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Digital Academy

Digital Academy. Aegis Media & Microsoft Advertising 28 th June 2011. Econometrics Sasha Grujicic & Lynne Clarke. “ Half the money I spend on advertising is wasted ; the trouble is I don't know which half. ” John Wanamaker. The Approach. Factors affecting a single purchase.

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Digital Academy

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  1. Digital Academy Aegis Media & Microsoft Advertising 28th June 2011

  2. Econometrics Sasha Grujicic & Lynne Clarke

  3. “ Half the money I spend on advertising is wasted; the trouble is I don't know which half. ” John Wanamaker

  4. The Approach

  5. Factors affecting a single purchase

  6. Applying maths to marketing • Marketing activity • Sales • Pricing • Market share Drivers Performance • Weather • Customer acquisition • Competitor activity • Brand perception

  7. Calculating revenue return on investment x Customers acquired Monetary value for each customer = RROI Cost of marketing activity

  8. Reaching the point of diminishing returns Spend has reached optimal levels for ROI Spend can still be delivering sales but at lower ROI than the optimal point As spendincreases so does ROI 0 Example: Optimal ROI range Spend is no longer delivering sales

  9. Throw enough mud at the wall, some of it will stick

  10. Econometric Modelling: What’s changing?

  11. Econometric Modelling: Implications • Opportunity to move to Agent Based Modeling and Targeting • Greater level of granularity of data and attribution • Purchase path mapping / correlations • Real time transactional considerations • More frequently updated modeling possibilities

  12. Econometric Modelling: Implications

  13. It is OUR job to help our clients understand the difference between the IMMEDIATE and the IMPORTANT

  14. Econometric Modelling: Implications to planning • How much to spend on marketing? • What is the optimal mix of marketing activities? • What is the overall impact of an increase or reduction of the marketing budget? • What is a change in business performance due-to? • How to improve the timing and execution of marketing? • How does the impact of marketing vary across customer segments and store types?

  15. Econometric Modelling: Implications to planning • How much to spend on marketing? Contribution of first $1 spent on advertising Contribution of the next $1 spent on advertising

  16. Econometric Modelling: Implications to planning • What is the optimal mix of marketing activities?

  17. Econometric Modelling: Implications to planning • What is the overall impact of an increase or reduction of the marketing budget? • Contributions • % of Sales Driven by Marketing • Volume +5.2% • Last Year • This Year

  18. Econometric Modelling: Implications to planning • What is a change in business performance due-to? Total change due to marketing Total change due to base Marketing Impacts Non-Marketing Impacts

  19. Econometric Modelling: Implications to planning • How to improve the timing and execution of marketing?

  20. Econometric Modelling: Implications to planning • How does the impact of marketing vary across customer segments and store types?

  21. Recommendations: $ TV Radio Digital OOH Print Promo

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