The document introduces marketing effectiveness measurement through econometrics. It poses questions about which marketing elements drive sales and discusses returns on investment. Three key factors impact sales: marketing investments, macroeconomic forces, and other variables. Econometric modeling can identify the incremental sales contribution of each marketing investment. The analysis provides insights such as the most effective marketing channels, returns on investments, saturation points, and seasonality effects. Case studies demonstrate how the approach answers specific business questions for various brands and industries.

1. Introduction to
marketing
effectiveness
measurement.
(Econometrics)

3. Questions prompting effectiveness measurement
 Which elements of my marketing and media investment are working to drive
sales?
 What has been the financial Return on Investment of digital media versus
traditional mass media?
 Has our marketing spend reached the point of saturation?
 What is the impact on sales from holidays, public events and seasonal factors?
 How effective are price changes and promotions?
 What is the best way to allocate my marketing budget to increase sales?

4. The ideal situation
Spend X on
Activity Y
Sales increase
by Z

5. The problem: There are so many factors impacting
sales
Sales

6. The real problem is even bigger
Social Media
Engagement
Sales

7. …simply eye-balling historic media and sales data does not
provide answers 7

8. …media effectiveness modelling
(Econometrics) can help
A statistical technique used
to identify and quantify the
incremental contribution
made by marketing
investments on retail sales
Sales
Macro-
Economic
Factors
Distribution
Price
Seasonality
(Temp &
Periodic
effects)
Promotions/
Coupons/DM
Sponsorship
Paid Digital
Media (PPC,
Display)
Mass Media:
TV, Radio,
Print, OOH
8

9. …simple econometric sales equation
9
Sales = base + B1TV + B2Radio +
B3Digital + B4Outdoor
Estimate for sales generated
from non-marketing activity
Once we have determined the B weightings for each media variable, we can fit historic
sales data to a very high degree.
Weighting for TV Weighting for Radio
Weighting for Digital Weighting for Outdoor

10. -200
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200
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Oct-2010
Nov-2010
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Jan-2011
Feb-2011
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Jan-2012
Feb-2012
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Sep-2012
Oct-2012
Nov-2012
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Jan-2013
Feb-2013
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Aug-2013
Sep-2013
Sales
Variance
Modelled Sales
Actual Sales
Forecast
Here we have causally linked each of the drivers to sales and developed an equation that allows us to map
historic sales. The closer the fit, the more accurate the model.
Accurately mapping sales with our model
Holding out 15%
ensure we can test for
predictive forecast
accuracy of the
modelling.

11. Key outputs from
Media Effectiveness Modelling

12. Total sales contribution from media
12

13. What have been the key sales drivers in the last year?
These have
performed best
in the last year

14. Returns by media channel (ROI per £1 spent)
Least efficient
channels
14
Revenue – Media Investment
Media Investment
ROI per
£1 Spent

15. Is my marketing starting to saturate?
168,000
168,500
169,000
169,500
170,000
170,500
171,000
171,500
172,000
172,500
173,000
£- £500,000 £1,000,000 £1,500,000 £2,000,000 £2,500,000 £3,000,000
AnnualSales
Annual Marketing Spend
Current Spend
Once media spending
saturates, we see a
diminishing returns
effect.
Note: we can assess marketing response to individual channels as well.

17. Answers to specific questions: Seasonality
Seasonality affects sales in a variety of different ways. It is why it is important for
the customer to quickly identify the key variables – and hence maximise the uplift
from marketing.
We can introduce seasonal variables
such as temperature, sunshine hours
and precipitation indices
(rain and snow), and even cases of
cold and flu to our models.
0
50
100
150
200
0
10
20
30
40
50
60
Dec
08
Mar
09
Jun
09
Sep
09
Nov
09
Feb
10
May
10
Aug
10
Nov
10
Temperature(°F)
Sales(000’s)
Min Temperature Sales
0.90
0.95
1.00
1.05
1.10
1.15
1.20
IndexofValueSales
Temperature °C
Sales by temperature
Sometimes these findings can allow
clients to pinpoint new times to
advertise for extra sales. In this
example there is a surprising
increase in the hottest period.

20. How can I reallocate my marketing budget to grow
sales?
£1.5M £1.5M
A full spend
optimisation can yield
between 3 - 8%
increase in sales.

21. Play out marketing What-if scenarios
1. Set marketing
budgets.
2. Set your
spend levels
across media
channels
3. Assess the
resultant
impact on sales
& profit

22. Case 1: Effectiveness for household cleaning product
Business Questions
1) To what extent has brand marketing driven sales and ROI?
2) Can we quantify the brand spill-over effect from parent brand (Y) spend on sub brand sales?
3) Does brand image attribute (Recommended by Doctors) impact upon brand sales?
Insight & Outcomes
 Overall marketing contributed to 32% of
total sales units
 TV and digital media (network display and
paid search) were the largest contributors?
 Doctors Recommendation drove 2% of
sales.
 Distribution was supported by additional
in-store features and display.
 Spend optimization led to increased
allocation for digital display media and TV.
Modelling the impact of media and key brand image factor on
sales
22

23. Case 2: Media effectiveness for Gamma toys
Business Questions
1) Gamma Playsets supported by substantial ATL activity leading up to Christmas, can we assess the ROMI
for this?
2) In addition, new store partners will help to increase distribution by 17%.
Insight & Outcomes
 Demand was highly seasonal and
concentrated to October, November and
December.
 Q4 sales were largely driven by expanded
retail store distribution and TV execution.
 Retail distribution and increased brand
awareness led to a sales uplift in Q1 the
following year.
Measuring ROI for Gamma playsets
23

24. Case 3: Effectiveness and spend saturation for a used
car dealership
Business Questions
 Increased spend in digital and offline channels without
media accountability?
 Can we spend more to increase sales units?
Insight & Outcomes
 Demand was seasonal and led by registration
plate changes.
 Competitive advertising has greater cut through.
 Upside potential to increase sales by spending
more was limited.
 Significant synergies between Network Digital
and Radio pointed to growth opportunities.
Media contribution to sales units Spend Saturation Analysis

25.  Bottom-Line Analytics is a full service consulting group focusing on
marketing effectiveness and brand performance analytics.
 Our experts have a total of over 100 years of direct experience in research,
insight and ROI measurement.
 We are dedicated to innovation in analytics and consumer insight.
 Everything we do is geared towards improving commercial performance.
About Us

26. 26
Our client experience

27. Masood Akhtar
Managing Partner, (EMEA)
Bottom Line Analytics Global
E: ma@bottomlineanalytics.com
M: +44 7970 789 663
Skype: Masood.Akhtar97
bottomlineanalytics.com