About Bottom-Line Analytics and Market Mix Modeling

Our approach for measuring market mix modeling productivity & ROI

After 25 years of hands-on experience with market-mix modeling and over 200 cases, I would like to share some commonalities that I have found about marketing effectiveness across all of these cases.

1. “At least” 30-40 percent of ad and marketing spend occurs in media or events which are highly un-productive and generate little to no incremental sales or revenue. Some call this marketing waste.
2. Another 60 to 70 percent of spending occurs on marketing initiatives where the marketer significantly under invests. In other words, much more spending should have occurred; and opportunity was missed in driving even more revenue and ROI.

The real opportunity and value of marketing-mix modeling comes via optimization of your marketing spending, which Bottom-Line Analytics does for all clients.  So what are the benefits could you expect from doing marketing mix modeling?

Tangible returns with a defined positive payout in market mix modeling

What would you say if somebody told you they could increase your company’s revenue by at least 2% without requiring that you spend one additional dime on marketing or promotion?  Recently, Bottom-Line Analytics – BLA – did a project for one of the country’s largest state lotteries with total revenue of over 6.6 billion dollars.  For this client, BLA conducted a comprehensive marketing audit and developed analytic models which directly linked their 40 million dollars in media and promotion spending to sales outcomes.  In fact, BLA developed a mathematical model that could predict their sales with 98% accuracy.   As this was concluded, BLA conducted one final and critical exercise.  It developed a tool that enabled them to simulate & forecast actual sales across 9 regions by changing any of their 200 ads and promotion events.   BLA then did this single exercise, which held their 40 million dollar total marketing spend constant and just reallocated money from less to more productive ads and promotion events. In the end, BLA revealed that this lottery could increase their sales by almost $800 million – 12.1% – without increasing their $40 million dollar advertising budget by one dime!

While marketing spending is one of, if not the number one, line-item expense on company income statements, it is fundamentally an investment.   Like all investments, good stewardship requires that one calculate the financial returns on that investment.  The goal of our measurement is to apply the most holistic methods and process for measuring these returns, and in doing so, gain the most insights possible in order to make these investment dollars generate the highest impact and returns possible.

Measuring not just the short-term but also the long-term impact of market mix modeling

Market Mix Modeling has been criticized because they only measure the short or immediate sales lift from advertising.   As a consequence, too often and in many cases, the financial returns to advertising spending is negative. To address this issue, BLA has developed a valid and accurate approach to also measuring the long-term sales lift from advertising.  From direct experience, BLA has often found that this long-term impact, when combined with the short-term sales lift, results in positive or profitable returns to advertising.  To this end, clients are in a better position to determine the correct level of spending needed to drive their business performance.

Modeling your market mix for more accurate attribution for digital marketing

BLA uses a methodology which treats each digital marketing touch point as separate entities.  By doing this, we have found that the actual impact of each digital marketing element is much more balanced and in alignment with click-stream behavior.  We believe that our approach can be the single-source for marketing ROI measurement instead of relying on multiple approaches that do not always sync together. We will be happy to validate our approach relative to the Digital Attribution Models you are presently using.

Advertising is all about the message and creative market mix models

From my years working with a creative ad agency and in marketing departments for large corporations, I have learned that effective advertising is really about effective messaging.  To this end, BLA has developed a system which integrates copy testing metrics from a partner company, Advertising Benchmark or ABX, into our marketing Mix Models.  So, in the end, we are able to measure and separate out the advertising spend or weight from the creative message.   Our experience shows that this creative message comprises 60 to 80 percent of the total sales impact or sales-lift due to advertising.  In addition, we have also found that the creative message is usually at the center for explaining the positive or negative sales impact from advertising on a year-over-year basis.

The advantage of working with Bottom-Line Analytics for market mix modeling

By working with BLA, clients will get this broader and more holistic approach to marketing measurement that has been described here.

Another advantage of working with Bottom-Line Analytics is that we seek to understand everything about your business and strategies so we can speak your language and address issues which are most relevant to your business.

Above all, we understand what working with your data requires that all of us at BLA strictly adhere to the highest levels of integrity and confidentiality.

Would you be interested in speaking with Michael Wolfe, Bottom-Line Analytic’s CEO, to find out how this can work for your company and brands? In fact, once Mr. Wolfe has had a chance to speak to you and learn about your unique situation, he is willing to guarantee a certain “attractive” return on what his company could do for you.

Cheers,

Michael Wolfe

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