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W10_MarketingAnalytics_Ch10_PromotionAnalytics.ppt

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Anil Tiwari
Anil Tiwari

This document provides an overview of promotion analytics, including estimating total promotion budgets, allocating budgets across promotion vehicles, and evaluating traditional and social media metrics. It discusses popular promotion methods, budget estimation techniques like percentage of sales and competitive parity, and using linear optimization models to allocate budgets across channels while maximizing objectives under constraints.

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Chapter 10. Promotion Analytics Disclaimer: All images such as logos, photos, etc. used in this presentation are the property of their respective copyright owners and are used here for educational purposes only Some material adapted from: Sorger, Stephan. Marketing Analytics: Strategic Models and Metrics. Admiral Press. 2013. 1
Outline/ Learning Objectives Topic Description Estimation Explain how to estimate the total promotion budget Allocation Describe how to allocate promotion budget across vehicles Traditional Address performance metrics for traditional media Social Describe tracking metrics for social media 1
Popular Promotion Methods Public Relations Radio Advertising Search Engine Marketing Social Networking Sites Television Advertising Direct Marketing Events and Experiences Internet Advertising Location-based Social Print Advertising Promotion Apple: Email ads Jeep: Sponsor of X Games Radio Shack: Ads on Yahoo! Foursquare: Local restaurants Maybelline: Ads in Vogue Royal Mail: Picked up stories Motel 6: Car travelers Lowes: PPC Ads for washers Facebook, LinkedIn, Twitter GEICO: Many TV ads 1
Promotion Popular Promotion Methods Public Relations Radio Advertising Search Engine Marketing Social Networking Sites Television Advertising Direct Marketing Events and Experiences Internet Advertising Location-based Social Print Advertising Apple: Email ads Jeep: Sponsor of X Games Radio Shack: Ads on Yahoo! Foursquare: Local restaurants Maybelline: Ads in Vogue Royal Mail: Picked up stories Motel 6: Car travelers Lowes: PPC Ads for washers Facebook, LinkedIn, Twitter GEICO: Many TV ads 1
Promotion Analytics: Promotion Budget Estimation Promotion Budget Estimation Competitive Parity Objective and Task Model-based Percentage of Sales Affordable Set budget as % of annual revenue LegalZoom: 9 12% of annual sales Set budget to what you can pay Recession spending: Slash budget Set budget to match competitors GM, Ford, Chrysler: Match spending Set budget to achieve objectives CPG: Common in B2C market Set budget using models Best for stable situations 1
Promotion Budget: Percentage of Sales Promotion Budget Promotion Budget = % of Revenues Annual Revenue Description: Set budget as a percentage of company annual revenue Example: LegalZoom estimates that many businesses spend 9-12% Sample Calculations for Acme Example: Acme generated $100,000 in revenue in the previous year If they apply 10% to promotion, promotion budget: 10% * $100,000 = $10,000 1
Promotion Budget: Affordable Method Promotion Budget Leftover funds go to promotion Company Funds Description: Set budget to whatever the organization can afford Example: During recession, many companies slashed marketing spending Sample Calculations for Acme Example: Acme budgets $20,000 for all expenses After spending $18,000 on rent, etc., $2000 left for promotional expenses 1
Promotion Budget: Competitive Parity Promotion Budget Promotion Budget for Company Promotion Budget of Competitor Description: Set budget to match what competitors spend Example: Big 3 auto makers (GM, Ford, Chrysler) match spending levels Sample Calculations for Acme Example: See next slide 1
Promotion Budget: Competitive Parity Promotion Vehicle Cost per Ad Quantity Subtotal Print Magazine Ads $1,000 30 $1,000 * 30 = $30,000 Radio Commercials $5,000 20 $5,000 * 30 = $100,000 Television Commercials $10,000 10 $10,000 * 10 = $100,000 Total Spending $230,000 1
Promotion Budget: Objective and Task Market Share Goal Advertising Reach Trial Rate Customer Count Advertising Impressions Gross Rating Points Advertising Budget 1 Common for Consumer Packaged Goods (CPG): Example: Market Share Objective: Plans to achieve 10% in category of 40 million potential users 10% * 40 million = 4 million users Advertising Reach: Plans to reach 80% of potential users 80% * 40 million = 32 million people Trial Rate: Plans to have 25% of informed prospects try the product 25% * 32 million = 8 million people Customer Count: 50% who those who try it become customers 50% * 8 million = 4 million people Advertising Impressions: Exposures to advertisements 30 impressions over 4 week campaign for 25% trial rate for each 1% of population Gross Rating Points: GRP = 1 exposure to 1% of target population 30 impressions * 80% = 2400 GRP Advertising Budget: Cost of Gross Rating Points (CPP) CPP in Acmes area = $1800/point; Budget = 24900 * $1800 = $4320,000
Promotion Budget: Model-Based Method Description: Set budget according to decision model Example: ADBUDG model used for stable, traditional markets Sample Calculations for Acme Example: -Estimate market share for each of four conditions: -Zero level advertising -Maintenance level advertising -50% boost advertising -Saturation level advertising -Build advertising effectiveness curve (model) based on those four points -Predict market share given a proposed level of spending 1
Market Response Model 1 A market response model describes how the targeting market would respond (outputs) to different levels of marketing activities (inputs). E.g., if we put $x in advertising, how much sales ($y) we may expect as the result If we know the market response to different marketing activities, we can optimize resource allocation. E.g., Allocate an optimal level of ads input in market A Optimize the ads resources across market A, B, and C Optimize the resources allocated for ads and promotion,
Market Response Model System Marketing Actions Inputs Competitive Actions Observed Market Outputs Environmental Conditions Objectives Market Response Models Product design, price, advertising, selling effort, etc. Awareness level, preference level sales Level, etc. Evaluation (5) Control Adaption (6) (1) (4) (2) (3)
Market Response Model for Advertising (Market A) Sales Dollars per 1,000 Persons per Year Advertising Dollars per 1,000 Persons (in the target population) per Year Saturation advertising Zero advertising Current ad level If increase 20% ad
Market Response Model for Advertising (Market B) Sales Dollars per 1,000 Persons per Year Advertising Dollars per 1,000 Persons (in the target population) per Year Saturation advertising Zero advertising Current ad level If increase 20% ad
ADBUDG Response Function Coming from data Parameters we want to estimate
ADBUDG Response Function
Promotion Allocation Linear Optimization Model INPUTS OUTPUTS Objective Function Constraints Maximized Objective Or Minimized Objective 1
Promotion Allocation: Linear Optimization Process Vehicle Contribution: Determine effectiveness of campaigns, based on historical data Promotion Objective: Declare promotion objective in equation form Promotion Constraints: Specify promotion constraints in equation form Optimization Model: Execute model Vehicle Contribution Promotion Objective Optimization Model Promotion Constraints Promotion Data Budget Allocation 1
Promotion Allocation: Constraints Contractual Constraints Company Policy Constraints Financial Constraints Legal Constraints Typical Promotion Constraints Budget NTE (not to exceed) $XXX/yr Must follow legal regulations Contracts with outside agencies Observe company policies 1
Promotion Allocation: Example Direct Marketing: Emails sent directly to individuals within target market Pay Per Click: Campaigns displaying ads during relevant Internet searches Social Media: Paid advertisements on social media platforms Promotion Vehicle Audience/Ad Cost/Ad Maximum Quantity D: Direct Marketing 30 Viewers/Ad $30/Ad 30 P: Pay Per Click 30 Viewers/Ad $40/Ad 20 S: Social Media 40 Viewers/Ad $60/Ad 10 1
Promotion Allocation: Example Objective Function Z = 30 * D + 30 * P + 40 * S The equation applies the following variables: Z = Our objective, in this case the total number of impressions from all promotion vehicles. D = Quantity of direct marketing campaigns to run, given that each direct marketing campaign results in 30 viewers per advertisement. P = Quantity of pay per click campaigns to run, with 30 viewers per campaign. S = Quantity of social media campaigns to run, with 40 viewers per campaign Linear Optimization Element Equation Objective Function Z = 30*D + 30*P + 40*S Constraint #1: Budget B = 30*D + 40*P + 60*S <= $2,000 #2: Maximum campaigns/ month: D D <= 30 #3: Maximum campaigns/ month: P P <=20 #4: Maximum campaigns/ month: S S <= 10 1
Promotion Allocation: Example Promotion Constraints B = 30 * D + 40 * P + 60 * S $2,000 The equation applies the following variables: B = Our monthly budget D = Quantity of direct marketing campaigns, which cost $30 each to run. P = Quantity of pay per click campaigns, which cost $40 each to run. S = Quantity of social media campaigns, which cost $60 each to run. = Inequality sign, indicating that we may not exceed our maximum budget. Linear Optimization Element Equation Objective Function Z = 30*D + 30*P + 40*S Constraint #1: Budget B = 30*D + 40*P + 60*S <= $2,000 #2: Maximum campaigns/ month: D D <= 30 #3: Maximum campaigns/ month: P P <=20 #4: Maximum campaigns/ month: S S <= 10 1
Promotion Allocation: Example Promotion Constraints D 30: Cannot exceed 30 direct marketing campaigns per month P 20: Cannot exceed 20 pay per click campaigns per month S 10: Cannot exceed 10 social media campaigns per month Linear Optimization Element Equation Objective Function Z = 30*D + 30*P + 40*S Constraint #1: Budget B = 30*D + 40*P + 60*S <= $2,000 #2: Maximum campaigns/ month: D D <= 30 #3: Maximum campaigns/ month: P P <=20 #4: Maximum campaigns/ month: S S <= 10 1
Promotion Allocation: Optimization Model Optimization Model: Setup Optimization Model: Execution Optimization Model: Interpretation Excel Solver function Specific format Identify limiting factors 1
Promotion Allocation: Setup Changing Cells Target Cell 30 30 40 Constraint #1: Budget 30 40 60 Constraint #2: D 30 1 Constraint #3: P 20 Constraint #4: S 10 1 1 D P S Columns for D, P, and S parameters Changing cells for D, P, and S Target Cell (Contains objective equation) Constraint, Left Side (Contains constraint equation) Constraint, Right Side (Contains constraint value) a b c d e f g h i j k l A B C D E F 1 2 3 4 5 6 7 8 9 1
Promotion Allocation: Execution Excel Home Data Solver A B C D E F G 1
Promotion Allocation: Execution Solver Parameters Set Target Cell: Solve Options Equal To: Max. Min. $E$4 By Changing Cells: Subject to the Constraints: $B$2: $D$2 $E$6 <= $F$6 $E$7 <= $F$7 $E$8 <= $F$8 $E$9 <= $F$9 Add Add Constraint Cell Reference: OK $E$6 <= Constraint: =$F$6 1
Promotion Allocation: Execution Changing Cells Target Cell 30 30 40 Constraint #1: Budget 30 40 60 Constraint #2: D 30 1 Constraint #3: P 20 Constraint #4: S 10 1 1 D P S Columns for D, P, and S parameters Changing cells for D, P, and S Target Cell (Contains objective equation) Constraint, Left Side (Contains constraint equation) Constraint, Right Side (Contains constraint value) 30 20 5 170 0 200 200 30 30 20 20 5 10 A B C D E F 1 2 3 4 5 6 7 8 9 1
Promotion Allocation: Interpretation Solver Results: Constraints Solver Results: Summary Promotion Vehicle Solver Result Cost/Ad Total Cost per Vehicle D: Direct Marketing 30 (30 max.) $30/Ad $900 P: Pay Per Click 20 (20 max.) $40/Ad $800 S: Social Media 5 (10 max.) $60/Ad $300 Total Spending $2,000 Promotion Vehicle Solver Result Max. Allowable Status D: Direct Marketing 30 30 Binding P: Pay Per Click 20 20 Binding S: Social Media 5 10 Not Binding Budget $2,000 $2,0000 Binding 1
Promotion Metrics for Traditional Media Cost Per Thousand Cost Per Point Impressions Gross Rating Points Target Rating Points Promotion Metrics: Traditional Media Frequency Reach Vogue: Circulation 1.25M # Exposures/ individual/ time Reach * Frequency Exposure level of ad to target Popular budgeting number Equivalent to exposures 1
Promotion Metrics for Traditional Media Frequency = # exposures per individual in target market over given time period Reach = size of intended audience targeted by promotion Reach Exposure 1: What is it? Exposure 2: What of it? Exposure 3: Should I buy it? Reach Frequency GRP Gross Rating Points GRP = Reach * Frequency 1
Promotion Metrics for Traditional Media Vogue: %College * %Employed * %Female = 64% * 64% * 89% = 36.5% Elle: %College * %Employed * %Female = 70% * 67% * 87% = 40.8% Target Rating Points = (Target Audience) / (Total Audience) * Gross Rating Points = 36.5% * 50 = 18.25 Target Rating Points Audience Data Vogue Elle Total Audience 11,398,000 6,302,000 Circulation 1,250,000 1,145,000 Gender: Female % 89% 87% Education: Any College 64% 70% Employed 64% 67% TRP Target Rating Points GRP Gross Rating Points Target Audience Total Audience Exposure level of ad to the target market 1
Promotion Metrics for Traditional Media Vogue Example: Circulation = 1.25 million people 4-Color Ad Cost = $165,000 CPM = (Cost of Media Buy) / (Target Audience / 1,000) = ($165,000) / ( 1.25 million / 1,000 ) = $132 CPM (Cost Per Thousand) Cost of Media Buy ($) Target Audience (in 1000s) 1
Promotion Metrics for Traditional Media Cost per Point Calculations: Vogue and Elle print magazines CPP (Cost Per Point) Cost of Media Buy ($) Vehicle Rating Magazine Cost/ Ad Circulation CPM Rating CPP Vogue $165,000 1,250,000 $132 36.5 $4,520 Elle $148,000 1,145,000 $129 40.8 $3,627 1
Promotion Metrics for Social Media Source Social media conversion sources and events Blog Subscription Prospect signs up to be notified of new blog posts Call Back Requests Prospect requests callback Contact Forms Prospect enters information and clicks Submit Content Downloads Prospect requests download of report or other content Contest Entry Prospect enrolls in contest by filling out form Demo Signup Prospect signs up for live demo or other event Live Chat Prospect engages in live dialog with company agent Purchase Prospect places online order for product or service Subscriptions Prospect requests subscriptions to newsletters User Registration Prospect registers to receive ongoing access Video Viewing Prospect watches featured video on website Webinar Signup Prospect signs up for web-based seminar 1
Promotion Metrics for Social Media Social media measurement tool categories Category Description, Target User, Example Built-in Tools Metrics capabilities included with social media application Target: Small businesses or personal use Example: Metrics within Facebook, LinkedIn, Twitter Aggregators Combines metrics from multiple sources Target: Small businesses Example: Hootsuite, Klout, SocialMention Professional Provides deep dive into significant data Target: Dedicated social media professional Examples: Cision, Cymfony, Radian6, ScoutLabs 1
Promotion Metrics for Social Media Social media measurement tools: Native (built-in) tools Vehicle Sample Measurement Capabilities Facebook Fans: Total fans; New fans; Removed fans Subscribers: Un-subscribers; Re-subscribers Interactions: Total number of comments; Wall posts LinkedIn Personal account, standard: Profile views Personal account, Business Plus: Traffic sources LinkedIn Groups: Total members; New postings Twitter Number of followers; Number of followings; Number of tweets YouTube Views: Total views; Unique viewers Popularity: Relative popularity; Top videos Hot Spots: Viewership compared to other same-length videos 1
Promotion Metrics for Social Media Social media measurement tools: Aggregators Tool Sample Measurement Capabilities Hootsuite Social media dashboard to manage & measure social networks Tracks brand mentions and analyzes social media traffic Klout Estimates level of influence based on data from Facebook, etc. Displays list of most influential followers Socialmention User-selected sources: Facebook, Twitter, YouTube, etc. Social media insight: Strength, Sentiment, Passion, Reach 1
Promotion Metrics for Social Media Social media measurement tools: Professional-level tools Tool Sample Measurement Capabilities Cision Tailored to public relations, marketing, and media relations Includes media monitoring and other PR tasks Cymfony Social media monitoring and analytics Acquired by Visible Technologies in 2012 Radian6 Social media dashboard and console Acquired by Salesforce.com in 2011 Scout Labs Scans Web, analyzes data, identifies trends Acquired by Lithium in 2010 Techrigy Searches Web and analyzes data for relevant trends Acquired by Alterian in 2009 1
Promotion Metrics for Social Media Referral Level: Users refer to others Dialog Level: Users communicate Engagement Level: Users act Referral Dialog Engagement Viewer Viewer Level: Users view content 1
Promotion Metrics for Social Media Sample Metrics: Engagement Level 1
Promotion Metrics for Social Media Sample Metrics: Dialog Level 1
Promotion Metrics for Social Media Sample Metrics: Referral Level 1
Check for Understanding Topic Description Estimation Explain how to estimate the total promotion budget Allocation Describe how to allocate promotion budget across vehicles Traditional Address performance metrics for traditional media Social Describe tracking metrics for social media 1

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W10_MarketingAnalytics_Ch10_PromotionAnalytics.ppt

  • 1. Chapter 10. Promotion Analytics Disclaimer: All images such as logos, photos, etc. used in this presentation are the property of their respective copyright owners and are used here for educational purposes only Some material adapted from: Sorger, Stephan. Marketing Analytics: Strategic Models and Metrics. Admiral Press. 2013. 1
  • 2. Outline/ Learning Objectives Topic Description Estimation Explain how to estimate the total promotion budget Allocation Describe how to allocate promotion budget across vehicles Traditional Address performance metrics for traditional media Social Describe tracking metrics for social media 1
  • 3. Popular Promotion Methods Public Relations Radio Advertising Search Engine Marketing Social Networking Sites Television Advertising Direct Marketing Events and Experiences Internet Advertising Location-based Social Print Advertising Promotion Apple: Email ads Jeep: Sponsor of X Games Radio Shack: Ads on Yahoo! Foursquare: Local restaurants Maybelline: Ads in Vogue Royal Mail: Picked up stories Motel 6: Car travelers Lowes: PPC Ads for washers Facebook, LinkedIn, Twitter GEICO: Many TV ads 1
  • 4. Promotion Popular Promotion Methods Public Relations Radio Advertising Search Engine Marketing Social Networking Sites Television Advertising Direct Marketing Events and Experiences Internet Advertising Location-based Social Print Advertising Apple: Email ads Jeep: Sponsor of X Games Radio Shack: Ads on Yahoo! Foursquare: Local restaurants Maybelline: Ads in Vogue Royal Mail: Picked up stories Motel 6: Car travelers Lowes: PPC Ads for washers Facebook, LinkedIn, Twitter GEICO: Many TV ads 1
  • 5. Promotion Analytics: Promotion Budget Estimation Promotion Budget Estimation Competitive Parity Objective and Task Model-based Percentage of Sales Affordable Set budget as % of annual revenue LegalZoom: 9 12% of annual sales Set budget to what you can pay Recession spending: Slash budget Set budget to match competitors GM, Ford, Chrysler: Match spending Set budget to achieve objectives CPG: Common in B2C market Set budget using models Best for stable situations 1
  • 6. Promotion Budget: Percentage of Sales Promotion Budget Promotion Budget = % of Revenues Annual Revenue Description: Set budget as a percentage of company annual revenue Example: LegalZoom estimates that many businesses spend 9-12% Sample Calculations for Acme Example: Acme generated $100,000 in revenue in the previous year If they apply 10% to promotion, promotion budget: 10% * $100,000 = $10,000 1
  • 7. Promotion Budget: Affordable Method Promotion Budget Leftover funds go to promotion Company Funds Description: Set budget to whatever the organization can afford Example: During recession, many companies slashed marketing spending Sample Calculations for Acme Example: Acme budgets $20,000 for all expenses After spending $18,000 on rent, etc., $2000 left for promotional expenses 1
  • 8. Promotion Budget: Competitive Parity Promotion Budget Promotion Budget for Company Promotion Budget of Competitor Description: Set budget to match what competitors spend Example: Big 3 auto makers (GM, Ford, Chrysler) match spending levels Sample Calculations for Acme Example: See next slide 1
  • 9. Promotion Budget: Competitive Parity Promotion Vehicle Cost per Ad Quantity Subtotal Print Magazine Ads $1,000 30 $1,000 * 30 = $30,000 Radio Commercials $5,000 20 $5,000 * 30 = $100,000 Television Commercials $10,000 10 $10,000 * 10 = $100,000 Total Spending $230,000 1
  • 10. Promotion Budget: Objective and Task Market Share Goal Advertising Reach Trial Rate Customer Count Advertising Impressions Gross Rating Points Advertising Budget 1 Common for Consumer Packaged Goods (CPG): Example: Market Share Objective: Plans to achieve 10% in category of 40 million potential users 10% * 40 million = 4 million users Advertising Reach: Plans to reach 80% of potential users 80% * 40 million = 32 million people Trial Rate: Plans to have 25% of informed prospects try the product 25% * 32 million = 8 million people Customer Count: 50% who those who try it become customers 50% * 8 million = 4 million people Advertising Impressions: Exposures to advertisements 30 impressions over 4 week campaign for 25% trial rate for each 1% of population Gross Rating Points: GRP = 1 exposure to 1% of target population 30 impressions * 80% = 2400 GRP Advertising Budget: Cost of Gross Rating Points (CPP) CPP in Acmes area = $1800/point; Budget = 24900 * $1800 = $4320,000
  • 11. Promotion Budget: Model-Based Method Description: Set budget according to decision model Example: ADBUDG model used for stable, traditional markets Sample Calculations for Acme Example: -Estimate market share for each of four conditions: -Zero level advertising -Maintenance level advertising -50% boost advertising -Saturation level advertising -Build advertising effectiveness curve (model) based on those four points -Predict market share given a proposed level of spending 1
  • 12. Market Response Model 1 A market response model describes how the targeting market would respond (outputs) to different levels of marketing activities (inputs). E.g., if we put $x in advertising, how much sales ($y) we may expect as the result If we know the market response to different marketing activities, we can optimize resource allocation. E.g., Allocate an optimal level of ads input in market A Optimize the ads resources across market A, B, and C Optimize the resources allocated for ads and promotion,
  • 13. Market Response Model System Marketing Actions Inputs Competitive Actions Observed Market Outputs Environmental Conditions Objectives Market Response Models Product design, price, advertising, selling effort, etc. Awareness level, preference level sales Level, etc. Evaluation (5) Control Adaption (6) (1) (4) (2) (3)
  • 14. Market Response Model for Advertising (Market A) Sales Dollars per 1,000 Persons per Year Advertising Dollars per 1,000 Persons (in the target population) per Year Saturation advertising Zero advertising Current ad level If increase 20% ad
  • 15. Market Response Model for Advertising (Market B) Sales Dollars per 1,000 Persons per Year Advertising Dollars per 1,000 Persons (in the target population) per Year Saturation advertising Zero advertising Current ad level If increase 20% ad
  • 16. ADBUDG Response Function Coming from data Parameters we want to estimate
  • 18. Promotion Allocation Linear Optimization Model INPUTS OUTPUTS Objective Function Constraints Maximized Objective Or Minimized Objective 1
  • 19. Promotion Allocation: Linear Optimization Process Vehicle Contribution: Determine effectiveness of campaigns, based on historical data Promotion Objective: Declare promotion objective in equation form Promotion Constraints: Specify promotion constraints in equation form Optimization Model: Execute model Vehicle Contribution Promotion Objective Optimization Model Promotion Constraints Promotion Data Budget Allocation 1
  • 20. Promotion Allocation: Constraints Contractual Constraints Company Policy Constraints Financial Constraints Legal Constraints Typical Promotion Constraints Budget NTE (not to exceed) $XXX/yr Must follow legal regulations Contracts with outside agencies Observe company policies 1
  • 21. Promotion Allocation: Example Direct Marketing: Emails sent directly to individuals within target market Pay Per Click: Campaigns displaying ads during relevant Internet searches Social Media: Paid advertisements on social media platforms Promotion Vehicle Audience/Ad Cost/Ad Maximum Quantity D: Direct Marketing 30 Viewers/Ad $30/Ad 30 P: Pay Per Click 30 Viewers/Ad $40/Ad 20 S: Social Media 40 Viewers/Ad $60/Ad 10 1
  • 22. Promotion Allocation: Example Objective Function Z = 30 * D + 30 * P + 40 * S The equation applies the following variables: Z = Our objective, in this case the total number of impressions from all promotion vehicles. D = Quantity of direct marketing campaigns to run, given that each direct marketing campaign results in 30 viewers per advertisement. P = Quantity of pay per click campaigns to run, with 30 viewers per campaign. S = Quantity of social media campaigns to run, with 40 viewers per campaign Linear Optimization Element Equation Objective Function Z = 30*D + 30*P + 40*S Constraint #1: Budget B = 30*D + 40*P + 60*S <= $2,000 #2: Maximum campaigns/ month: D D <= 30 #3: Maximum campaigns/ month: P P <=20 #4: Maximum campaigns/ month: S S <= 10 1
  • 23. Promotion Allocation: Example Promotion Constraints B = 30 * D + 40 * P + 60 * S $2,000 The equation applies the following variables: B = Our monthly budget D = Quantity of direct marketing campaigns, which cost $30 each to run. P = Quantity of pay per click campaigns, which cost $40 each to run. S = Quantity of social media campaigns, which cost $60 each to run. = Inequality sign, indicating that we may not exceed our maximum budget. Linear Optimization Element Equation Objective Function Z = 30*D + 30*P + 40*S Constraint #1: Budget B = 30*D + 40*P + 60*S <= $2,000 #2: Maximum campaigns/ month: D D <= 30 #3: Maximum campaigns/ month: P P <=20 #4: Maximum campaigns/ month: S S <= 10 1
  • 24. Promotion Allocation: Example Promotion Constraints D 30: Cannot exceed 30 direct marketing campaigns per month P 20: Cannot exceed 20 pay per click campaigns per month S 10: Cannot exceed 10 social media campaigns per month Linear Optimization Element Equation Objective Function Z = 30*D + 30*P + 40*S Constraint #1: Budget B = 30*D + 40*P + 60*S <= $2,000 #2: Maximum campaigns/ month: D D <= 30 #3: Maximum campaigns/ month: P P <=20 #4: Maximum campaigns/ month: S S <= 10 1
  • 25. Promotion Allocation: Optimization Model Optimization Model: Setup Optimization Model: Execution Optimization Model: Interpretation Excel Solver function Specific format Identify limiting factors 1
  • 26. Promotion Allocation: Setup Changing Cells Target Cell 30 30 40 Constraint #1: Budget 30 40 60 Constraint #2: D 30 1 Constraint #3: P 20 Constraint #4: S 10 1 1 D P S Columns for D, P, and S parameters Changing cells for D, P, and S Target Cell (Contains objective equation) Constraint, Left Side (Contains constraint equation) Constraint, Right Side (Contains constraint value) a b c d e f g h i j k l A B C D E F 1 2 3 4 5 6 7 8 9 1
  • 27. Promotion Allocation: Execution Excel Home Data Solver A B C D E F G 1
  • 28. Promotion Allocation: Execution Solver Parameters Set Target Cell: Solve Options Equal To: Max. Min. $E$4 By Changing Cells: Subject to the Constraints: $B$2: $D$2 $E$6 <= $F$6 $E$7 <= $F$7 $E$8 <= $F$8 $E$9 <= $F$9 Add Add Constraint Cell Reference: OK $E$6 <= Constraint: =$F$6 1
  • 29. Promotion Allocation: Execution Changing Cells Target Cell 30 30 40 Constraint #1: Budget 30 40 60 Constraint #2: D 30 1 Constraint #3: P 20 Constraint #4: S 10 1 1 D P S Columns for D, P, and S parameters Changing cells for D, P, and S Target Cell (Contains objective equation) Constraint, Left Side (Contains constraint equation) Constraint, Right Side (Contains constraint value) 30 20 5 170 0 200 200 30 30 20 20 5 10 A B C D E F 1 2 3 4 5 6 7 8 9 1
  • 30. Promotion Allocation: Interpretation Solver Results: Constraints Solver Results: Summary Promotion Vehicle Solver Result Cost/Ad Total Cost per Vehicle D: Direct Marketing 30 (30 max.) $30/Ad $900 P: Pay Per Click 20 (20 max.) $40/Ad $800 S: Social Media 5 (10 max.) $60/Ad $300 Total Spending $2,000 Promotion Vehicle Solver Result Max. Allowable Status D: Direct Marketing 30 30 Binding P: Pay Per Click 20 20 Binding S: Social Media 5 10 Not Binding Budget $2,000 $2,0000 Binding 1
  • 31. Promotion Metrics for Traditional Media Cost Per Thousand Cost Per Point Impressions Gross Rating Points Target Rating Points Promotion Metrics: Traditional Media Frequency Reach Vogue: Circulation 1.25M # Exposures/ individual/ time Reach * Frequency Exposure level of ad to target Popular budgeting number Equivalent to exposures 1
  • 32. Promotion Metrics for Traditional Media Frequency = # exposures per individual in target market over given time period Reach = size of intended audience targeted by promotion Reach Exposure 1: What is it? Exposure 2: What of it? Exposure 3: Should I buy it? Reach Frequency GRP Gross Rating Points GRP = Reach * Frequency 1
  • 33. Promotion Metrics for Traditional Media Vogue: %College * %Employed * %Female = 64% * 64% * 89% = 36.5% Elle: %College * %Employed * %Female = 70% * 67% * 87% = 40.8% Target Rating Points = (Target Audience) / (Total Audience) * Gross Rating Points = 36.5% * 50 = 18.25 Target Rating Points Audience Data Vogue Elle Total Audience 11,398,000 6,302,000 Circulation 1,250,000 1,145,000 Gender: Female % 89% 87% Education: Any College 64% 70% Employed 64% 67% TRP Target Rating Points GRP Gross Rating Points Target Audience Total Audience Exposure level of ad to the target market 1
  • 34. Promotion Metrics for Traditional Media Vogue Example: Circulation = 1.25 million people 4-Color Ad Cost = $165,000 CPM = (Cost of Media Buy) / (Target Audience / 1,000) = ($165,000) / ( 1.25 million / 1,000 ) = $132 CPM (Cost Per Thousand) Cost of Media Buy ($) Target Audience (in 1000s) 1
  • 35. Promotion Metrics for Traditional Media Cost per Point Calculations: Vogue and Elle print magazines CPP (Cost Per Point) Cost of Media Buy ($) Vehicle Rating Magazine Cost/ Ad Circulation CPM Rating CPP Vogue $165,000 1,250,000 $132 36.5 $4,520 Elle $148,000 1,145,000 $129 40.8 $3,627 1
  • 36. Promotion Metrics for Social Media Source Social media conversion sources and events Blog Subscription Prospect signs up to be notified of new blog posts Call Back Requests Prospect requests callback Contact Forms Prospect enters information and clicks Submit Content Downloads Prospect requests download of report or other content Contest Entry Prospect enrolls in contest by filling out form Demo Signup Prospect signs up for live demo or other event Live Chat Prospect engages in live dialog with company agent Purchase Prospect places online order for product or service Subscriptions Prospect requests subscriptions to newsletters User Registration Prospect registers to receive ongoing access Video Viewing Prospect watches featured video on website Webinar Signup Prospect signs up for web-based seminar 1
  • 37. Promotion Metrics for Social Media Social media measurement tool categories Category Description, Target User, Example Built-in Tools Metrics capabilities included with social media application Target: Small businesses or personal use Example: Metrics within Facebook, LinkedIn, Twitter Aggregators Combines metrics from multiple sources Target: Small businesses Example: Hootsuite, Klout, SocialMention Professional Provides deep dive into significant data Target: Dedicated social media professional Examples: Cision, Cymfony, Radian6, ScoutLabs 1
  • 38. Promotion Metrics for Social Media Social media measurement tools: Native (built-in) tools Vehicle Sample Measurement Capabilities Facebook Fans: Total fans; New fans; Removed fans Subscribers: Un-subscribers; Re-subscribers Interactions: Total number of comments; Wall posts LinkedIn Personal account, standard: Profile views Personal account, Business Plus: Traffic sources LinkedIn Groups: Total members; New postings Twitter Number of followers; Number of followings; Number of tweets YouTube Views: Total views; Unique viewers Popularity: Relative popularity; Top videos Hot Spots: Viewership compared to other same-length videos 1
  • 39. Promotion Metrics for Social Media Social media measurement tools: Aggregators Tool Sample Measurement Capabilities Hootsuite Social media dashboard to manage & measure social networks Tracks brand mentions and analyzes social media traffic Klout Estimates level of influence based on data from Facebook, etc. Displays list of most influential followers Socialmention User-selected sources: Facebook, Twitter, YouTube, etc. Social media insight: Strength, Sentiment, Passion, Reach 1
  • 40. Promotion Metrics for Social Media Social media measurement tools: Professional-level tools Tool Sample Measurement Capabilities Cision Tailored to public relations, marketing, and media relations Includes media monitoring and other PR tasks Cymfony Social media monitoring and analytics Acquired by Visible Technologies in 2012 Radian6 Social media dashboard and console Acquired by Salesforce.com in 2011 Scout Labs Scans Web, analyzes data, identifies trends Acquired by Lithium in 2010 Techrigy Searches Web and analyzes data for relevant trends Acquired by Alterian in 2009 1
  • 41. Promotion Metrics for Social Media Referral Level: Users refer to others Dialog Level: Users communicate Engagement Level: Users act Referral Dialog Engagement Viewer Viewer Level: Users view content 1
  • 42. Promotion Metrics for Social Media Sample Metrics: Engagement Level 1
  • 43. Promotion Metrics for Social Media Sample Metrics: Dialog Level 1
  • 44. Promotion Metrics for Social Media Sample Metrics: Referral Level 1
  • 45. Check for Understanding Topic Description Estimation Explain how to estimate the total promotion budget Allocation Describe how to allocate promotion budget across vehicles Traditional Address performance metrics for traditional media Social Describe tracking metrics for social media 1