BaseDynamics Marketing Mix Modeling & Optimal Budget Allocation
Challenge
- A global electronics brand was a pioneer in manufacturing LED HD TV panels and wanted to understand the effectiveness of their marketing budget that covered in-store merchandising, pricing offers and a wide range of off and online media investments.
- They were particularly interested into the short-and long-term impact of their marketing activities and how to strategically balance both.
- Building on the results, the brand then wanted to optimize spend over the next series of innovation planning cycles and forecast future sales performance.
Solution
- To answer these questions, the client leveraged the Marketscience BaseDynamics marketing mix modeling approach, combining regression with the power of time series econometrics.
- Marketscience managed a rigorous data collection program to amass five years of daily marketing spend, sales, in-store and consumer experience tracker data covering both the current and prior product innovations.
- The Dynamic MMM model identified the marketing tactics that had either a short- or a long-term impact and also identified those that impacted both, for the following activities:
- Point of sale marketing
- Online paid search, social, display advertising and video
- Traditional offline TV and print media
- Pricing & promotions
The insights were then used to make recommendations on future budget optimizations and forecast likely sales outcomes.
Results
We provided the brand with:
- A clear ranking of marketing initiative effectiveness based on historical ROIs
- Granular understanding of which marketing configurations - timing, spend amounts, media types - drove the best short- and long-term returns
- Optimization of marketing budgets for the upcoming year resulting in ~10% increase in revenue for the same marketing budget
- Drivers of brand evolution and a clear view into how consumer brand perceptions and experience drives long-term brand performance
- Sales forecasts simulating the impact of alternative levels of media and promotional investments. This allowed our client to optimally manage product inventory, facilitating the supply chain planning process
