Like most retailers, you spend millions of dollars every year on media to communicate your brand and marketing messages to consumers. In today’s hyper-competitive world, it’s more critical than ever to make meaningful and memorable impressions to drive traffic and sales. But are you placing your bets correctly? How confident are you that you are selecting the media vehicles that maximize your ROI? Knowing what works has never been easy, and it has become even tougher for two reasons:
- The number of ways you can reach audiences has grown significantly. Social media is booming, with brands spending 65% more in 2016 on Facebook, Twitter, LinkedIn, Instagram and Pinterest ads than in 2015. TV and radio still broadcast to millions, although viewers are shifting to alternatives like Hulu and Sirius XM. Paid search and emails are ubiquitous. And with their tangible nature, print vehicles such as catalogs and circulars are still widely used.
- Your customers’ behaviors have evolved. Media consumption is more ala carte to the individual. With the increasing overlap of impressions (who doesn’t look at their phone or tablet when watching TV?), it’s even harder for you to understand which is motivating someone to shop. And if you have physical stores, you face additional challenges. Not only do consumers respond differently by channel, but the local demographics of your physical stores can differ extensively. And they are probably changing rapidly, due in part to today’s brick-and-mortar consolidation environment.
Your media agency partners provide metrics on reach, universe, and impressions, but can’t quantify actual revenue impacts. Decisions need to be informed by insights you may not currently have. So to play it safe and avoid unknown outcomes you may opt to repeat last year’s plan – which is not ideal or strategic. Or perhaps you have made adjustments but are unsure if they are working.
What has worked in the past may not any longer. You’re not the only retailer in this situation. Others face similar unknowns, such as:
- What is my true baseline demand, and what incremental value does my media spend really add?
- How do we isolate media-driven impacts vs. those driven by other factors (e.g., seasonality)?
- How can we measure the impact on critical metrics like traffic, transactions and average basket?
- Should my strategy vary across geographies, brands and product categories?
- Within each media vehicle, what attributes drive success? Should we run longer or more frequent radio ads? Should we send every customer every catalog, or should we stagger distribution?
- Do some marketing messages resonate more effectively than others?
Companies like yours can harness advanced analytics to address these types of questions. What if you could measure ROI of your marketing efforts at the vehicle, channel, and market levels? What if you could quantify the impact of various campaign attributes? Then you could adjust your media allocation to increase your revenues without increasing your risk or your budget. Or you could spend less and still maintain current performance. Either way, you win!
The right approach combines predictive and prescriptive analytics to help you make more informed and optimal media spend decisions. How do we know? Because we worked with a specialty retailer to optimize their media mix, without increasing spend or risk, driving a 2 percent increase in demand.
Stay tuned for my next blog in the series that will discuss how to diagnose and adjust your approach to media spend allocation.