How Market Mix Modeling Can Impact Cross-Channel Budget and Business Planning
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2. Cross Channel StrategyHow Market Mix Modeling Can Impact Cross-Channel Budget and Business Planning Speakers: Dhiraj Rajaram, Mu Sigma Craig Kronzer, UnitedHealth Group
3. Session Objectives Learn approaches to Market Mix modeling – how it enables measurement of multi-channel activities Discover the advanced framework to quantify ‘true’ cost of acquisition, netting out cross channel effects and cannibalization Evaluate tools and platforms for budget scenario planning and optimize marketing budget allocation
5. Organization Overview Insurance Solutions Established in 1998 as a AARP/UHG relationship Nation's largest supplemental insurance program focusing on people age 50 and over Distribution: DTC, Employer, Agent, Web Largest provider of pure-play decision sciences and analytics services 30 Fortune 500 Clients in 10 Industry Verticals Headquartered in Chicago IL with presence all over the US
6. Business Problem Background Business Hypotheses Insurance Solutions uses multiple marketing channels to attract members Operational constraints result in less than complete attribution of sales to marketing efforts Several sales are not attributable to any of the marketing channels The business wanted to test the hypothesis that unattributed sales are driven by marketing In particular, there was a need to understand the impact of DRTV on sales The solution framework required to measure cross-channel impacts
7. The Challenge of Measurement Attribution by Channel A major portion of sales is unattributed to any advertising channel Sales attributed to DRTV are low compared to proportion of investment Business wants to measure the true effect of TV advertising by understanding the “halo effect”
8. The Need for Measurement Due to relatively low attribution of sales to DRTV, the apparent cost of acquisition for the channel is high There is a need for improved measurement to calculate the ‘true’ cost of acquisition Cost of acquisition is a key component in marketing planning Cost of Acquisition
10. Problem Solving Framework SCQFinal SCQInitial Factor Network Hypothesis Matrix SCQInitial SCQFinal The Mu Sigma Problem DNA ensures appropriate emphasis on design and hypothesis leading to right representation
12. The Market Mix Framework The Market Mix Framework decomposes total sales into contributions by advertising vehicles and external factors Contributions from different channels enable calculation of ROI
20. Multi-target Model Each of the target sales modeled on all advertising inputs as well as external factor
21. Reattributed Sales Original Attribution Post Modeling Reattribution The Market Mix models are able to measure the contribution of advertising to previously unattributed sales
22. Improved measurement Reattributed CPS Original CPS Due to higher level of attribution in sales, the effective cost per sale reduces significantly
23. Halo Effect Self Contribution The ‘halo’ effect of advertising channels enables quantification of cross-channel contribution Halo Effect
24. Impact of the initiative Pre-MMX Modeling Post MMX Modeling Cost of sale calculated based on direct attribution used in budget planning Member lifetime value calculations biased by high cost of acquisition in some channels “Dark Test” conducted to verify impact of TV on unattributed sales The optimization process for allocating budget across channels refined by using ‘true’ cost of acquisition Budget allocation across marketing channels changed significantly “Bright Test” conducted to test additional advertising opportunities
26. Speaker Bios Dhiraj Rajaram Founder and CEO of Mu Sigma, an analytics services company that helps clients such as Microsoft and Dell institutionalize data-driven decision making. Prior to founding Mu Sigma, he advised senior executives across a variety of verticals as a strategy and operations consultant at Booz Allen Hamilton and PricewaterhouseCoopers. Craig Kronzer Leads a Data Analytics team for UnitedHealthcare. Team is responsible for enterprise-wide analytics including building predictive models, designing and analyzing marketing tests, and claim data analytics. Previously, was with Carlson Marketing Group and Lands' End. Craig holds an MS in Statistics from the University of Minnesota and BS in Computer Science from the University of Wisconsin.