Archive | January, 2012

Optimizing Your Marketing Mix in a Multi-Channel World

Fifty years ago, optimizing the media mix was relatively easy. The channel mix was relatively manageable. Companies selected from a mix of national and local magazines, newspapers, broadcast television networks, radio and large industry trade shows. By the 90s, channel options became a bit more complex; with cable television, segmented direct mail and a bevy of trade publications and trade shows added to the mix. Today the media mix has exploded to include new digital channels such as social networks, SEO, online advertising, virtual events, email, and mobile. All of these marketing vehicles reinforce the importance of ascertaining the effectiveness and efficiency of your marketing channel investments; increasing the emphasis on marketing mix modeling and optimization.

What Is a Marketing Mix Model?
Marketing mix models are needed when you want to quantify the sales impact of various marketing activities and determine effectiveness and ROI for each marketing activity. Marketing mix modeling uses statistical analysis such as multivariate regressions on sales and marketing time series data to estimate and forecast the impact of various marketing tactics on sales. Regression is the workhorse for mix models. Regression is based on a number of inputs (or independent variables) and how these relate to an outcome (or dependent variable) such as sales or profits or both.

Once you have the statistics to create the model you can use these equations to figure out how to optimize your mix. This is known as Marketing Mix Optimization. You will want your model to account for direct as well as indirect effects and take things outside of your contract (such as the time of year, interest rates, exchange rates, gas prices, elections, competition, etc.) into account. Developing a marketing mix optimization model requires good data and strong analytical skills. You may find it prudent to partner with your finance organization to co-author the model. This will also help to generate a buy-in from the sales and leadership team.

When does it make sense to use a marketing mix model? For example, when you are trying to answers questions such as:

  • What happens if the economy changes by X?
  • What happens if we reduce/increase the marketing budget by Y?
  • What happens if the competition adds Z to their media spend or reduces their price?
  • What if we have to hold our touch points to the current mix, what is the optimal mix of these?
  • What is the optimal mix for our current budget?

However, the marketing mix model needs to support your overall organizational outcomes, marketing objectives, and metrics and performance targets. Optimizing a mix that will not enable you to achieve your outcomes and objectives may make you more efficient but will not make you more effective. If you are not meeting your performance targets or industry benchmarks, you may want to revisit your execution before you adjust your mix and spend.

How to Build a Marketing Mix Model
So you’re ready to build your model. What are the steps and what data will you need? Data is the key to being able to perform analytics. So the first step is to determine what data is going to go into your model. Common types of data include:

  • Monthly/Weekly sales data with causal factors
  • competitive information
  • monthly/weekly marketing spend by touch point (channel, promotion, etc)
  • customer demographic and other data
  • industry data
  • distribution data
  • product category data
  • economic and other data that impacts customer buying decisions

Things such as your data quality, the breath of internal and external data, the granularity of your data, the accuracy of your historical marketing data, the robustness of your statistical functionality, and the technical architecture to support the model construction all impact the quality of your model.

Optimizing Your Model
Once you have the data you can construct a prototype. Seven steps are important to finetuning your model:

  1. Test the predictive ability of the model on a hold out sample
  2. Refit using all the data and predict the future – remember to account for indirect effects and things out of your control in the model
  3. Compare actual to forecast sale performance and determine incremental revenue
  4. Apply financial data and determine ROI
  5. Model the influence of individual factors
  6. Simulate the impact of different marketing activities
  7. Develop and deploy the optimal marketing mix

We live in a dynamic environment and our channels are just as dynamic. Therefore, you will want to refresh your models quarterly and rebuild them at least annually. Building a marketing mix model may be one of those tasks worth outsourcing to the experts if you don’t have the analytical skills to develop your model or access to internal resources that can help.
.
.

Neolane Lands $27 Million Investment

Conversational marketing technology vendor Neolane has announced that it has closed a $27 million financing round with Battery Ventures, who already pumped $50 million into revenue performance management (RPM) software provider Marketo last November. Neolane announced the funding will be used to expand the company’s presence in the global marketing technology industry, particularly in North America, by bolstering its own sales, marketing and product development efforts.

Battery Ventures Vice President, Morad Elhafed, said:

Neolane has successfully carved out an impressive footprint within the marketing technology space. We are optimistic about Neolane’s expansion goals and the overall future growth trajectory of this category. Read More…

Inbound vs Outbound Marketing

Last week we mentioned that inbound marketing is on the rise. In an increasingly social marketing environment, inbound marketing is the next big thing. And budgets for inbound marketing are going up, so we can expect this form of marketing to continue to grow more important over the coming year. Still a bit uncertain about the difference between inbound and outbound marketing? Voltier Digital have made an infographic illustrating the two kinds. According to the chart, inbound marketing is the holy grail marketers have been looking for. After all, who wouldn’t want the customer to come to them instead of the other way around? Here’s how Voltier sees it:

The days of annoying consumers with intrusive advertising and marketing tactics are fading. The new age of inbound marketing is about providing added value and earning customer loyalty, instead of simply pounding a message into consumers’ heads and hoping it will stick.

Click the image to view the full chart!

.

.

MRM According to IBM

Now that the MRM in 60 Seconds series has been completed, we’ve been looking at other videos explaining Marketing Resource Management. IBM, one of the marketing automation software vendors from our list, created this short video simply saying marketers can ‘do more for less’ with an MRM system in place. Implementing an MRM solution can reduce project cycle times, increase output using the same resources, and improve compliance with legal and brand requirements, to name just a few positive effects. This video also emphasises the control an MRM system offers: transparency and accountability, at all levels of the marketing organization.

.

.

.

Marketing Operations Manager: Job Description

With Marketing Resource Management and Marketing Operations being relatively new fields of expertise, not everyone knows what marketing operations managers do exactly. To answer that question, take a look at the job description provided by Gary M. Katz for a director of Marketing Operations: would you have what it takes?

Sample Job Description: Director of Marketing Operations

Summary
The Director of Marketing Operations is a member of the Marketing leadership team and works closely with the Chief Marketing Officer to facilitate the development of strategies and plans for the business as a whole and measurement of their implementation progress. Partners with other marketing leaders to enable organizational alignment towards critical business objectives and leads the organization’s implementation of company-wide strategic transformation activities and strategic imperatives. Collaboratively consults with other marketing leaders to support strategic business needs while improving the effectiveness and efficiency of processes, programs, and infrastructure. This position helps to direct a dedicated operational team toward a focus on the profitability and long-term viability of the enterprise. Read More…

4 Key Tips for Simplifying the Localization Process

If you’re like many people we talk to, the company you work for is probably feeling the squeeze of the current economic downturn, and has been for a while. In tough times expansion is often put on the back burner and localization projects are left behind. However, don’t be fooled into thinking that localization is a luxury that an international business can do without. In fact, if you’re cutting back on product launches and market expansion this leaves an opportunity to improve or expand the languages you already support, increasing engagement in existing markets and improving sales.

One of the biggest misconceptions is that localization is just a fancy word for translation, when in reality it covers everything from letters to layout, color to cultural suitability, style, tone, meaning, message and everything in between. The Localization process is a much more broad and comprehensive endeavor,  interdependent and layered, and when done right, can lead to excellent results.

Here are 4 areas that are key to ensuring your localization project goes without a hitch. Read More…

Marketing Industry on the Move Again

The number of mergers and acquisitions climbed dramatically in the media and marketing sectors last year, suggesting a consolidation trend in the wake of the financial crisis. Berkery Noyes, the investment bank, reported that the value of M&A activity in these categories reached $54 billion in 2011, compared with totals of $38 billion in 2010 and $54 billion in 2009.

Evan Klein, Managing Director at Berkery Noyes, said:

The media and marketing industry is continuing its strong recovery from a slow fourth quarter in 2010. Marketing services and digital media companies have all benefited from a large increase in internet advertising revenues in 2011, and look to be promising segments for driving M&A activity. Read More…

Are You Creative, Motivated and Experienced?

If you have a LinkedIn profile (and chances are that you do, with over 135 million members),  you’ve probably thought carefully about how you fill in your profile. Describing yourself in a positive way without sounding boastful, highlighting your strong suits and downplaying your weaknesses, hopefully your profile bio gives a good impression of your unique personality and skills. And for those of us who need some tips, there is of course plenty of help available.

But recently, LinkedIn announced a list of ‘the most overused words’ in members’ profiles for 2011. The number one most overused buzzword in LinkedIn Profiles globally and for professionals based in the United States is ‘creative.’ The top 10 terms that are overused by professionals in the United States are:

  1. Creative
  2. Organizational
  3. Effective
  4. Extensive experience
  5. Track record
  6. Motivated
  7. Innovative
  8. Problem solving
  9. Communication skills
  10. Dynamic Read More…

How Marketing Automation Supports Demand Generation and Lead Management

Continuing the series of videos on Marketing Operations basics, here are two videos by Software Advice. ‘Demand generation’ and ‘lead management’ are terms that are routinely thrown around, but what they mean exactly is not always clear to companies. And if it is, the question remains which one deserves more attention from the management.

In two short videos, Carlos Hidalgo, CEO of Annuitas Group and Executive Director of the Marketing Automation Institute, explains the difference between the two armed with just a whiteboard and some colored markers. Old school, but very enlightening:

In part one, Hidalgo defines both terms and explains how companies should view them not as separate entities, but a dual proposition. Demand generation and lead management actually work together to create a more effective customer engagement strategy.

Read More…

Asos, Net-A-Porter and H&M Best Digital Marketers

Fashion retailers Asos, H&M and Net-A-Porter outperformed their European competitors in digital marketing this year, according to a study by ‘think tank’ L2. The companies made the best use of digital marketing techniques, including mobile, social and email marketing communications strategies. In an increasingly tough climate for brick-and-mortar retailers, e-commerce is a growth market.

L2 assessed 55 leading players’ digital marketing strategies. Brands were measured on 350 data points across four dimensions: Site, Digital Marketing, Social Media, and Mobile and assigned a Digital IQ and a corresponding class of Genius, Gifted, Average, Challenged, or Feeble. The IQ distribution reveals a significant split in digital competence:  nearly half of the brands were categorized as Challenged or Feeble. A small elite of 7% scored Genius, and a decent 22% can call itself Gifted. Retailers with lower average price points performed better, suggesting high-end retailers are still hesitant to embrace digital channels. Read More…