introduction disclaimer: all logos, photos, etc. used in this presentation are the property of their...

Introduction

Disclaimer:• All logos, photos, etc. used in this presentation are the property of their respective copyright owners and are used here for educational purposes only

© Stephan Sorger 2015; www.StephanSorger.com; Marketing Analytics: Introduction Ch.1.1

http://www.stephansorger.com/

Outline/ Learning Objectives

© Stephan Sorger 2015; www.StephanSorger.com; Marketing Analytics: Introduction Ch. 1.2

Topic Description

Introduction Marketing analytics definition, drivers, and advantagesModels Definition, styles, forms, and variables of modelsMetrics Definition, families, and dashboards of metrics


Topic Description

Definition (Broad) Broad definition (but too vague):Data analysis for marketing purposes, from data gathering to analysis to reporting

Definition (Applied) Techniques and tools to provide actionable insight- Models - Metrics

Models Decision tools, such as spreadsheets

Metrics Key performance indicators to monitor business

Marketing Analytics: Models, Metrics & Measurements

Models:Decision tools,like spreadsheetsExample: Bass Forecasting

Metrics:KPIs to monitor business,like charts and graphsExample: Sales/ Channel

© Stephan Sorger 2015; www.StephanSorger.com; Marketing Analytics: Introduction Ch.1.3


Models and Metrics

Metrics = Gauges:- Monitor situation- Diagnose problems


Models = GPS:- Representation of Reality- Decide on course of action


Metrics Gone Wrong

Military leaders in World War II used metrics regarding airplane damage incorrectly“Reinforce damaged areas”Abraham Wald, a statistician skilled in analytics, said: Right Metrics, Wrong Conclusion“Reinforce non-damaged areas” (fixing selection bias from studying only airplances that returned)



Trends Driving Marketing Analytics Adoption

Before:Huge budgets

Now:Tiny budgets


MarketingAnalyticsAdoption

Online Data Availability

Reduced Resources

Massive Data

Accountability

Data-Driven Presentations

Improve productivityReduce costs“What gets measured gets done”

Data to back up proposalsPredict success of plans

Initiatives to capture customer informationWhat to do with all that data?

Cloud-based data storageOnline = speedOnline = convenience

Do more with lessScrutinized budgetsMarketers must show outcomes


Marketing Analytics Advantages


MarketingAnalytics

Advantages

Persuade Executives

Side-step Politics

Encourage Experimentation

Drive Revenue

Save Money

Marketing as cost centerMarketing as profit centerCorrelation between spending and results

Old way: Execute campaign guess outcomeNo longer tolerate such an approachNew way: Predict outcome

Test multiple scenarios before proceedingRun simulationsPredict which will work best

Focus on revenue impact from marketingCorrelation between spending & results

Some CEOs do not appreciate marketingShow impact of efforts with metrics


Topic Description

Model Simplified representation of reality to solve problemsExample: Advertising effectiveness model

Purpose Evaluate impact of input variablesExample: Assess how advertising affects sales

Decisions Models provide guidance on marketing actionsExample: Decide on ad budget to achieve objectives

Models: What is a Model?

Advertising Effectiveness:Response (sales revenue)increases with increasing ad budgetuntil Point A, then decreases


Advertising

Sales

time

A


Topic Description

Verbal Expressed in words“Sales is influenced by advertising”

Pictorial Expressed in picturesChart or graph of phenomenon

Mathematical Expessed in equationSales = a + b * Advertising

Styles: Verbal, Pictorial, Mathematical


Verbal Pictorial Mathematical

Sales = f(advertising)

Topic Description

Descriptive Characterize (describe) marketing phenomenonIdentify causal relationships and relevant variablesExample: Sales = a*Advertising + b*Features +c*…

Predictive Determine likely outcomes given certain inputsClassic “What If?” spreadsheet exerciseExample: Sales forecast model

Normative Decide best course of action to maximize objective,given limits on input variables (constrained optimization)“Given X, what should I do?”Example: Determine price using forecasts at diff. prices

Models: Forms


Descriptive Predictive Normative

Sales

Advertising

This Way

Topic Description

Variable Quantity that can be changed, or variedExamples: Advertising budget, Sales

Independent Variable Variable whose value affects dependent variable (x)Controllable: Advertising budgetNon-controllable: Customer age

Dependent Variable Variable representing marketing objective (y, or output)Responds to changes in independent variableFor-profit: Revenue, Profit; Not-for-profit: Donations

Models: Variables


Y = a + b * X

Y = Sales (Dependent Variable) (Output)a = Parameter: Y-interceptb = Parameter: Slopex = Advertising (Independent Variable) (Input)

1

b

Slope = rise/run = b/1

X (Advertising)Independent Variable

Y (Sales)DependentVariable

Y-intercept(Sales levelwhen advertisingspending =0)


Models: Terminology

Linear Response Model

Topic Description

Definition Business-oriented key performance indicatorsExamples: Sales per channel, Cost per sale

Purpose Monitor and improve marketing effectivenessTake corrective action as necessaryExample: Marketing expense as percentage of sales

Metrics Families Groups of control metrics; Diagnostic & predictive infoExample: Sales metrics: sales/industry; sales/product

Metrics Dashboards Marketing automation systems- Eloqua, Marketo, PardotSalesforce automation systems- Netsuite, Salesforce.com

Metrics

Metrics Dashboard


Number Question

1 Describe how marketing analytics models are analogous to automotive global positioning system (GPS) units.

2 Explain how marketing accountability is driving the adoption of marketing analytics.

3 Describe how marketing analytics approaches can help persuade executives.

4 Identify the type of style a model expressed in pictures represents.

5 Identify the form of model used in standard computer spreadsheet programs.

6 Understand the difference between controllable & non-controllable independent variables.

7 Understand the basic form of a linear response model: Y = a + b*X

8 Identify the types of systems that typically include metrics dashboards.

Check Your Understanding


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