sony australia understanding complete marketing roi

Google Confidential and Proprietary

Marketing Response Understanding the complete marketing ROI for Sony Australia

May 2011


2 Google Confidential and Proprietary

2

Sony Australia Background

•  Sony Australia operates through mul3ple online and offline channels

•  Online: products are distributed directly via Sony Style (online shop) and indirectly via retailers/dealers

•  Offline: full product informa3on and demonstra3ons are available in Sony Centre showrooms as well as at other retailers/dealers

•  Major spor3ng events are used as a theme for promo3onal campaigns: release of the new BRAVIA 3D was joint with FIFA World Cup 2010

•  Offline Media predominates in marke3ng and communica3ons

•  TV and Print are the largest propor3on of total marke3ng investment


About the Project


•  To understand and quan3fy the effec3veness of Sony Australia’s marke3ng and media spend in driving Sony TV sales, par3cularly:

•  To evaluate the role of paid search in Sony’s marke3ng ecosystem

•  To understand the role of Sony’s paid and owned media (e.g. website) in driving sales

•  To op3mise the marke3ng and media mix to generate greater revenue from the same level of investment

Research Objec>ves


Methodology


•  All data analysis was conducted by MarketShare in December 2010

•  Using Sony Australia’s internal and proprietary data (May 2007 – Aug. 2010)

•  Sony TV sales volumes and revenues (split by TV screen size) •  Pricing •  Website data (visitors, conversions) •  Marke3ng and Media costs •  Search volume data from Google.com.au •  MarketShare proprietary marke3ng database

•  Mul3ple econometric models (mul3plica3ve logarithmic 3me series) were constructed to understand total Marke3ng ROI by media channel and inform future op3mal media resource alloca3on

Econometric Modelling World-‐Class Marke3ng Science + Real-‐World Industry Exper3se


The Offline World What are the drivers of Bravia offline sales?



June July August

Drivers of Bravia offline sales

Paid Search +3%

October

2009 2010 November December January February March April May

TV, Print, Outdoor

Base Sales 33%

Seasonality

Pricing

Offline Sales Volumes September 2009 – August 2010



33% 9%

35% 2% 7% 1% 1% 2% 2%

5% 3%

Print, TV and Paid Search are the top 3 drivers of offline sales.

Drivers of Bravia offline sales

21% of offline sales are influenced by marke3ng

79% of offline sales are non-‐marke3ng driven

Offline Sales Volumes September 2009 – August 2010

7 Google Confidential and Proprietary Base sales volume includes influence from existing store network, employee workforce, existing infrastructure distribution, seasonality, underlying consumer demand, etc.

‘Other’ Category includes sponsorship (incl. FIFA 2010 World Cup) and retailer marke3ng Understanding of ROI of display within the media mix was compromised by a lack of data rela3ng to Display investments over the period analysed.


Marke3ng ROI How to op3mise media spend and maximise sales



Weekly Media Spend

Historical Spend

Weekly Sales (un

its)

Understanding the effec>veness of marke>ng spend


•  Econometric models take advantage of natural varia3on in both marke3ng spend and sales levels over the 3me, e.g. during the analysis period (May 2007 – Aug 2010)

•  This varia3on makes it possible to plot response curves for each marke3ng channel, which in turn allows the measurement of ROI

Methodology

Once the responsiveness of each media in driving sales is known, it is

possible to define an op>mal marke>ng mix for future campaigns

to deliver the maximum ROI.

Media Response Curve



-‐1

2.6 2.7

-‐0.5 -‐0.1

4.3

TV Subscrip>on

TV Print Radio Outdoor Paid Search

Inde

xed

Mar

gina

l RO

I

5

-1

Return on marginal investment (ROMI) quan3fies the $ return on the next $ invested. Posi3ve ROMI indicates current underspend – and a recommended increase – whereas a nega3ve value indicates overspend. Op3mal spend (and therefore overall ROI) occurs when all ROMIs are driven to zero – this explains the direc3onal changes illustrated in the next slides.

Marginal ROI – Where to spend the next dollar to get maximum return? At the margin, the next dollar is best invested in Paid Search, Print, and Subscrip>on TV

Understanding of ROI of display within the media mix was compromised by a lack of data rela3ng to Display investments over the period analysed.


Average Weekly Increm

ental R

even

ue (K

)

Average Weekly Spend

TV


ental R

even

ue (K

) Average Weekly Spend

Subscrip>on TV


Historical spend

Optimal spend

Optimal spend

Historical spend

Decrease spend in

TV

Increase spend in

Op>mising Media Budgets TV and Subscrip>on TV

To maximise ROI, Sony Australia should reduce spending on TV and increase spending on subscrip3on TV

Subscrip3on TV

Absolute values for average weekly revenue and spend are hidden for client confiden3ality



ental R

even

ue (K

)


Radio


ental R

even

ue (K

)


Print

Decrease spend in

Radio


Historical spend

Optimal spend

Optimal spend

Historical spend

Op>mising Media Budgets Print and Radio

To maximise ROI, Sony Australia should increasing marke3ng spend on Print and decrease spend on Radio

Increase spend in

Print




ental R

even

ue (K

)


Outdoor


ental R

even

ue (K

) Average Weekly Spend

Paid Search

Paid Search


Historical spend

Optimal spend

Optimal spend Historical

spend

Op>mising Media Budgets Outdoor and Paid Search

To maximise ROI, Sony Australia should reduce spending on Outdoor and increase spending on Paid Search

Outdoor

Decrease spend in

Increase spend in





ental R

even

ue (K

)

Average Weekly Spend:

Total Media Spend

Historical Op3mal

Op>mising Media Budgets – Total Campaign With the same budget, an op3mal media mix delivers an addi>onal 3-‐5% in revenue

Opportunity = 3-‐5%

. . . by adjus3ng spend levels on individual media channels




Assuming all other media investments are held at the current level, it is possible to understand the effec3veness of incremental media spend in a single channel on sales

Increases in Paid search investment will deliver the greatest return based on number of addi3onal Sony TVs sold


How many Sony TV sales would an incremental weekly investment of $10k drive?

Weekly Sales (un

its)

Weekly Media Spend

+ $10k weekly investment drives incremental TV sales . . .

TV +52

Subscrip3on TV +68

Print +70

Radio +32

Outdoor +21

Paid Search +72


Project Summary Op3mum Alloca3on for 2011




TV 39%

Print 17%

Radio 9%

Outdoor 21%

Paid Search 4%

TV 25%

Print 27%

Radio 6%

Outdoor 14%

Paid Search 12%

Subscrip3on TV 16%

-37% +65%

+55%

-37%

-30% +220%

TV Subscription TV Print Radio Outdoor Paid Search

Historical Op3mal

Move towards Digital Recommenda>on for op>mising budgets in 2011

2010 Media Mix Recommended 2011 Media Mix

Investment by Channel


Subscrip3on TV 10%



1 Sony customers are almost equally responsive to TV and online marke3ng (these factors drive 5% and 3% of sales respec3vely); however, TV represents nearly 50% of Sony’s total marke3ng budget

2 At the margin, the next dollar of marke3ng budget is best invested in Paid Search, Print, or Subscrip3on TV; of these, Paid Search has the highest ROMI (addi3onal $10k investment would drive +72 unit sales)

3 To reach the op3mum media mix, Sony Australia should increase spending on Subscrip3on TV, Print and Paid Search, and decrease spending on TV, Outdoor and Radio

4 By shining their media mix toward the op3mum balance, Sony Australia could increase total revenue by 3-‐5% with the same marke3ng budget

Summary


Appendix




Bravia TVs Situa>on Analysis

•  Evolu3on of Bravia from LCD to 3D over 2009-‐2010 coincided with the cyclical growth of base sales. Incremental sales had declined mostly due to seasonal factors

•  Price was the major driver in driving Bravia LCD sales due to a series of promo3ons: Bravia + PS3 (Oct-‐Nov 2009) and Christmas-‐3me offers/retailer promo3ons

•  The June 2010 release of Bravia 3D was driven by Media: it contributed almost 30% to total sales as opposed to only 10% during the pre-‐release period. Website visits almost tripled as online query ac3vity went up

•  Sony grew its media presence in the marketplace over the three year 3me period of the analysis: they increased share of voice from 12% to 32%. Sony invests heavily in offline media, where TV contributes close to 2/3 of total marke3ng spend


World-‐Class Marke3ng Science + Real-‐World Industry Exper3se

•  Strategic analy3cs firm deploying industry’s most advanced analy3c models for marke3ng effec3veness, ROI and alloca3on

•  Reputa3on for being the most innova3ve firm in the category, with focus on advanced math, thought leadership and ac3on

•  Significant experience with new media, including search, social networks and display

•  Heavy emphasis on applica3on of analy3cs to make berer decisions going forward

•  An independently owned company delivering 100% objec3vity in assessing marke3ng effec3veness.


About MarketShare

sony australia understanding complete marketing roi

Technology

sales google confidential

oine media

proprietary data

sony tv sales volumes

driving sales

driving sony tv sales

offline sales

conversions marke3ng