Which marketing vehicles will yield the best investment returns? This is the dilemma facing many marketers as they determine which media vehicles will drive traffic and a return on their investment when it comes to marketing campaigns. Print? TV/Cable? Radio? Digital? What is the optimal mix, and which ones most effectively support their marketing strategy?
The answer? Leveraging predictive analytics to solve for the best mix of media vehicles and messaging. This statistical approach, while well known to those optimizing market segment mix in Revenue Management, remains a mystery to many in Marketing and other functions.
If Revenue Management is in charge of price changes for various products, and revenues uptick, more than likely the Revenue Management department (teams that include statisticians and Ph.D. mathematicians) will measure and take credit for the improvement. Meanwhile, Marketing may invest in a radio campaign, and the uptick that occurs based on the advertisement is harder for Marketing to quantify. The level of statistical analysis used to evaluate price and demand is needed to accurately measure the impact of media vehicles and messaging.
Too often, the assumption in terms of marketing spend is “everything is incremental.” For example, if Marketing launches a digital campaign, any uptick is likely to be claimed as the campaign’s success. However, this assumption doesn’t acknowledge other factors that could be driving the change. To accurately measure the effectiveness, the impact of the vehicle should be isolated from all other factors. Dilution, as it relates to the negative revenue impact of discounts to customers who would have purchased anyway, is critical and should be accounted for as well.
Predictive analytics can help to inform better business decisions, allowing Marketing to measure the true impact of a specific marketing message or promotional vehicle, removing noise that’s occurring simultaneously. To isolate the real impact, marketers must ensure their marketing tests are controlled and data is normalized – a statistical approach used to isolate the impact. Then marketers can discern the true impact of their campaigns, and drill into uplift driven by the media vehicle vs. the message. A significant difference in behavior should be expected from a specific promotional discount or call to action, and general brand messaging.
Once the noise is filtered, the true impact of the campaign can be determined, with predictive analytics and optimization recommending a mix of marketing that will deliver the highest return on investment. Leveraging these insights can help to inform both strategic and tactical marketing plans, improving performance of both. If brand awareness, long-term value generation, targeted competitive response, or market penetration is the goal, predictive marketing mix analysis and optimization can help ensure success. Just remember… there is no one-size-fits-all marketing strategy, and there are no silver bullets.