introduction to media mix optimization
TRANSCRIPT
Mathematical Techniques Exist to Reallocate Spend and Improve Return on Marketing Investments
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Optimized Current
Radio 5%
Direct mail 40%
vs.
Email 10%
Other 40%
Radio 10%
Direct mail 30%
Email 15%
Other 30%
Derive the same return from
lower investment
Derive a greater return from
same investment
Social Media 5%
Social Media 15%
Sample Realized Investment Gains
Beverage Company • Identified savings of 19% in total marketing spend • Reinvested savings to reposition largest brand
Auto Manufacturer • Identified savings of 16% in total advertising spend • ~50% of budget reallocated to increase effectiveness
Media Company • Identified savings of 12% in total marketing spend • ~40% of budget reallocated into higher impact activities
Estimated ROI Increase
of 40%
Estimated ROI Increase
of 33%+
Estimated ROI Increase
of 50%+
Source: Acxiom www.lulustar.com 3
Techniques Are Based on Econometric Modeling
Key Estimation Components
• Lagged and Carry-over effects of media spend, by channel
• Response saturation, by channel
• Correlation – over time and across products
• Systems of Equations
• Model validation and predictive accuracy
• Share of Voice
• Environmental variables (e.g. Employment Rate)
• Competitive Events
• Seasonality
Typical Marketing Mix Optimization (MMO) Modeling Techniques
• Ordinary Least Squares (OLS)
• Ridge Regression
• Two-Stage Least Squares (2SLS)
• Seemingly Unrelated Regressions (SUR)
• Multivariate Time Series
• Spatial Regression
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