MARKETING PRODUCTIVITY ANALYSIS

1. MARKETING PRODUCTIVITY ANALYSIS

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

3. John Wanamaker (1838-1922): “Half the money I spend on advertising is wasted; the trouble is I don't know which half.”

4. “Corporate marketing is the last bastion of unaccountable spending in corporate America.”

5. Eric Schmidt (2006): “Corporate marketing is the last bastion of unaccountable spending in corporate America.”

6. Marketing Productivity Analysis

7. Marketing Productivity Analysis

8. Effective vs. Efficient: The Difference?

9. Effective vs. Efficient: The Difference?

10. “Measuring Marketing Productivity” Rust et al. (2004)

11. “Metrics for Making Marketing Matter” Lehmann(2004)

12. Framework for Marketing Performance Measurement • What marketers and competitors do • Advertising • Price • Promotions • Distribution • What customers think & feel Feedback Effect Direct Effect Consideration Liking Awareness What customers do Brand purchases Adapted from Lehmann and Reibstein (2006)

13. Advertising Campaign Testing • What marketers and competitors do • Advertising • Price • Promotions • Distribution • What customers think & feel Feedback Effect Direct Effect Consideration Liking Awareness What customers do Brand purchases Adapted from Lehmann and Reibstein (2006)

14. Brand Health Tracking • What marketers and competitors do • Advertising • Price • Promotions • Distribution • What customers think & feel Feedback Effect Direct Effect Consideration Liking Awareness What customers do Brand purchases Adapted from Lehmann and Reibstein (2006)

15. Marketing Mix Modeling • What marketers and competitors do • Advertising • Price • Promotions • Distribution • What customers think & feel Feedback Effect Direct Effect Consideration Liking Awareness What customers do Brand purchases Adapted from Lehmann and Reibstein (2006)

16. M5: Mindset Metrics and Marketing Mix Modeling • What marketers and competitors do • Advertising • Price • Promotions • Distribution • What customers think & feel Feedback Effect Direct Effect Consideration Liking Awareness What customers do Brand purchases Adapted from Lehmann and Reibstein (2006)

17. Return on Marketing Investment: Rearview Mirror Marketing ROI Marketing Expenditure Incremental Contribution Costs Margins Marketing Support Incremental Volume Model

18. Return on Marketing Investment: Front Dash Marginal Marketing ROI Marginal Expenditure Marginal Contribution Costs Margins Marketing Support Incremental Volume Model

19. A brief history of marketing mix modeling

20. It all began with… What do these three things have in common? (first drink is on me if you can guess!)

21. The Answer: SIR FRANCIS GALTON anthropologist, eugenicist, tropical explorer, geographer, inventor, meteorologist, proto-geneticist, psychometrician and statistician

22. 1875: Is This Really Marketing Mix? Galton’s work on inherited characteristics of sweet peas led to the initial conceptualization of linear regression

23. The First 100 Years Regression conceptualized 1875

24. The Birth of Data Regression conceptualized 1923 1875 A.C. Nielsen Company Founded

25. The Nielsen Factor • Pioneer in Data Collection • Inaugurated a National Radio Index for broadcasters and advertisers in 1942 • Followed by a television ratings service in 1950 • Once TV ratings were available, people starting experimenting

26. Advertising, Goodwill and Demand Vidale/Wolfe observe relationship between sales and advertising Regression conceptualized 1962 1957 1923 1875 Arrow/Nerlove Formalize Adstock Dorfman/Steiner Theroem A.C. Nielsen Company Founded

27. First Marketing Mix Model Vidale/Wolfe observe relationship between sales and advertising Little/Lodish Media Planning Calculus MDS Founded (1969) Regression conceptualized 1975 1962 1957 1923 1875 Arrow/Nerlove Formalize Adstock Dorfman/Steiner Theroem Little BRANDAID Marketing Mix Model A.C. Nielsen Company Founded

28. Advertising has a Carryover Effect Vidale/Wolfe observe relationship between sales and advertising Little/Lodish Media Planning Calculus MDS Founded (1969) Broadbent Popularizes Adtsock Regression conceptualized 1975 1979 1962 1957 1923 1875 Little BRANDAID Marketing Mix Model Arrow/Nerlove Formalize Adstock Dorfman/Steiner Theroem A.C. Nielsen Company Founded

29. Two Dimensions of Adstock Advertising Lag (Decayed Effect) Advertising Saturation (Diminishing Returns Effect)

30. Ten Years After MMA Founded Duke’s Marketing Workbench IRI Founded IRI’s Infoscan Introduced Guadagni/Little Logit Mix Model 1983 1985 1986 1987 1989 1980 Nielsen Launches Home Video Index IRI Acquires MDS Blattberg/Wisniewski How Promotions Work

31. Marketing Mix Models – Before the Internet

32. The Next 10 Years 10 Marketing Mix Modeling firms founded; numerous consultants and ad agencies start ROMI practices 1999 1990 So what happened next?

33. The World Changed…

34. MMM in a Digital World Sales & Trade Promotions Marketing Search Volume Online Display Social Media Search Volume Paid Search Impressions Paid Search Clicks Business Performance Business Impact Sales Business Impact Business Impact Direct Indirect