Challenge
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Being faced with stiff competition in the airline industry and increasing fuel prices, this global airline needed a deeper understanding of the performance of their marketing budgets and how to position themselves in the marketplace.
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Given the long-term investment requirements of opening new flight routes it was even more important for this airline to understand the drivers of long-term consumer demand and how to support it with effective marketing.
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The client specifically wanted to understand the impact of both internal and external drivers to determine the relative contribution of both brand and performance campaigns on short-term sales and long-term base growth.
Solution
- The Marketscience Base Dynamics modeling approach was leveraged within our Studio platform to identify the impact of internal and external drivers on flight bookings and revenue and determine the short-term and long-term ROI of marketing investment.
- A model structure was developed for the US market across four main departure regions, four sales channels and two seat classes.
- A number of intermediate and ultimate effects models were developed to identify and quantify the complex consumer journey of searching for and buying a flight ticket across online and offline touchpoints.
Results
- The client leveraged the optimization features of the Marketscience SimOpt tool to compare budgets that were optimized for short- versus long-term returns to understand the differences in channel allocations.
- To drive the relevant consumer perceptions supporting longer-term demand required an increase in social and online video investments as compared to prior short-term focused allocations.
- +10% improvement in effectiveness due to long-term optimization.
Implementation
- The Marketscience team worked with various stakeholder groups across the business to socialize the results and help them incorporate recommendations into future marketing and media decision-making.
- The model structure was then evolved further to better integrate the impact of dynamic pricing and to glean insights on the interaction between marketing, brand strength and price elasticity.
What We Did
- Dynamic Marketing Mix Modeling
- SimOpt.Studio Budget Optimization
