introduction disclaimer: all logos, photos, etc. used in this presentation are the property of their...
TRANSCRIPT
Introduction
Disclaimer:• All logos, photos, etc. used in this presentation are the property of their respective copyright owners and are used here for educational purposes only
© Stephan Sorger 2015; www.StephanSorger.com; Marketing Analytics: Introduction Ch.1.1
Outline/ Learning Objectives
© Stephan Sorger 2015; www.StephanSorger.com; Marketing Analytics: Introduction Ch. 1.2
Topic Description
Introduction Marketing analytics definition, drivers, and advantagesModels Definition, styles, forms, and variables of modelsMetrics Definition, families, and dashboards of metrics
Topic Description
Definition (Broad) Broad definition (but too vague):Data analysis for marketing purposes, from data gathering to analysis to reporting
Definition (Applied) Techniques and tools to provide actionable insight- Models - Metrics
Models Decision tools, such as spreadsheets
Metrics Key performance indicators to monitor business
Marketing Analytics: Models, Metrics & Measurements
Models:Decision tools,like spreadsheetsExample: Bass Forecasting
Metrics:KPIs to monitor business,like charts and graphsExample: Sales/ Channel
© Stephan Sorger 2015; www.StephanSorger.com; Marketing Analytics: Introduction Ch.1.3
Models and Metrics
Metrics = Gauges:- Monitor situation- Diagnose problems
© Stephan Sorger 2015; www.StephanSorger.com; Marketing Analytics: Introduction Ch. 1.4
Models = GPS:- Representation of Reality- Decide on course of action
Metrics Gone Wrong
Military leaders in World War II used metrics regarding airplane damage incorrectly“Reinforce damaged areas”Abraham Wald, a statistician skilled in analytics, said: Right Metrics, Wrong Conclusion“Reinforce non-damaged areas” (fixing selection bias from studying only airplances that returned)
© Stephan Sorger 2015; www.StephanSorger.com; Marketing Analytics: Introduction Ch. 1.5
Trends Driving Marketing Analytics Adoption
Before:Huge budgets
Now:Tiny budgets
© Stephan Sorger 2015; www.StephanSorger.com; Marketing Analytics: Introduction Ch. 1.6
MarketingAnalyticsAdoption
Online Data Availability
Reduced Resources
Massive Data
Accountability
Data-Driven Presentations
Improve productivityReduce costs“What gets measured gets done”
Data to back up proposalsPredict success of plans
Initiatives to capture customer informationWhat to do with all that data?
Cloud-based data storageOnline = speedOnline = convenience
Do more with lessScrutinized budgetsMarketers must show outcomes
Marketing Analytics Advantages
© Stephan Sorger 2015; www.StephanSorger.com; Marketing Analytics: Introduction Ch. 1.7
MarketingAnalytics
Advantages
Persuade Executives
Side-step Politics
Encourage Experimentation
Drive Revenue
Save Money
Marketing as cost centerMarketing as profit centerCorrelation between spending and results
Old way: Execute campaign guess outcomeNo longer tolerate such an approachNew way: Predict outcome
Test multiple scenarios before proceedingRun simulationsPredict which will work best
Focus on revenue impact from marketingCorrelation between spending & results
Some CEOs do not appreciate marketingShow impact of efforts with metrics
Topic Description
Model Simplified representation of reality to solve problemsExample: Advertising effectiveness model
Purpose Evaluate impact of input variablesExample: Assess how advertising affects sales
Decisions Models provide guidance on marketing actionsExample: Decide on ad budget to achieve objectives
Models: What is a Model?
Advertising Effectiveness:Response (sales revenue)increases with increasing ad budgetuntil Point A, then decreases
© Stephan Sorger 2015; www.StephanSorger.com; Marketing Analytics: Introduction Ch. 1.8
Advertising
Sales
time
A
Topic Description
Verbal Expressed in words“Sales is influenced by advertising”
Pictorial Expressed in picturesChart or graph of phenomenon
Mathematical Expessed in equationSales = a + b * Advertising
Styles: Verbal, Pictorial, Mathematical
© Stephan Sorger 2015; www.StephanSorger.com; Marketing Analytics: Introduction Ch. 1.9
Verbal Pictorial Mathematical
Sales = f(advertising)
Topic Description
Descriptive Characterize (describe) marketing phenomenonIdentify causal relationships and relevant variablesExample: Sales = a*Advertising + b*Features +c*…
Predictive Determine likely outcomes given certain inputsClassic “What If?” spreadsheet exerciseExample: Sales forecast model
Normative Decide best course of action to maximize objective,given limits on input variables (constrained optimization)“Given X, what should I do?”Example: Determine price using forecasts at diff. prices
Models: Forms
© Stephan Sorger 2015; www.StephanSorger.com; Marketing Analytics: Introduction Ch. 1.10
Descriptive Predictive Normative
Sales
Advertising
This Way
Topic Description
Variable Quantity that can be changed, or variedExamples: Advertising budget, Sales
Independent Variable Variable whose value affects dependent variable (x)Controllable: Advertising budgetNon-controllable: Customer age
Dependent Variable Variable representing marketing objective (y, or output)Responds to changes in independent variableFor-profit: Revenue, Profit; Not-for-profit: Donations
Models: Variables
© Stephan Sorger 2015; www.StephanSorger.com; Marketing Analytics: Introduction Ch. 1.11
Y = a + b * X
Y = Sales (Dependent Variable) (Output)a = Parameter: Y-interceptb = Parameter: Slopex = Advertising (Independent Variable) (Input)
1
b
Slope = rise/run = b/1
X (Advertising)Independent Variable
Y (Sales)DependentVariable
Y-intercept(Sales levelwhen advertisingspending =0)
© Stephan Sorger 2015; www.StephanSorger.com; Marketing Analytics: Introduction Ch. 1.12
Models: Terminology
Linear Response Model
Topic Description
Definition Business-oriented key performance indicatorsExamples: Sales per channel, Cost per sale
Purpose Monitor and improve marketing effectivenessTake corrective action as necessaryExample: Marketing expense as percentage of sales
Metrics Families Groups of control metrics; Diagnostic & predictive infoExample: Sales metrics: sales/industry; sales/product
Metrics Dashboards Marketing automation systems- Eloqua, Marketo, PardotSalesforce automation systems- Netsuite, Salesforce.com
Metrics
Metrics Dashboard
© Stephan Sorger 2015; www.StephanSorger.com; Marketing Analytics: Introduction Ch. 1.13
Number Question
1 Describe how marketing analytics models are analogous to automotive global positioning system (GPS) units.
2 Explain how marketing accountability is driving the adoption of marketing analytics.
3 Describe how marketing analytics approaches can help persuade executives.
4 Identify the type of style a model expressed in pictures represents.
5 Identify the form of model used in standard computer spreadsheet programs.
6 Understand the difference between controllable & non-controllable independent variables.
7 Understand the basic form of a linear response model: Y = a + b*X
8 Identify the types of systems that typically include metrics dashboards.
Check Your Understanding
© Stephan Sorger 2015; www.StephanSorger.com; Marketing Analytics: Introduction Ch. 1.14