marketing spendoptmztn.gap
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Marketing Spending OptimizationHow to get higher returns on your marketing investment
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Forward
“Dare to rise, when all voices behind you say you can’t get there, ignore them and move on… it’s not about the talents and gifts you have; it’s about how wise you optimize them!”― IsraelmoreAyivor,Leaders' Watchwords
Marketing is always one of the leading line-item expenses on a company’s income statement. Too often, however, it is seen only as that: an expense and not as the lifeblood for generating demand for a company’s products.
Good and essential management practise, therefore, starts with the measurement of marketing and a determination of the level of investment that matches the level of demand or revenue in which that investment generates.
The following is a description of how Global Analytics Parnershas developed, through much experience, a process leading to clients and marketers generating the most revenue from their marketing investments possible.
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Annual Marketing Contributions
66.7%
14.7%
8.0%
1.4%
0.0%
2.2%
0.5%
1.5%
0.7%
0.9%
0.9%
2.4%
0.2%
9.2%
Baseline
Long Term Media Effect
Social VOC
GDP Impact
Display Premium
Display Network
Paid Search
Branded TCP TV GRPs
SEO
Sponsorship (ITV Weather )
Cinema Ad
Radio
Press
We start with our next-generation marketing-mix model which quantifies all marketing drivers and the corresponding long-term marketing effects.
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4Total Brand Marketing Response
1,68,000
1,68,500
1,69,000
1,69,500
1,70,000
1,70,500
1,71,000
1,71,500
1,72,000
1,72,500
1,73,000
£- £5,00,000 £10,00,000 £15,00,000 £20,00,000 £25,00,000 £30,00,000
An
nu
al S
ale
s
Annual Marketing Spend
Unit Sales Marginal Profit
Current Spend
Our optimization method accounts for non-linear responses and saturation, as shown here
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The Marketing Investment Opportunity Matrix
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Essential InvestmentAggressively Expand
Reallocate Significantly Reduce
Marginal Growth Impact
We have visualization tools to help clients understand investment opportunities and cutbacks. Our processis a trade-off between the incremental cost and returns to marketing investments, driven by our models.
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The Marketing Optimization “Growth Dividend”
0 413
26 26
48
69 69
4839
30 30
179
4 00
1020304050607080
Growth Dividend due to Marketing Spend Optimization
Incidence
The “growth dividend” is the additional growth a brand can achieve at constant marketing spend due
to model-based spending optimization. Across 15 years and over 400 studies, the average growth
benefit amounts to +7.1 percent. This is the growth that can be attained without incremental spending..
7Spending Optimization
Contribution Spend Optimized
Press 286 £2,41,961 £92,090
Radio 676 £2,33,578 £5,38,187
Cinema 516 £21,663 £59,799
Sponsorship ITV 713 £1,65,000 £53,819
Branded TV 194 £3,55,341 £2,39,194
SEO 385 £45,000 £1,23,185
Paid Search 249 £2,72,438 £88,502
Display Network 1112 £68,490 £2,08,697
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 £1,403,471
The major investment increases should be directed towards radio, digital display & SEO. This plan will generate +5.4% at constant 1.4M UK Pounds spent.
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