The raison d’etre for the majority of Market Mix Modelling agencies is to calculate the marketing return on investment, or MROI.  Gain Theory takes a different approach – knowing the ROI is nice, but does little to solve the pain points of our customers –how to optimize marketing investment, the allocation between media channels and to ensure that all touchpoints are working coherently.

As one Marketing VP recently said in an independent CMO survey: “MMMs provide some insight into making better investments, but that is still fairly one dimensional”.

Because we start from a different position – dynamic improvement rather than static reporting – our approach is also different.

The common approach to media impact

By far and away, the most common approach to estimating the impact of media is to use an ad stock.  This may largely be seen as taking the ratings that your target audience had an opportunity to see and then decaying them.  Using a decay allows the media to be tested for an immediate effect, as well as an impact over the medium and longer term.

Now, this approach is fine if you are only concerned with identifying the ROI.

But it says nothing about wastage and it gives little insight into weekly phasing or even where diminishing returns begin to set in.  This is because a rating has little definitive to say about the chances of your target audience hearing or seeing an ad.

Ratings are a trading currency.  Nothing more.

Consider a simple example.  What do 20 TV ratings actually represent from a viewing perspective?  It could mean that 20% of your target audience have had an opportunity to see (OTS) one exposure.  Or it could mean that 10% are at 2 OTS.  Or some other combination.  On its own, it is impossible to say.  As ad stocks are based on this rather ambiguous metric, they have little to say about the level of reach or frequency required to drive improvements in your ROI.

Our tried and tested AdModel approach is much more forward thinking and considers five key parameters that provide key information for all stakeholders.

  1. Effective Frequency    
    How many exposures need to be seen to trigger a response?
  2. Recency Frequency    
    How many exposures need to be close to the purchase?
  3. Recency Window    
    What do we mean by ‘close’ – a week? 2 months?
  4. Memory Decay    
    How long is the exposure remembered?
  5. Habit       
    Is there repeat purchase?

The fifth parameter – Habit – describes the long term impact of converting new users – basically a measure of trial and repeat.  They may be completely new to the brand, or they may be existing users for who marketing has helped them discover new opportunities for use.

Going beyond ROI to help marketers take action

Identifying the first four parameters defines the budget required, the phasing strategy, and optimal investment.  For example, knowing that for your brand consumers need to see 4 exposures, 2 of them in the last 7 days throws up a completely different approach than if consumers just need 2 exposures, just 1 of which can be seen anytime within 2 weeks of the purchase decision.

Planning on norms, benchmarks and experience can lead to some serious inefficiencies.  Let’s look at the following simple example.

base plan to optimised plan

ratings alternative plan

The base plan from the agency seemed OK – continuity was deemed important, and running with a broadly constant level of weight.  However, the AdModel tells us that, to trigger a response from those active in the market, we need:

admodel table

Using this insight we can deliver a 30% increase in the ROI.  Based on science, not hunch.

As you can see, some big improvements in efficiency, just by understanding how media is working for you.  And this is for just one channel – the same efficiencies can be seen across the media and marketing mix.

This approach has been tested across all verticals and across all continents.  If you want to move away from reporting just an ROI to dynamically improving your marketing investments, it’s time to rethink your approach.

REGISTER FOR PREMIUM CONTENT AND UPDATES

Register to automatically receive the latest industry news, thoughts and trends, and gain access to premium content.
Or to login.

WORK WITH US

Find out how we can help, demo our products and get more information about our global cross-sector experience.
CONTACT

JOIN US

If you think you have what it takes to make a difference at Gain Theory, please check out our careers page.
CAREERS

We all thought Google had injured paid search as we know it.

The company rolled out significant changes to its desktop Search Engine Results Page (SERP) layout last year. Essentially, it removed the sidebar of paid search results to the right of the page, leaving paid search with up to four ads at the top and three new added ads at the bottom of the page, leaving organic search sandwiched in the middle.

The sidebar change caused much panic among search marketers, who anticipated an increase in costs due to the reduced inventory, but some months in, there seems to have been minimal impact in cost. However, there is a casualty: paid search’s overlooked counterpart, Organic Search (SEO). Now pushed further down the page, reduced and generally maligned, it’s caught between two big paid search slices.

The SERP changes were followed by the arrival of extended text ads, arguably the most significant change in many years, which gave advertisers double the characters available. It was designed for mobile experience and the name of the game is now making sure you are taking better advantage of the longer ads than your competitors. This often means knowing when not to use them, but generally speaking, more text should equal more information to searchers, more pertinent responders and thus better Click Through Rates (CTRs) and conversions.

The quest to improve paid search has diminished the real estate for organic search results. And there is a less noticeable consequence: as traffic through free Organic Search decreases and is replaced by traffic through paid ads, there is actually a decrease in the incremental impact of Paid Search.

What do I mean by this?  Paid Search incrementally is the proportion of visits to a site, coming through the paid search channel, which disappears if the search ad doesn’t run. Incrementality excludes visits coming from alternative channels. A large factor in incrementality is the likelihood of getting to a site in the absence of a paid ad.

Every action that Google takes to expand Paid moves traffic away from Organic. This is a zero sum game for visits: the same number of people are making searches, arriving at the SERP, but are ever more likely to click a paid ad. Marketers are paying for a proportion of clicks that would have come anyway via organic. Paid Search is cannibalizing clicks from Organic Search.

This cannibalization has always been happening, but it is a growing and becoming a bigger problem for the advertiser. Google has addressed this by suggesting the cannibalization is small. It calculates that only 8 percent of paid ads have an associated organic ad on same page, but that still doesn’t address a number of key issues.

Firstly, the scope for direct cannibalization may be smaller across all paid ads but it will be larger for the bigger brands that have a strong organic ranking.  Secondly, it does not take into account indirect cannibalization. Paid search is usurping more traffic from Organic on the whole.

At the individual advertiser and SERP level, one brand’s PPC ad is stealing clicks from another brand’s Organic ad, whose own PPC ad is stealing from yet another’s SEO. There are winners and losers, but indirect cannibalization is difficult to quantify. One thing for sure is Paid is improving at the cost to Organic and delivers “less bang for your buck.”

Search can be a zero-sum game. The silent decline of SEO is matched by an increase of Search Engine Marketing. It’s generating a revenue boost for Google, but at the expense of everyone else. The more paid search, the more advertisers will pay for what was once free.

Article originally published by Campaign here

 

 

Digital marketing channels today are divergent – search, video, social, display, email, mobile – the list goes on. Marketers have a myriad of options to choose from to reach consumers to hit KPIs. But the biggest challenge is understanding which digital media work best…and how to optimize those.

The holy grail of many brands today is establishing which digital investment gets the credit for delivering a conversion event. Where should we spend our money? What can we cut from the budget? How? When?

As more media is bought digitally, more data is produced and with that comes an ability to measure effectiveness at a granular level.

The future is increasingly connected and for some big digital advertisers, requires the right measurement solution.

Digital Attribution can provide the right measurement and optimization solution. But you need the right tools and conditions to do so and what’s more – it’s not for everyone.

We have compiled an 8 Step Guide to Digital Attribution to help navigate marketers through the subject and understand whether it’s a journey they want to embark on.

The 8 steps are:

  1. Significant Digital Media Spend
  2. A Clear Online KPI
  3. A Skilled Team of Data Scientists
  4. The Right Purpose
  5. The Ability to Optimize Quickly
  6. The Right Data Set-Up
  7. Unified Digital Tracking
  8. The Right Methodology

You can read the in depth article published in AdMap, by downloading the article on the top right hand corner of this page.

Or

Visit our digital-attribution.com website to view the video.

 

AI and voice recognition promise to accelerate consumer adoption of smart devices, writes the global CEO of Gain Theory.

Last year, CES was most aptly described as more of an evolution than revolution. The reverse is true in 2017. This year’s event was a complete game-changer. Behind the high-profile, attention-grabbing gadgets is a very clear commentary on how voice recognition, artificial intelligence and smart technology have combined to irrevocably change the relationship between brand and consumer for the better.

“Smart” was the prevailing theme at this year’s event—and I saw (and heard) it everywhere. From lightbulbs to toasters and TVs to vacuum cleaners, the devices on display didn’t just “do”—they thought. Smart devices themselves are not the real game changers here. It is AI and, in particular, voice recognition, which promise to accelerate consumer adoption.

Relevance, ease-of-use and trust have all been barriers to consumer adoption and, until recently, many smart devices were controlled by a smart phone. The ability to turn lights on and off via a smartphone has been around for some time but not necessarily widely adopted. Frankly, why get off the sofa to grab your smart phone to turn off the lights when there’s minimal additional effort to simply walk over to the light switch? Voice recognition was the crucial missing component—and it was all over CES.

So it wasn’t surprising that Amazon’s Alexa stole the show.

Next generation smarter devices
With seven microphones embedded into the Echo device and machine learning at scale with automated speech recognition, Alexa’s response is almost instantaneous in helping to control lights, thermostats, door locks, sprinkler systems and even order an Uber at the command of voice. Amazon has opened up Alexa for integration using a free API and, according to GeekWire, Alexa now has over 7,000 “skills” (Amazon’s word for integrations) from just a 1,000 in June 2016. With reportedly 5 million units of Echo sold to date and fast growing integration of Alexa with other devices, the ease of use and relevance of smart devices is likely to accelerate consumer adoption with some predicting that 2017 will be the year smart home goes mainstream.

On another front, traditionally non-tech brands are moving into the smart device market, partnering with tech creators to fashion an array of new products. For example, Hair Coach, the world’s first smart hairbrush, is a collaboration between Kérastase (part of the L’Oréal Group) and Withings, who bring sensor technology and app connectivity to everyday products. The brush has microphones that pick up on various audible cues on the state of your hair and shares its data via a mobile app.

There were also a multitude of toys and educational devices for children. Fisher Price announced its intent to launch a high-tech exercise bike for toddlers and Lego announced a robot-making toolkit for kids. Lego’s “Boost” toolkit enables children ages seven and up learn to code and build robots, bringing their creations to life by adding movement, sound and personality.

Manufacturers as maintenance managers
Until recently, retailers held the keys to unlocking direct conversations with consumers. Having a detailed understanding of customers purchasing habits and demographics have helped them to communicate one-on-one with consumers, build strong relationships and increase future sales.

Manufacturers, on the other hand, have remained relatively in the dark beyond the number of units distributed, relying on third parties to help inform them of the end sales volumes, pricing and demographics of customers. The advent of smart technology has the potential to change that by enabling the manufacturer to gain a deep understanding of customer behaviour after the product has been purchased (assuming the customer grants permission). Smart fridges will automatically reorder items when they run out. Automotive manufacturers will know when your journey cannot be completed with your current fuel levels and alert you when driving to your nearest/most convenient/cheapest gas station.

Implications to marketers
Smart devices with voice recognition and AI will not just dramatically change the way in which consumers interact with computers, but also the way in which brands market to and build relationships with consumers due to the vast increase in data and resulting insights.

Retailers of consumer electronics, manufacturers, energy providers, telco operators and others will have a real opportunity to build even stronger relationships with customers by helping them to navigate the smart home. Joining up all the devices, ensuring strong security, diagnosing and solving problems for consumers as they integrate new technology as well as providing on-going subscription based support will strengthen brand relationships if done at a level that results in surprise and delight.

Machine learning, the ability to process data at scale and make intelligent decisions and recommendations in real-time will require a different approach to marketing in the future.

On its 50th anniversary, CES has indeed (re)found its voice and it’s clear that there’s a major step change in the technology we interact with every day, with voice recognition likely to be the biggest revolution in our lives since the smart phone.

Manjiry Tamhane is the global CEO of Gain Theory.

Article originally published by Campaign US  here

 

 

The latest IAB digital ad spend results have been released. In it is revealed the fact that in the UK paid search is now the largest advertising sector, above TV and even programmatic display.

It appears as though the constant Google algorithm changes have managed to drive even more money into the pockets of Alphabet and their investors.

But is paid search really advertising at all?

In the old days, before the internet, if you wanted a pair of shoes you’d go to town, find a shop which sells shoes, and buy them. You might know you wanted a pair of Clarks shoes, or you might spend a bit of time to peruse a number of shops. Shops would spend money on rent, staff, store frontage, and a number of other tangibles to ensure they got your business. But this would never be included in a marketing budget.

Now, you go online, go to clarks.com or search for clarks, or you search for shoes (you might specify a colour, or a size, or a type… whatever). The point is, none of this is new, it’s just a way of doing online what we’ve previously done in the past. You either know what you want and go straight to it, or you shop around a bit and eventually get what you want.

The best advertising is about creating a demand for a product or a brand. Paid search does not create demand, it converts it. And whilst this is important, I would argue it’s not advertising.

With budgets about to be squeezed again in the UK due to Brexit bringing with it price pressure this could be an important argument for brands to have.

What do you think? Agree, disagree, or simply don’t believe this is important? I’d love to hear your thoughts – email me at matthew.chappell@gaintheory.com 

© Gain Theory 2017. All rights reserved.