorship  (incl.  FIFA  2010  World  Cup)  and  retailer  marke3ng  Understanding  of  ROI  of  display  within  the  media  mix  was  compromised  by  a  lack  of  data  rela3ng  to  Display  investments  over  the  period  analysed.    Base sales volume includes influence from existing store network, employee workforce, existing infrastructure distribution, seasonality, underlying consumer demand, etc. Google Confidential and Proprietary 7 Google Confidential and Proprietary
  8. 8. Marke3ng  ROI  How  to  op3mise  media  spend  and  maximise  sales   Google Confidential and Proprietary 8 Google Confidential and Proprietary
  9. 9. Understanding  the  effec>veness  of  marke>ng  spend  Methodology   •  Econometric  models  take  advantage  of  natural  varia3on  in  both  marke3ng  spend   and  sales  levels  over  the  3me,  e.g.  during  the  analysis  period  (May  2007  –  Aug  2010)     •  This  varia3on  makes  it  possible  to  plot  response  curves  for  each  marke3ng  channel,   which  in  turn  allows  the  measurement  of  ROI   Media  Response  Curve   Historical   Spend   Once  the  responsiveness  of  each   Weekly  Sales  (units)   media  in  driving  sales  is  known,    it  is   possible  to  define  an  op>mal   marke>ng  mix  for  future  campaigns   to  deliver  the  maximum  ROI.   Weekly  Media  Spend     Google Confidential and Proprietary 9 Google Confidential and Proprietary
  10. 10. Marginal  ROI  –  Where  to  spend  the  next  dollar  to   get  maximum  return?   At  the  margin,  the  next  dollar  is  best  invested  in  Paid  Search,  Print,  and  Subscrip>on  TV   Subscrip>on   5 TV   TV   Print   Radio   Outdoor   Paid  Search   4.3   Indexed Marginal ROI 2.6   2.7   -­‐0.5   -­‐0.1   -1 -­‐1   Return  on  marginal  investment  (ROMI)  quan3fies  the  $  return  on  the  next  $  invested.    Posi3ve  ROMI  indicates  current   underspend  –  and  a  recommended  increase  –  whereas  a  nega3ve  value  indicates  overspend.  Op3mal  spend  (and   therefore  overall  ROI)  occurs  when  all  ROMIs  are  driven  to  zero  –  this  explains  the  direc3onal  changes  illustrated  in  the   next  slides.  Understanding  of  ROI  of  display  within  the  media  mix  was  compromised  by  a  lack  of  data  rela3ng  to  Display  investments  over  the  period  analysed.   Google Confidential and Proprietary 10 Google Confidential and Proprietary
  11. 11. Op>mising  Media  Budgets   TV  and  Subscrip>on  TV   To  maximise  ROI,  Sony  Australia  should  reduce  spending  on  TV  and  increase  spending  on   subscrip3on  TV   TV   Subscrip>on  TV   Average  Weekly  Incremental  Revenue  (K)   Average  Weekly  Incremental  Revenue  (K)   Optimal spend Increase  spend  in   Historical Subscrip3on  TV   spend Optimal Historical spend spend Decrease  spend  in   TV   Average  Weekly  Spend   Average  Weekly  Spend  Absolute  values  for  average  weekly  revenue  and  spend  are  hidden  for  client  confiden3ality   Google Confidential and Proprietary 11 Google Confidential and Proprietary
  12. 12. Op>mising  Media  Budgets   Print  and  Radio   To  maximise  ROI,  Sony  Australia  should  increasing  marke3ng  spend  on  Print  and  decrease   spend  on  Radio   Print   Radio   Average  Weekly  Incremental  Revenue  (K)   Average  Weekly  Incremental  Revenue  (K)   Optimal Decrease  spend  in   spend Historical spend Radio   Historical Increase  spend  in   Optimal spend spend Print   Average  Weekly  Spend   Average  Weekly  Spend  Absolute  values  for  average  weekly  revenue  and  spend  are  hidden  for  client  confiden3ality   Google Confidential and Proprietary 12 Google Confidential and Proprietary
  13. 13. Op>mising  Media  Budgets   Outdoor  and  Paid  Search   To  maximise  ROI,  Sony  Australia  should  reduce  spending  on  Outdoor  and  increase   spending  on  Paid  Search   Outdoor   Paid  Search   Average  Weekly  Incremental  Revenue  (K)   Average  Weekly  Incremental  Revenue  (K)   Increase  spend  in   Historical spend Paid  Search   Optimal spend Historical spend Decrease  spend  in   Optimal spend Outdoor   Average  Weekly  Spend   Average  Weekly  Spend  Absolute  values  for  average  weekly  revenue  and  spend  are  hidden  for  client  confiden3ality   Google Confidential and Proprietary 13 Google Confidential and Proprietary
  14. 14. Op>mising  Media  Budgets  –  Total  Campaign   With  the  same  budget,  an  op3mal  media  mix  delivers  an  addi>onal  3-­‐5%  in  revenue   Total  Media  Spend   Average  Weekly  Incremental  Revenue  (K)   Opportunity  =  3-­‐5%   .  .  .  by  adjus3ng  spend  levels  on  individual  media  channels   Average  Weekly  Spend:   Historical     Op3mal  Absolute  values  for  average  weekly  revenue  and  spend  are  hidden  for  client  confiden3ality   Google Confidential and Proprietary 14 Google Confidential and Proprietary
  15. 15. How  many  Sony  TV  sales  would  an  incremental   weekly  investment  of  $10k  drive?   Assuming  all  other  media  investments  are   Weekly  Sales  (units)   held  at  the  current  level,  it  is  possible  to   understand  the  effec3veness  of   incremental  media  spend  in  a  single   channel  on  sales   Weekly  Media  Spend     +  $10k  weekly  investment   drives  incremental  TV  sales  .  .  .   TV   +52   Increases  in  Paid  search   Subscrip3on  TV   +68   investment  will  deliver   Print   +70   the  greatest  return  based   Radio   +32   on  number  of  addi3onal   Sony  TVs  sold   Outdoor   +21   Paid  Search   +72  Understanding  of  ROI  of  display  within  the  media  mix  was  compromised  by  a  lack  of  data  rela3ng  to  Display  investments  over  the  period  analysed.   Google Confidential and Proprietary 15 Google Confidential and Proprietary
  16. 16. Project  Summary    Op3mum  Alloca3on  for  2011   Google Confidential and Proprietary 16 Google Confidential and Proprietary
  17. 17. Move  towards  Digital   Recommenda>on  for  op>mising  budgets  in  2011   2010  Media  Mix   Recommended  2011  Media  Mix   Paid  Search   Paid   4%   Search   12%   TV   Outdoor   TV   25%   21%   39%   Outdoor   14%   Radio   Print   Radio   Subscrip3on  TV     6%   Print   9%   17%   Subscrip3on  TV     16%   27%   10%   Investment  by  Channel   Historical   Op3mal   -37% +55% +65% -30% +220% -37% TV Subscription TV Print Radio Outdoor Paid SearchUnderstanding  of  ROI  of  display  within  the  media  mix  was  compromised  by  a  lack  of  data  rela3ng  to  Display  investments  over  the  period  analysed.   Google Confidential and Proprietary 17 Google Confidential and Proprietary
  18. 18. Summary   Sony  customers  are  almost  equally  responsive  to  TV  and  online   1 marke3ng  (these  factors  drive  5%  and  3%  of  sales  respec3vely);   however,  TV  represents  nearly  50%  of  Sony’s  total  marke3ng  budget   At  the  margin,  the  next  dollar  of  marke3ng  budget  is  best  invested  in   2 Paid  Search,  Print,  or  Subscrip3on  TV;  of  these,  Paid  Search  has  the   highest  ROMI  (addi3onal  $10k  investment  would  drive  +72  unit  sales)   To  reach  the  op3mum  media  mix,  Sony  Australia  should  increase   3 spending  on  Subscrip3on  TV,  Print  and  Paid  Search,  and  decrease   spending  on  TV,  Outdoor  and  Radio   By  shining  their  media  mix  toward  the  op3mum  balance,  Sony   4 Australia  could  increase  total  revenue  by  3-­‐5%  with  the  same   marke3ng  budget   Google Confidential and Proprietary 18 Google Confidential and Proprietary
  19. 19. Appendix   Google Confidential and Proprietary 19 Google Confidential and Proprietary
  20. 20. Bravia  TVs  Situa>on  Analysis   •  Evolu3on  of  Bravia  from  LCD  to  3D  over  2009-­‐2010  coincided  with  the  cyclical   growth  of  base  sales.  Incremental  sales  had  declined  mostly  due  to  seasonal   factors   •  Price  was  the  major  driver  in  driving  Bravia  LCD  sales  due  to  a  series  of  promo3ons:   Bravia  +  PS3  (Oct-­‐Nov  2009)    and  Christmas-­‐3me  offers/retailer  promo3ons   •  The  June  2010  release  of  Bravia  3D  was  driven  by  Media:  it  contributed  almost  30%   to  total  sales  as  opposed  to  only  10%  during  the  pre-­‐release  period.  Website  visits   almost  tripled  as  online  query  ac3vity  went  up   •  Sony  grew  its  media  presence  in  the  marketplace  over  the  three  year  3me  period   of  the  analysis:  they  increased  share  of  voice  from  12%  to  32%.  Sony  invests   heavily  in  offline  media,  where  TV  contributes  close  to  2/3  of  total  marke3ng  spend   Google Confidential and Proprietary 20 Google Confidential and Proprietary
  21. 21. About  MarketShare  World-­‐Class  Marke3ng  Science  +  Real-­‐World  Industry  Exper3se   •  Strategic  analy3cs  firm  deploying  industry’s  most  advanced  analy3c  models   for  marke3ng  effec3veness,  ROI  and  alloca3on   •  Reputa3on  for  being  the  most  innova3ve  firm  in  the  category,  with  focus  on   advanced  math,  thought  leadership  and  ac3on   •  Significant  experience  with  new  media,  including  search,  social  networks   and  display   •  Heavy  emphasis  on  applica3on  of  analy3cs  to  make  berer  decisions  going   forward   •  An  independently  owned  company  delivering  100%  objec3vity  in  assessing   marke3ng  effec3veness.   Google Confidential and Proprietary 21 Google Confidential and Proprietary

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