Case where new & used car dealership chain needed to improve the effectiveness of their media spend and save money by eliminating ineffective programs. Using econometric models, this analysis showed how this chain was able to save 28% on their marketing spend and direct their investments toward more productive activities and grow overall sales 2.4%

1. Marketing Effectiveness Analytics
For AUTO SERVICES & DEALERS
1

2. Situation
• Auto Services, Inc. (disguised name) is a major auto-reseller in
Europe who markets second hand autos through a chain of
dealerships
• ASI’s business is in a highly competitive market. Going into next
year, they are seeking to understand what is working and not
working in their various marketing initiatives and seek to hold their
market position in the face of pressures to reduce marketing
expenditures.
• Bottom-Line Analytics took on a comprehensive marketing
econometrics model in order to quantify the returns and impact of
ASI’s own marketing and the impact that competitor’s marketing
has on their performance. This cultminated in a marketing spending
optimization exercise that allowed ASI to gain moderate sales with
lower marketing investments.
2

3. Key Insights
• The model developed here is reliable for understanding and predicting media and marketing
impacts and effectiveness.
• About 12% of Auto Services’s brand car sales is due to media advertising. This amounts to
about a 9.57 return in revenue per pound of media investment.
• Overall auto sales were flat over the past 12 months, at -0.1%. Whereas media investment
generated a +8.3% impact, this was countered with a -8.0% impact from competitive media
spend. Radio and Digital Media were the major positive drivers for Auto Services sales. The
macro-economy also contributed +1.3%.
• Auto Services’s spend has limited upside potential due to high levels of saturation and the
counter-impact due to competitor advertising. Stoneacre and Ford of Winsford are the two
competitors with the largest negative impact on Auto Services sales.
• Car-People’s best opportunity lies with “optimizing” its current media spend. By optimizing
spend and investing more in productive and less in low productive media, sales gains of
+2.2% are indicated. This plan calls for large increases in spending behind Radio, SEO and
Digital Display.
• Our models have found a significant “synergy dividend” between some offline media,
especially Radio and TV, and digital media. This synergy and the coordination of these media
campaigns (e.g. radio/TV and digital) are a major upside opportunity.
• Car-People’s sales were also found to be highly sensitive to the economic environment.
Careful monitoring of the economy is indicated and business expansion is best when GDP
growth is +1 percent or more.
3

4. Modelling Architecture
We undertook econometric media mix modelling to understand which marketing
channels have driven sales and ROI for The Auto Services over the last 3 years. The
illustration below shows the various data components that we considered in our
modelling of sales units*.
Digital Display (Premium & Network)
The Auto Services TV
Paid Search
SEO: Unique Site Visitors
Radio, Press, Cinema, ITV Spons’
Competitor TV**
Monthly Temp & Precipitation*
CPI: Used Car Price Index*
Gross Domestic Product
Seasonality ***
TCP Car
Sales (Oct
2010 – Sept
2013
Manchester
Wakefield
Sheffield
* not all variables we re included in the modelling
** The Car Shop, CarCraft, Available Car, Fords of Winsford & Stoneacre TV Ratings
*** Determined through TCP car sales data from Oct 2010 and Sept 2013
4

5. Model Performance
R2=97.6%, Holdout R2=89.9%
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Oct-2010
Dec-2010
Feb-2011
Apr-2011
Jun-2011
Aug-2011
Oct-2011
Dec-2011
Feb-2012
Apr-2012
Jun-2012
Aug-2012
Oct-2012
Dec-2012
Feb-2013
Apr-2013
Jun-2013
Aug-2013
Model
Actual
The model shows a high level of predictive accuracy
5

6. Annual Marketing Contributions
86.2%
0.0%
2.9%
0.7%
1.9%
0.9%
1.2%
1.2%
3.0%
0.2%
1.8%
13.8%
Baseline
Display Premium
Display Network
Paid Search
Branded TCP TV GRPs
SEO
Sponsorship (ITV Weather )
Cinema Ad
Radio
Press
GDP Effect
1.4 million in marketing spend generated almost 13.4 million pounds in revenue
sales. Total media accounts for about 12% of total sales. Radio, Digital Display and
TV were the largest drivers of car sales.
6

7. Marketing Variance: Drivers of Growth
-5.0% -4.0% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0%
CompTV_Fords of Winsford
CompTV_Stoneacre
Baseline
SEO
Paid Search Impressions
Display Premium Impressions
Press Spend
CompTV_Available Car
CompTV_Carcraft
Branded TCP TV GRPs
Competitor Brand TV GRPs…
Cinema Ad Spend
Sponsorship (ITV Weather Spend)
GDP Effect
Radio Spend
Display Network Impressions
-4.2%
-3.8%
-1.7%
-0.4%
-0.2%
-0.2%
-0.1%
-0.1%
0.1%
0.9%
1.0%
1.2%
1.2%
1.3%
2.5%
2.5%
Annual Variance Contributiion
Digital Display & Radio were the key growth drivers. Media contributed +8.3% but competitive ad
spending had a -8.0% impact.
7

8. Marketing Contributions by Month
(500)
-
500
1,000
1,500
2,000
Oct-2010 Jan-2011 Apr-2011 Jul-2011 Oct-2011 Jan-2012 Apr-2012 Jul-2012 Oct-2012 Jan-2013 Apr-2013 Jul-2013
Baseline The Car Shop_TV Carcraft_TV Available Car_TV
Fords of Winsford_TV Stoneacre_TV Digital Display Premium Digital Display Network
Digital Paid Search SEO Brand TV Sponsoship
Cinema Radio Press GDP Effect
Gains from recent campaigns negated by
competitive media
Base Momentum (Seasonality and cumulative Brand Equity)
8

9. Total Auto Services Marketing Response
168,000
168,500
169,000
169,500
170,000
170,500
171,000
171,500
172,000
172,500
173,000
£- £1,000,000 £2,000,000 £3,000,000
AnnualUnitSales
Annual Marketing Spend
Unit Sales Marginal Profit
Current Spend
The dilemma is that incremental spend will not generate much growth. This is
due to the countervailing impact of competitive spend; and higher returns can
occur by cutting back.
9

10. Impact of Competitor Media Spend
166,000
168,000
170,000
172,000
174,000
176,000
178,000
180,000
182,000
184,000
186,000
-100% -80% -60% -40% -20% 0% 20% 40% 60% 80% 100%
AnnualUnitSales
change in competitor spend
Competitive spend impact does not have the same degree of saturation and therefore
Auto Services’s spend not sufficient to mitigate its impact.
10

11. Impact of the Macro-Economy
170,000
172,000
174,000
176,000
178,000
180,000
182,000
184,000
186,000
(1.5) (1.0) (0.5) - 0.5 1.0 1.5 2.0 2.5 3.0
AnnualUnitSales
GDP Percent Growth Rate
Car sales very sensitive to moves in the economy. A +1.0 percent increase in economic
growth generates about a +2% increase in sales.
11

12. Marketing Synergies
-
1,000
2,000
3,000
4,000
5,000
6,000
Separate Impact Simultaneous Activation
Marketing Synergy
Radio
Digital
Radio and Digital Media are most effective when executed together. There is about a
+43% synergy or additional lift due to simultaneous activation.
12

13. Marketing Synergies
-
1,000
2,000
3,000
4,000
5,000
6,000
Separate Impact Simultaneous Activation
Synergy
TV
Digital
TV and Digital Media are most effective when executed together. There is about a +66%
synergy or additional lift due to simultaneous activation.
13

14. Effectiveness of Marketing Spend by Channel
£0.18
£0.70
£0.86
£1.13
£2.48
£4.34
£4.77
£5.34
£7.72
£- £1.00 £2.00 £3.00 £4.00 £5.00 £6.00 £7.00 £8.00 £9.00
Press
Sponsorship ITV
Paid Search
Branded TV
Radio
Display Premium
Display Network
Cinema
SEO
Return per Pound Spent
Cinema, Digital Display and Sponsorship drive the most sales per unit of spend
14

15. £0.08
£0.09
£0.10
£0.11
£0.13
£0.14
£0.16
£0.18
£0.20
£0.22
£0.25
£0.28
£0.32
£0.35
£0.40
£0.44
£0.50
£0.56
£0.63
£0.70
£0.79
£0.88
£0.99
£1.11
£1.24
£1.39
£1.56
£1.75
£1.97
£2.20
£2.47
£2.77
£3.10
£3.48
£4.39
£4.48
£4.91
£5.50
£6.17
£6.91
£7.75
£- £2.00 £4.00 £6.00 £8.00 £10.00
Print Ad 14
Radio Ad 6
Sponsorship Ad 5
Branded TV Ad 13
Print Ad 6
Sponsorship Ad 4
Radio Ad 5
Branded TV Ad 11
Sponsorship Ad 3
Sponsorship Ad 1
Print Ad 2
Print Ad 1
Sponsorship Ad 2
Sponsorship Ad 4
Radio Ad 4
Radio Ad 2
Premium Display Ad a Display Ad 3
Premium Display Ad a Display Ad 1
Network Display Ad a Display Ad 1
SEO Event 3
SEO Event 1
Marketing Returns by Ad/Campaign/Event
MROI
15
Effectiveness by Ad, Campaign and Event
41% of the ads run were identified as “low ROI” and wasteful spend.
Discontinuing these ads can save
560K GBP’s.

16. The Marketing Investment Opportunity Matrix
• Based on model “marginal returns”, marketing investment strategy should focus on
the opportunity matrix guidelines
Essential InvestmentAggressively Expand
ReallocateSignificantly Reduce
16

17. Spending Optimization
Contribution Spend Optimized
Press 286 £241,961 £65,616
Radio 676 £233,578 £383,468
Cinema 516 £21,663 £42,608
Sponsorship ITV 713 £165,000 £38,347
Branded TV 194 £355,341 £170,430
SEO 385 £45,000 £87,772
Paid Search 249 £272,438 £63,059
Display Network 1112 £68,490 £148,700
Display Premium 53 £0 £0
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Press
Radio
Cinema
Sponsorship ITV
Branded TV
SEO
Paid Search
Display Network
Display Premium
£1,403,471 £1,000,000
The major investment increases should be directed towards radio, digital display & SEO.
This plan will generate +2.4% in sales at 1 million spend, even with reduced total spend &
discontinuing the low ROI ads.
17