media mix optimization - the starting point for customer-centric communications

DMA09San Diego, California

J. Patrick BewleyVP, Global Marketing Strategy

October 17, 2009

© 2009 Acxiom Corporation. All Rights Reserved.


Helping Marketers Find Answers

• Media Mix Optimization is a comprehensive and dynamic strategic capability that enables marketing practitioners to scientifically and quantitatively measure, plan, manage and optimize marketing resources and investments

• MMO helps marketers to regularly capture insight to:– Drive business results through better strategic planning and execution of

the marketing process– Identify opportunities to increase margin through improved ROI on existing

marketing investments– Improve collaboration, brand positioning, coordination and consistency of

analyses across lines of business, brands and geographies– Align resources to execute customer-centric strategies

2


What it is What it isn’t

Media Mix Optimization – what it is and what it is not

3

An applicationmodel or eventAn applicationAn applicationmodel or eventmodel or event

Refinement to campaign strategy or optimization

of a budget for a particular department

Refinement to campaign Refinement to campaign strategy or optimization strategy or optimization

of a budget for a of a budget for a particular departmentparticular department

Incremental efficiency improvement

Incremental efficiency Incremental efficiency improvementimprovement

A process and journeyA process and journeyA process and journey

Organization changeOrganization changeOrganization change

Transformationalbusiness model

TransformationalTransformationalbusiness modelbusiness model


Approaches

4

Traditionally above the line marketing spend (Print, TV, Radio)

Traditionally below the line marketing spend (Direct: IPTV, Mail, Email)

How do I perform against my vertical market, geo, or market at large?

Seeks to correlate media spend with sales results, accounting for: seasonality, competition

Seeks to close the loop on channel specific campaigns, then optimize across

Introduces benchmarking into the equation to create an “open system”

Applied to… Goal…Inferred Attribution

Direct Attribution

Normative Performance


Linking Media Strategy to Customer Lifecycle

5

Cus

tom

er V

alue

Time

Acquisition Strategies Retention and Growth Strategies Attrition Strategies

Lengthen and DeepenCustomer Value

Adopted from: Dr. V Kumar

Y 3Y 1

Y 0

Y 2 Y 4

Intelligently Prospectto Minimize CPA

Identify and Address Potential Attriters

Above the line spend

Below the line spend

Inferred Attribution

Normative Performance Normative Performance

Direct Attribution Direct Attribution


6

WEBSITEOperator SMS EmailSE

STORESE

STOREOperator

e

Key Opportunity Revenue Impact Margin ImpactAvenue Revenue Per User (ARPU) Increase in ARPU

Marketing Spend Per Device Shipped Increased Margin Per Device

Improved Sales Mix Increased Revenue Per User Increased Margin Per User

Devices Sold per User Increased Revenue Per User Increased Margin Per User

Lifecycle Relationship

Strategy

Channel Strategy

Value Relationship

Next Device Upgrade Purchase

Consumer Value

Consumer Life

Device Registration

Purchase Music

Transmitter

Device Purchase

Feature Service

Content

ŅThe Cliff Ó

Incremental Device

Social Interaction Triggers Incremental Device and Additional User and Consumer

Lifecycle


Connecting the dots…

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Inferred Attribution

Direct Attribution

Lifecycle Marketing

Enhanced Customer Profiles

Channel Propensity

Models

Redeployed Media Mix #1

Redeployed Media Mix #2

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Normative Performance

10-15% Reduction in Media Spend

Up to 20% top line growth

Up to 30% Reduction off original media spend

10-15% reduction in direct spend

The “last” 5%

33

22

66

44 55 77

88


A Comprehensive MMO Solution

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• Television• Newspaper• Magazine• Radio• Out-of-Home• Cinema

• Direct Mail• Teleservices• DR Broadcast• Digital• DR Print• Mobile

Media / ChannelInterplay

• Strategy• Response

Attribution• Predictive

Modeling

Media TypeOptimization

Single or Multiple

ChannelOptimization

Marketing Spend

Benchmarking

Peer comparison of marketing investments and return

CannibalizationAssessment

Determining impact on revenues from other channels

Competitor MixImpact

Assessment

Assessing competitive marketing activity impacts

• Optimal marketing investment mix to- reach the most profitable consumers - with the right product and offer

• Single product or full portfolio optimization• Forecasting

• Scenario planning • Quantifies halo effects• Consolidates all marketing analyses into a single

database• Provides effective, relevant reporting

Quantitatively-based, Continuously Assessed Output

Baseline Offerings Included with Baseline Offerings (or stand alone)Marketing

InvestmentsMarketing

MixModeling

• Analytics• Segmentation•

Single or Multiple


Our Approach

• Advanced analytics cover descriptive, diagnostic, predictive andprescriptive analytic work

• Provide strategy, insights and execution on all direct and digital channels and are building capabilities based on customer preferences

• Leverage our data and knowledge-base recognition capabilities to avoid the garbage in, garbage out trap

• Automate the customer recognition process and provide the data at a moments notice; analytics are replicable, repeatable and scalable; partner with model visualization specialists

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In summary…

• There are multiple approaches and definitions of MMO• You should pick an approach that is consistent with your goals• To get the best return, you should link above the line and below the line MMO

efforts• Normative performance expands your horizons• It’s a journey, not an event

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Appendix


Key Messages

• Solving the extremely complex and dynamic problem of measuring the performance of media and channel combinations

• Focusing on consumer-level media attribution

• Helping marketers document their business impact … verifiability, accountability, measurability and return on investment

• Providing marketers with accurate media usage data and consumer insight to drive consumer-centric media planning

• Media mix optimization leverages Acxiom’s demonstrable expertise in data, analytics, technology and consulting

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Changes In Media and Consumption Are Generating Vexing Questions From Marketers

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• Insight– Which media mix drove the most volume– What’s the ROI for each marketing investment– Why share is up or down for this brand or line of business

• Forecasting– What volume and profit will my current marketing strategy drive– What would be the impact of a change in marketing mix– How will a competitor’s marketing investment affect my profitability

• Optimizing– What plan maximizes volume for the same spend– How can a marketer maximize revenue after a budget cut– How best to invest a windfall


Inferred Attribution – Top Down

Is right when:• You have two, preferably three years of weekly sales

and marketing data• You have a large and highly diverse marketing mix• You go to market primarily via indirect channels

Work best when:• They correlate sales and marketing activities using

linear and multivariate regression analysis• Quantify the impact of multiple demand drivers –

environmental (i.e. gasoline prices, temperature)• Reveal incremental impact and marginal return• Can be viewed by geographic, media, or brand level

budget allocations14


Direct Attribution – Bottom Up

Is right when:• You have (or can develop) rich customer profiles• You have multiple products that can be cross/up sold• You have shopping basket data that allows for

collaborative filtering analysis• You go to market primarily directWork best when:• They discretely isolate a customer action (i.e.

additional information inquiry)• You spend the time to understand the decision

making process• They are used in a test and control methodology• Can be viewed by geographic, media, or product

level budget allocations15

Max

imiz

e R

etur

n

Fixed Marketing Spend

Efficiency Curve

Fixe

d R

etur

n

Minimize Spend

Efficiency Curve


Normative Performance– Outside In

Is right when:• You have either:

– Mature mix models (Inferred or Direct)– Or no clue where to start

• You use them to get the last mile out of marketing spend

• You operate in a competitive or saturated market

• You need an objective, independent case for change

Works best when:• They are applied at a fundamental unit level

such as CPA, allowing a apples to apples comparison

• They are viewed at the vertical, and geo level16


Tool Examples – Inferred Attribution

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IntuitiveEasily create constraints based scenarios

TransparentAllow complex manipulation of the models “Under the hood” where appropriate

Actual Vs. ForecastAbility to contrast results against the model predictions

Constraints based optimizationAllows user to input spend/activity and smooth a result to revenue, or profit targets

Side by Side contrastAbility to contrast one planed scenario against another in an easy to interpret interface


Tool Examples – Direct Attribution

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Dashboard Summary

Solicitation Summary

Inquiry /Response Summary

Product/Conversion Summary

Providers Selected [+ ] Media Types Selected [+ ] Sum m ary Selected [+ ]

Average Cost Per Touch :

Total Outbound Solicitations :

Direct Mail

Magazine

Email

more ...more ...

American Express

Avis

Delta Dental

Hartford Home

New York Life

Direct Mail

Magazine

Email

Outbound Telemarketing

$0.83

12,367,972

1,367,972

1,000,000

10,000,000

[-]

[-]

[-]

11/ 01/2006 Š 11/30/ 2006

[-]

Monthly Solicitation by Provider Provider Solicitation Statistics [+]

more ...

Provider

American Express

Avis

Delta Dental

Hartford Home

Direct Mail Magazine Email Total

1,367, 972

1,367, 972

1,367, 972

1,367, 972

1,367,972

1,367,972

1,367,972

1,367,972

1,367,972

1,367,972

1,367,972

1,367,972

1,367,972

1,367,972

1,367,972

1,367,972

% Total

33%

17%

25%

25%

Monthly Inquiry by Provider Provider Inquiry by Media Type [+ ]

more ...

Provider

American Express

Avis

Delta Dental

Hartford Home

Direct Mail Magazine Email Total

2,304 / 4% 1,304 / 2% 1,304 / 1.5% 4912 / 2.3%

2,304 / 4% 1,304 / 2% 1,304 / 1.5% 4912 / 2.3%

2,304 / 4% 1,304 / 2% 1,304 / 1.5% 4912 / 2.3%

2,304 / 4% 1,304 / 2% 1,304 / 1.5% 4912 / 2.3%

Provider Product Conversion Statistics [+ ]

more ...

Provider

Number of Conversions

% Conversion Rate

Aggregate Cost Per Acquisition

Conversion By Product Type

American Express Avis Delta Dental

1, 523

9%

$236. 08

Hartford Home

1, 523

9%

$236.08

1,523

9%

$236.08

1, 523

9%

$236. 08

Configurable DashboardsPoint of View, Point of Time Reporting

Statistical AnalysisUse of complex concepts to create Readable Visual Results

Top Demographic AnalysisNet out top segments such as; age, income, and geography

Real Time ReportsUp to the minute/day campaign information makes decisions nimble

UI ErgonomicsFocus on simplifying interpretation, faster decisions

Key MetricsTop marketing metrics like CPR, CPA in real time

media mix optimization - the starting point for customer-centric communications

Business

acxiom corporation

media strategy

user increased margin

answers media mix optimization

original media

media spendmarketing

device shippedincreased

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