Media Mix Management

One of the most complex issues brand managers face these days is knowing how much of their marketing budget to spend on each media channel. Media planners will give you their own answer(s) to this but the rationale often seems weak or flimsy and/or very tactical in nature. What's more, experience of what's worked elsewhere may in fact be entirely inappropriate for your particular brand. We have seen a compelling example of this in the retail sector where an agency applied supermarket Clubcard thinking to a 'low visit frequency' retail environment with disastrous consequences for campaign ROI.

Usually what is needed is a more strategic overview of media investment, understanding what role each type of media should be playing for the brand, where to leverage synergies and where to exploit tactical advantage. Moreover, the strategy has to appreciate where the audience is and the fact that, for example, despite it's popularity, less than half the UK population (and an even smaller proportion globally) actually use vehicles such as Facebook.

This is where RedRoute's Media Mix Management service comes in.

We will provide you with an objective, data-driven framework for deciding how much you need to spend on each type of media in order to maximise your return on investment - in both the short term and the long term.

Moreover, our methods and approach mean that you get a prediction of the sales (or other relevant target measure) that you should get for that level and mix of investment.

This confers tremendous advantage when negotiating with media suppliers or providing revenue projections for Finance. As Nick Adderley, Marketing and Insight Director at Heathrow Airport describes it:

"RedRoute have demonstrated the real sales impact of our varied media campaigns giving us a very good estimate of the returns we were getting. They have helped us to understand how to maximise those returns and quantified a number of other dynamics of airport shopping. These new insights have helped us to rapidly step-change the effectiveness of our marketing plans both for the coming year and beyond."

Our approach is holistic - covering all media types including social media, where we have a particular competitive advantage based on our combined use of 'Turk-enabled' text mining technology and unique buyer/user-motivational modelling.

These have proven to be highly predictive of actual customer/consumer behaviour at both the individual and market segment level meaning that decisions based on their conclusions are inevitably shown to be right. As Andrew Smith, currently CEO of Pack&Send Ltd and ex-Regional VP of Olayan (the Mid-East's biggest supplier of western FMCG brands) said of the value he has found in our service:

"Over the years RedRoute have reliably evaluated the likely impact of alternative marketing strategies and tactics for us on repeated occasions, which has enabled us to meet and overcome numerous new and challenging marketing conditions. Their predictions have proved to be very reliable, enabling us to feel confident we are making the right decisions for the right reasons every time."

The service we provide enables you to know how much to spend, where, when and on what to maximise the ROI on your marketing communications budget. And to also know how to react to meet new threats and exploit new opportunities as they arise.

How It Works

There are several steps in our service. These can be described as follows (note: we use the term 'sales' for convenience, the target can in fact be any relevant measure that you wish to use):

Step 1: Predict the Sales Gain

Using data modelling and media analytics we begin by understanding the relationship within your market, and for your brand(s) and campaign(s) in particular, between media exposure and sales performance. These analyses are intense, and in-depth, and they enable us to describe the relationships for each type of media and/or campaign as shown in Diagram 1.

For example, a campaign that says "come down to our store tomorrow because everything is half price" would be expected to have a rapid response before then reaching saturation - the point at which all those who are ever likely to come tomorrow have been reached with our message.

By contrast, a campaign that said "come down to our place tomorrow, we've a whole new range and it's a great place to shop" is a softer message and much less motivating on just one exposure to it. After seeing it three or four times, however, a higher proportion of people begin to think "yes, ok, I'll have a look".

Knowing the likely shape of the build curve then determines, as shown in Diagram 1, what the optimal level of spend should be - the level of spend that produces the highest return per unit of spend.

But each media does not work independently. So our analyses also take into account actual and expected media interactions and synergies. So we know whether 1+1=2 or 3 or maybe 1.5. This enables us to know whether we should spend all the money on TV or some on TV, some on Radio and some on Digital and so on.

There are, of course, differences in strength of creative message that need to be accounted for. We do that by assessing the 'perceptual drivers' that determine consumer preferences for differing brands within a market and then evaluating (via media tracking or other consumer research data) how well your current marketing messages align your brand to those preferences. If what your brand delivers is well-aligned with consumer preferences then the more people will choose you as the solution to their needs. The general evidence on this is compelling and is a key cornerstone of building media models which are truly predictive of future customer/consumer behaviour.

Similar mechanisms are at play in the way that social media affect sales performance. The key difference is that, unlike traditional advertising, there are both positive and negative message streams, each of which are judged in a relative context by consumers. However, the information they receive is processed in a similar manner to advertising with information that aligns your brand more strongly with the key perceptual choice drivers increasing preference for your brand and that which doesn't weakening it.

Understanding the shapes and positions of these uplift curves, both by media and in total, is therefore the key expertise that we bring to your decision making. The key factors determining them include:

and other aspects often specific to individual media (e.g. repeat and secondary readership; on-line search behaviour; and so on).

Some of these key determinants, like reach and frequency, are purely factual and are driven by audience size, publications or sites used and so on. Others, like the message content described above are emotional.

Our modelling therefore combines the volumes of communications (ie numbers of people exposed) with the strength of the messaging and it's likely impact on consumer preferences, positive or negative. The effect these changes are having on actual behaviours can then be calibrated using actual historical data.

The final outcome is a chart like the one shown in Diagram 1 where you can see the relationship between "Effective Net Media Weight" (the appropriately combined total of your differing media activities) and the resulting sales uplift.

From this information we can establish the best:

needed to achieve differing sales targets. We are also able to derive the optimal spends for a given campaign messages / campaign types.

Step 2: Validate the Sales Gain

Having predicted the sales gain you will get from optimising your marketing communications budget, we will then design a statistically robust in-market test to enable you to see for yourself what difference it makes. Whilst not an essential step, it is used either to further verify any aspects for which the available historical evidence is weak on and/or verify the gains without putting all your sales at risk.

Our tests are specifically designed to provide you with unambiguous proof either that the recommended approach is best or, if there are points that require greater validation which the test is designed to deliver, unambiguous evidence to e used to confirm or adapt the plan as required.

Step 3: Replicate the Sales Gain

This is then the roll-out phase that can take place either directly after Step 1 or after Step 2. It is also the phase where the same approach is used for other brands, other categories, other markets and so on, having proved the approach in the prior stages.

Benefits

The benefit from our MMM service is typically worth the equivalent of adding 15% to your marketing communications budget, and the value to your organisation in terms of sales and profits can be many times this amount.

For example:

- a major supermarket used our modelling to add over £50m in sales and £9m in profits to their direct marketing campaigns by using our approach to optimise the timing and messaging of their multi-product category marketing budget

- a major online and telephone banking service used Step 2 of our 3 Step approach to design a multi-media and multi-regional communications test that would yield unambiguous answers as to what the optimal campaign mix should be. The net result was an increase in the effectiveness of their campaign budget equivalent to spending an additional £3m on media - a more than 30% efficiency gain and hence a 30% increase in the volume of sales they got for the same media spend

- a multi-channel office supplies company was using TV media for the first time and wanted to understand the returns from that investment and how messaging via differing channels (TV, Press, Poster, Radio, PR, Catalogues, Email, Online Display, Search, and Affinity Partnering) worked together to generate sales. Our Step 1 service enabled them to know how each of these media were working individually and in combination to drive sales forward and enabled them to double the effect their spend was having I terms of sales uplift. Evaluations and planning of the media campaigns have now been using this service to good effect for over 3 years.

And we have many similar case studies covering a wide range of markets.

Process

To take advantage of our service usually requires an initial Feasibility Study and Assessment of Potential Sales Gain. This is a low cost analysis lasting for 3-4 weeks and its purpose is to establish the available data sources, size of task, project resources required and expected size of prize. It enables us to judge how big and what tasks are needed within the detailed analytical and modelling phase to obtain the required relationships and whether scope exists to improve on the existing allocations.

Assuming the gains are worthwhile (which typically means exceeding project costs by at least a factor of 10:1) then the work continues onto Step 1 of our three step programme outlined earlier.

It is also the case, however, some clients prefer to move directly to the teasing phase. Typically this is in cases where the size of prize is potentially very large but the amount of historical data available is not sufficient to permit any analyses to be done up-front. The test is then designed, as was the case for the financial services company mentioned above, to generate the evidence and provide unambiguous answers.

The final step, Replicating the Gain, typically involves planning and seminars, using the results already obtain from either or both of Steps 1 and 2 to leverage the learnings cross the business.