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Rethinking path to
and from purchase
Prof. Koen Pauwels
From impressions to expressions
• “A lot of us remember when the role of the
CMO was much simpler. Information flowed in
o...
Like
TV Sales
Paid
Search
Unlike
Price
Distribution
Websites
Visits
Now online media even drive toilet tissue sales!
Srini...
Reaching the right customer with the
right offer at the right time …
Past Metaphor: The purchase funnel
Purchase LoyaltyConsiderationAwareness
Consideration
Initial
Consideration
Set
Moment of
Decision
Loyalty Loop
Post Purchase Experience
Ongoing process
Active Ev...
And how about path from purchase?
• Prospective customer may postpone purchase
because they feel overwhelmed or uncertain
...
But do consumers really
• Switch brands near the end
of the purchase process?
• Change their feelings online ?
• Have thes...
It depends
So what is the evidence?
1) From individual search data
2) From aggregate metrics
And what future research do w...
Search for cameras (Bronnenberg et al. 2016)
• Consumer finds choice in mid to late search,
stays close to mean of early s...
But Search varies across categories
Cars, insurance: search starts
3 months before purchase
(Lecinski, Google 2011)
Grocer...
and Across Brands
• Ineffectiveness of paid search for
Heralded as ‘Paid is dead’
• But paid and multiple touchpoints syne...
Explained from theory (Pauwels et al. 2016)
• Goods differ in knowledge consumers need:
a) Experience good: deep, trusted ...
With marketing effect implications
Experience goods
(services)
Search goods
(products)
Unfamiliar
brand
Elasticity: Owned ...
Driven by reach & trust of media
Source: Nielsen (2013) survey across continents
Our findings confirm hypotheses
• Owned > paid media if high enduring involvement
(e.g. fashion, GMAT testing) but paid > ...
and give managers specific advice
Experience (Service) Search (Product)
Unfamiliar
brand
Owned (and Earned) key to purchas...
Initiated by:
Content
Separated
Content
Integrated
Firm
Email, TV
PR, product
placement
Customer
Retarget
SEA
Affiliate
SE...
Integrated: the category (TV) the
consumer comes to the site for
Separated:
other
categories
Content Integration best in later stages
and differ by conditions :
• Among Content-integrated ads:
Affiliate sites if high involvement
(e.g. shoes, fashion, cars,...
Implications for marketing?
• Positioning and targeting less important as
consumers rely less on marketing.
• Let the mark...
But no perfect mindset metric:
Online metrics
• Unobtrusive
• At time of interest
in the category
• What? Where?
• Often p...
MSI best paper (Pauwels and van Ewijk 2013)
1) How much do classic funnel metrics and online
journey metrics explain and p...
All variables endogenous in the Dynamic System
Accounts for
short and long
term effectsVolume sales
Environment
Marketing
...
General Results
1) Classic funnel still matters, but online journey
metrics substantially add to sales explanation
2) Clas...
Classic ‘mid-funnel’ less effective
0.28%
0.02%
0.07%
0.20%
0.17%
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
Awareness Cons...
Moderators: involvement, online spent
• Online Journey metrics matter more:
a) The higher category involvement
b) The high...
Integrate slow moving attitudes and
fast online actions (Pauwels & van Ewijk 2013)
Web visits
KNOW
COGNITION
Aware
Conside...
TV best offline action to lift online behavior, even
outperforms online on pageviews & social media
.17 .17 .17
.25
.19
.7...
Marketing effects vary by stage
• Display ads in early stages funnel, search
throughout the journey (Abhishek et al. 2012)...
And continue to show trade-offs
• Persuasiveness drops 10% with each 1M
extra views if provocative ad (Tucker 2016)
• Digi...
Initial
Consideration
Set
Moment of
Decision
Loyalty Loop
Post Purchase Experience
Ongoing process
Active Evaluation
Infor...
Did funnel hips really get larger ?
• Pauwels & van Ewijk (2013), Simonson (2016)
argue that mid-funnel metrics less predi...
Owned media works top & bottom
Stock
Returns
Stock
Risk
Owned
Positive WOM
Advocacy
Intent
Aware
Negative WOM
Colicev, Mal...
Helps get route awareness, not intent
Why do we need experiments?
• Self-selection bias: it’s not just that consumers
have to click on a search or display ad, t...
Real-time feedback: the multi armed bandit
Consumer behavior changes online
• Going from more to less mobile device (phone
to PC) doubles conversion (DeHaan et al. 2...
Touching feels like ownership
Touchscreen devices give this touch (Basel 2016)
So Focus decision on concrete product attri...
Future research needed on
• Mapping of classic to online metrics
• Under which conditions do consumers change
thoughts, fe...
• Contact me at koen.h.pauwels@gmail.com
• LinkedIn/Twitter handle: koenhpauwels
• My blog: https://analyticdashboards.wor...
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rethinkingpathtoandfrompurchasepauwels

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rethinkingpathtoandfrompurchasepauwels

  1. 1. Rethinking path to and from purchase Prof. Koen Pauwels
  2. 2. From impressions to expressions • “A lot of us remember when the role of the CMO was much simpler. Information flowed in one direction: from companies to consumers. When we drew up our plans and budgets, the key metric was consumer impressions: how many people would see, hear or read our ad?” Joe Tripodi, Chief Marketing and Commercial Officer, Coca-Cola, 2011
  3. 3. Like TV Sales Paid Search Unlike Price Distribution Websites Visits Now online media even drive toilet tissue sales! Srinivasan, Rutz and Pauwels 2015
  4. 4. Reaching the right customer with the right offer at the right time …
  5. 5. Past Metaphor: The purchase funnel Purchase LoyaltyConsiderationAwareness
  6. 6. Consideration Initial Consideration Set Moment of Decision Loyalty Loop Post Purchase Experience Ongoing process Active Evaluation Information gathering, shopping McKinsey 2009 The Consumer Decision Journey Has the Web made the funnel fat? Purchase LoyaltyAwareness
  7. 7. And how about path from purchase? • Prospective customer may postpone purchase because they feel overwhelmed or uncertain • Satisfied customers unsubscribe because they feel overwhelmed by marketing/’relationship’
  8. 8. But do consumers really • Switch brands near the end of the purchase process? • Change their feelings online ? • Have these feelings best captured by online metrics ?
  9. 9. It depends So what is the evidence? 1) From individual search data 2) From aggregate metrics And what future research do we need? 3) Including controlled experiments
  10. 10. Search for cameras (Bronnenberg et al. 2016) • Consumer finds choice in mid to late search, stays close to mean of early search attributes, later narrows search for each attribute. • % of search/site visits represents % of choice • Consumer revisits the chosen product • Generic search more at start, but only 7% Branded Search more often later: up to 97%
  11. 11. But Search varies across categories Cars, insurance: search starts 3 months before purchase (Lecinski, Google 2011) Groceries: search, if any, on same day as purchase So when should paid or owned media work best?
  12. 12. and Across Brands • Ineffectiveness of paid search for Heralded as ‘Paid is dead’ • But paid and multiple touchpoints synergy should be key for less familiar brands such as
  13. 13. Explained from theory (Pauwels et al. 2016) • Goods differ in knowledge consumers need: a) Experience good: deep, trusted info (Nelson 1974) b) Search good: fast info by search (Erdem et al 1999) • Low familiarity lifts need for cross-channel media: a) Tough to build brands online (Erdem 1999, Sandom 2010) unfamiliar brands need online + offline media b) Familiar brands leverage within-online synergies
  14. 14. With marketing effect implications Experience goods (services) Search goods (products) Unfamiliar brand Elasticity: Owned > Paid Synergy: Cross > Within-online Synergy: Cross-channel > Within online synergy Familiar brand Elasticity: Owned > Paid Synergy: Within online > Cross Elasticity: Paid > Owned Synergy: Within online > Cross
  15. 15. Driven by reach & trust of media Source: Nielsen (2013) survey across continents
  16. 16. Our findings confirm hypotheses • Owned > paid media if high enduring involvement (e.g. fashion, GMAT testing) but paid > owned if need only at specifictime (e.g. furniture, toaster ) • Cross-channel synergy higher than within-online synergy for unfamiliar brands, within-online synergy highest for familiar brands • Earned media highest elasticity across conditions
  17. 17. and give managers specific advice Experience (Service) Search (Product) Unfamiliar brand Owned (and Earned) key to purchase Spend on offline media for synergy Owned key to Purchase Spend on offline media for synergy Familiar brand Owned key to purchase Spend within online for synergy Paid (and Earned) key to purchase Spend within online for synergy
  18. 18. Initiated by: Content Separated Content Integrated Firm Email, TV PR, product placement Customer Retarget SEA Affiliate SEO OK, but which paid online actions? DeHaan, Wiesel and Pauwels 2016
  19. 19. Integrated: the category (TV) the consumer comes to the site for Separated: other categories
  20. 20. Content Integration best in later stages
  21. 21. and differ by conditions : • Among Content-integrated ads: Affiliate sites if high involvement (e.g. shoes, fashion, cars, alcohol) Paid search, price comparison site if high need NOW (e.g. refrigerator) • Among Content-Separated (e.g. retargeting) When mood of website matches your offer 21
  22. 22. Implications for marketing? • Positioning and targeting less important as consumers rely less on marketing. • Let the market sort out user segments • Metrics like Customer Lifetime Value (to justify customer acquisition costs) less useful • Instead of brand perceptions, preference, loyalty, track online metrics (Simonson 2016)
  23. 23. But no perfect mindset metric: Online metrics • Unobtrusive • At time of interest in the category • What? Where? • Often platform-owned Classic Surveys • Representative • At regular intervals, providing time series • Why, to what extent? • Often Customized
  24. 24. MSI best paper (Pauwels and van Ewijk 2013) 1) How much do classic funnel metrics and online journey metrics explain and predict brand sales? 2) Does it differ by involvement and brand spent? 3) How can managers affect metrics that matter most? 36 brands in 15 categories: durables (cars), services (internet, energy, travel, lodging, insurance), food (cheese, butter, snacks, candy, dairy, beer, soft drink) non-food (tissue, sanitary napkins) packaged goods
  25. 25. All variables endogenous in the Dynamic System Accounts for short and long term effectsVolume sales Environment Marketing Price Promotion Distribution Advertising Classic funnel Loyalty Preference Awareness Consideration Intention Online Journey Owned Paid Earned
  26. 26. General Results 1) Classic funnel still matters, but online journey metrics substantially add to sales explanation 2) Classic Awareness drives search clicks and site visits, but is also driven by these online metrics
  27. 27. Classic ‘mid-funnel’ less effective 0.28% 0.02% 0.07% 0.20% 0.17% 0.00% 0.05% 0.10% 0.15% 0.20% 0.25% 0.30% Awareness Consider Preference Buying intention Loyalty Consider, Preference, Buying intention and Loyalty matter less than Awareness Consumers need to be aware, then look online! How to read? If awareness increases by 1%, volumes sales increase on average by .28%
  28. 28. Moderators: involvement, online spent • Online Journey metrics matter more: a) The higher category involvement b) The higher % of brand budget spent online ‘Best’ combination of classic funnel and online metrics is category and brand specific
  29. 29. Integrate slow moving attitudes and fast online actions (Pauwels & van Ewijk 2013) Web visits KNOW COGNITION Aware Consider Buy LIKE Click Visit AFFECT Prefer Loyalty Experience & Express DO Search
  30. 30. TV best offline action to lift online behavior, even outperforms online on pageviews & social media .17 .17 .17 .25 .19 .74 .07 .95 .71 .51 .41 0 .70 .20 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 TV Online How to read? If TV expenditures increase by 1%, # website visits increase on average by .25%
  31. 31. Marketing effects vary by stage • Display ads in early stages funnel, search throughout the journey (Abhishek et al. 2012) • Content-integrated ads same traffic impact as content-separated, but much better conversion (DeHaan et al. 2016) • TV ads lift branded search, conversion, eWOM, page views (Joo et al. 2016, Pauwels & van Ewijk 2013)
  32. 32. And continue to show trade-offs • Persuasiveness drops 10% with each 1M extra views if provocative ad (Tucker 2016) • Digital does not change “richness versus reach” tradeoff - just alters the parameters. • There is still a role for paid media • But pointless to persuade consumers about quality: they go to others (Simonson 2016)
  33. 33. Initial Consideration Set Moment of Decision Loyalty Loop Post Purchase Experience Ongoing process Active Evaluation Information gathering, shopping Implying new marketing objectives Get consumer familiar with your brand Advertising general, contextual or category-based. Incidental contacts with earned media (PR and Social) Re-confirm purchase: listen to feedback via earned media Resist temptation to over-contact lest customer unsubscribes Ensure you are found and respected online: when consumer drops by website, help with info access, paid ads focus on behavioral targeting Persuade consumer With Promo, Ads
  34. 34. Did funnel hips really get larger ? • Pauwels & van Ewijk (2013), Simonson (2016) argue that mid-funnel metrics less predictive of purchase and less sensitive to marketing • Instead the more trusted opinion of others is key and now readily available in social media • Tested in large scale stock market study with daily mindset metrics, owned + social media
  35. 35. Owned media works top & bottom Stock Returns Stock Risk Owned Positive WOM Advocacy Intent Aware Negative WOM Colicev, Malshe and Pauwels, Revising for JM
  36. 36. Helps get route awareness, not intent
  37. 37. Why do we need experiments? • Self-selection bias: it’s not just that consumers have to click on a search or display ad, they also have to visit the website displaying the ad • Context matters: on which site, device, where with which creative, extent of exposure, … • Personalization technologies allow us to show multiple messages, and then choose best one
  38. 38. Real-time feedback: the multi armed bandit
  39. 39. Consumer behavior changes online • Going from more to less mobile device (phone to PC) doubles conversion (DeHaan et al. 2015) • Talking about purchase on social media increases store traffic (Pauwels et al. 2016) • Social media critics buy more (Weiger et al. 2016) • Touching product on device feels like owning it
  40. 40. Touching feels like ownership Touchscreen devices give this touch (Basel 2016) So Focus decision on concrete product attributes For fast moving goods, interface touch suffices
  41. 41. Future research needed on • Mapping of classic to online metrics • Under which conditions do consumers change thoughts, feelings and decisions online ? • What are the implications for consumers, for managers and for society ? Questions?
  42. 42. • Contact me at koen.h.pauwels@gmail.com • LinkedIn/Twitter handle: koenhpauwels • My blog: https://analyticdashboards.wordpress.com • Professional Facebook page: https://www.facebook.com/pages/Smarter-Marketing- with-Analytics-Dashboards/586717581359393 • And check out my practical book: It’s not the Size of the Data, it is How You Use it: Smarter Marketing with Analytics & Dashboards Want to learn more?

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