Marketing Mix Modeling For Optimizing Media Spend
Challenges and Industry
The marketing team of a national retailer with a short seasonal window for closing sales approached GFAIVE with the challenge of planning out large advertising investments before the season. The key requirement was for the retailer to still be able to adjust and tactically optimize investments during the season.
The main challenge faced by the team was to build a solution that could provide the highest degree of accuracy quickly despite having a limited amount of time to gather most relevant data due to season change.
GFAIVE team focused on a holistic marketing mix modeling approach to build the foundation by understanding key business drivers, ROI, and opportunities for optimizing spend. The team collected over 3 years worth of sales, media spend and macro data to reflect calendar events, price levels, competitor media, store openings and more.
Next, the team cleaned and prepared all the variables to make them fit to use in collecting data to contribute to the build of an econometric model. In this way, it became possible to statistically measure and isolate the impact of each variable on sales and to draw both – strategic and tactical insights from it.
It was discovered that in this unique case, national TV and search were the most efficient media channels and there was a strong correlation between TV, search and display advertisements. Further analysis uncovered how to improve ROI across channels, from specific quarter-hour TV spots, copy length and display ad formats, to leveraging other channels – like local radio.
Based on these insights and knowledge of cross-channel synergies, digital marketing efforts were closely monitored during the high-season and continuously optimized to improve results in real-time.
After implementing the new tactics, the retailer was able to boost his marketing ROI by 26% and drive millions in incremental value. Within a short but important time frame the holistic approach led to impressive sales growth.
Furthermore, the solution allowed the retailer to run various “what-if” scenarios, thus helping make beneficial investments while preventing unfavorable ones.