Campaign Effectiveness

19 years ago   •   2 min read

By Marcia Kadanoff

Figure out what really works to accelerate growth in revenue and profits
ROI Marketing provides a set of tools for decision making around which
specific marketing programs merit funding.  Where ROI Marketing
leaves off is where Campaign Effectiveness begins.

Work in this area focuses on answering the overarching questions
around marketing spending and its impact on driving revenues and
profitability.  It’s become a truism that 50% of the dollars spent
on advertising are wasted.14 
Campaign Effectiveness provides the analytic tools to pinpoint the
marketing activities which drive the most revenue and profits.

Techniques here rely on statistical marketing in general and
something called marketing-mix modeling in particular. 
Marketing-mix modeling was first pioneered in consumer-packaged goods
(CPG) companies, companies that spend about 10% of revenues on
advertising.  Using these models, the CPG sector has shifted
dollars out of TV advertising and into more targeted forms of media.15  A typical reallocation is shown below:

A reallocation like this may or may not result in cost savings, at least initially.  The real benefit of market-mix modeling is to accelerate growth in revenue and profitability,
by redirecting dollars that would have been wasted on ineffective
marketing into activities that are more efficient and effective at
driving revenue and profitability. 

Over time, MarketMix Optimization models can be used to identify
anomalies in pricing of media in selective geographies.  For
example, one large business-to-business client is using MarketMix
Optimization as an ongoing process.  Each quarter, we upload
recent sales data into our system, crunch the numbers, and determine
how to manage the marketing mix to maximize growth in revenue and
profitability to our client.  As pointed out earlier, the
dirty-little secret with TV advertising is that every year, advertisers
are asked to spend more for considerably less.16 
Our work empowers the client to decide whether the additional cost of
spot TV is worth it to them on a market-by-market basis.  In some
markets, the incremental cost is simply not worth it and our client has
shifted dollars out of spot TV and into outdoor advertising
instead.  In this way, our client gets more revenue without having
to increase spending on advertising. 

In short, marketing-mix models are not just for consumer-packaged
goods companies but can be used by any company that spends at least
$25M or more on different types of media.  MarketMix™ Modeling and
Optimization™ has been used successfully in the retailing, technology,
and media sectors.  Success stories are hard to come by,
however.  For many companies, campaign effectiveness work remains
a secret weapon, one they are understandably reluctant to share with
the outside world.

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