restaurant mroi

Optimizing Marketing and

Media Strategy for Retail Food ServiceThrough Effective

Marketing Measurement and

Accountability

1

Today’s Agenda

• Bottom-Line Analytics

• The Marketing Measurement Challenge

• The Vision

• QSR Case Study

• The Plan

2Copyright Bottom Line Analytics, LLC - All Rights Reserved, 2013

About Us

Bottom-Line Analytics LLC is a consulting group that focuses on Marketing and Social Media analytics

Our modeling experts have a total of over 100 years of direct experience with marketing optimization modeling. This includes direct experience in over 35 countries and dozens of product categories

We are dedicated to the principles of innovation, excellence and uncompromising customer service

Most important, however, we are dedicated to getting tangible and positive business results for our clients


Our Team’s Experience


Today’s Agenda



• The Vision

• QSR Case Study

• The Plan


• In the early 1900’s John Wanamaker turned a phrase marketers still reference today:

“Half the money I spend on advertising is wasted, I just don’tknow which half”

• In the 1930’s, Albert Einstein said

“Insanity is doing the same thing over and over again and expecting different results”

• In the 1990’s a new era of marketing accountability was born, with an appropriate quote, by F. John Reh

“You can not manage what you don't measure”

The Marketing Measurement Challenge


BLA Focuses on Measuring & Optimizing The Where And The What

Revenues

Offline Media, Direct, Creative

& Message

Online Media, Direct & Message

Pricing, Capacity &Customer

Transactions

Macro Variables and

Market Factors

Competition

Influential Factors – Independent Variables

Social Media


Today’s Agenda



• The Vision

• QSR Case Study

• The Plan


9

• Visualize-

– A tool which will enable you to accurately ascribe ROI to each of your various marketing initiatives

– The ability to simulate and forecast any of a number of future Business Plans and/or Business Scenarios

– An ability to know what marketing programs are working and not working – The ability to accurately quantify volume gains from specific competitors, due

to cannibalization or that which is purely incremental

• Realize– How to drive 3-10% more revenue with current or existing marketing budgets

through model-based marketing spending optimization– A business and marketing plan that can be factually defended and linked

directly to profitable revenue and growth– A business plan where you are confident that your marketing dollars are

working at maximum efficiency– A system whereby wasted and unproductive marketing initiatives can be

eliminated

The Vision

Copyright Bottom Line Analytics, LLC - All Rights Reserved, 2013

Today’s Agenda



• The Vision

• QSR Case Study

• The Plan


11

• Client Profile - $6.3B annual revenues, 1,800 outlets nationwide, 100% franchise-owned

– Franchisees fund national-corporate marketing and product development via a 10% assessment against their net income and fund 100% of local marketing efforts

– Client spent $85M in marketing & media initiatives:• National Media: $46M• Local Media $39M• New Product Launches & Initiatives: $4M

– The client used a broad spectrum of different messages supported across media, including brand, breakfast, promotional & new products

• Study Objectives– Develop a fact-based assessment of Media and Marketing activities– Develop recommendations to maximize growth by achieving the most

effective balance between national-corporate, local and new product marketing investments and across all regions, media and marketing channels

• The case example has been masked to preserve confidentiality

QSR Restaurant Case Study


12

How Effective Are Our Media and Marketing Activities?1. What proportion of marketing program/channels contributed to total

revenue sales?2. Which regions were most impacted by marketing and which marketing

programs worked best in each region?3. What were the key drivers of growth and what role did new-products play

in driving that growth?4. What messages drove a greater response - brand, new product, breakfast

or promotional?5. What is the ROI of individual marketing programs/channels?

Client Questions

What Can We Do To Improve In The Future?6. Which marketing activities represent the best opportunities for

increased funding and which should we cut back?7. What is the optimal total spend and how should that be allocated across

markets and programs/channels?8. What Is the optimal marketing spend across individual markets?


13

65.6%

3.7%

0.8%

8.8% 1.1%0.8% 1.9%

2.2%

3.6%

0.4%2.6%0.5%0.8%0.3%1.8%

4.1%

0.3%0.7%

19.1%

Base Vol Customer Traffic Growth Store ExpansionSocial Media WOM Healthy Menu Launch Media New Salad Buffet Media and PromoFSI's Ad Quality Local RadioLocal OOH Long Term TV Ad Effect Nat Brand TV Short-Term Effect. Brand MessageNat Brand TV Short-Term Effect. Breakfast Message Nat Brand TV Short-Term Effect. Promo Message Local TV Short-Term Effect, Promo MessageLocal TV Short-Term Effect, Breakfast Message Online Banners Online Search

Marketing efforts drove 19% of QSR sales. National TV drove 6.4%, local TV generated 5.9% of sales. Breakfast messages generated 4.9% of total sales, while new-product media messages garnered a 2% share; social media drove 8.8% of sales.

Decomposition of Sales

1. What Proportion Do Marketing Programs/Channels Contribute To Annual Sales?

MarketingActivities

14

Consolidated Sales Decomposition by Region

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Northeast Central Southeast SouthWest West

Online Search Online Banners Local TV Short-Term Effect Nat Brand TV Short-Term Effect Long Term TV Ad Effect Local OOH Local Radio Ad Quality FSI's New Salad Buffet Media and Proomo Healthy Menu Launch Store Expansion Customer Traffic Growth Base Vol

The West Region is the most marketing driven of all of the regions. This is due to the higher success of new product launches . The SE region is most affected by local TV advertising, whereas FSI’s have a relatively greater impact in the NE region.

Decomposition of Sales by Region

2. Which Regions Were Most Impacted By Marketing AndWhich Marketing Programs Worked Best In Each Region?


15

-3% -2% -1% 0% 1% 2% 3% 4%

Healthy Menu Launch Base Vol Ad Quality Local Radio Store Expansion FSI's Customer Traffic Long Term TV Ad EffectNew Salad Buffet Media and Promo Online Adv National TV Short-Term Effect Local TV Short-Term EffectLocal OOH Price

Contributions to Annual Sales Variance

The QSR sales increased 6.7% YOY. The two new item launches together accounted for 3.2 points of that growth, or nearly half. Improved national TV ad quality was a notable positive driver

Negative effects were due to a +3% price increase and reductions in outdoor and local TV ad spending

3. What Are The Key Drivers Of Growth? What Role Did New-Products Play In Driving That Growth?

3.2

-3.2


$-

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

Brand Messages Breakfast Messages New ProductMessages

PromotionalMessages

$1.11

$1.49

$2.68

$1.26

ROI of Marketing Campaigns & Messages(Profit Per Expenditure $)

4. What Messages Drove A Greater Response, Brand, NewProduct, Breakfast Or Promotional?

New product and breakfast messages stand out as delivering the highest ROI per dollar of investment.


17

The QSR generates a 29% ROI on $85.1MM of Marketing spend

Across the mix, all activities generate positive returns except outdoor advertising and FSI’s. The launch of the healthy menu line was most profitable, with above average ROI for Salad Buffet marketing, national TV, local radio and online advertising.

Marketing ROI

Gross Profit

Spend (Cost)

Net Returns % ROI

New Salad Buffet Media and Promotion $ 6.6 $ 3.6 $ 2.9 45%FSI's $ 14.3 $ 16.4 $ (2.1) -15%Healthy Menu Launch $ 4.8 $ 0.4 $ 4.4 92%Local TV $ 15.9 $ 12.1 $ 3.7 24%National TV $ 57.2 $ 39.2 $ 18.0 31%Local Radio $ 15.5 $ 8.7 $ 6.7 44%Local Outdoor $ 1.7 $ 2.0 $ (0.3) -17%Online Advertising $ 4.4 $ 2.3 $ 2.0 46%Total Local Spending $ 47.5 $ 39.4 $ 8.1 17%Total National Spending $ 73.1 $ 45.6 $ 27.4 38%Total Spend $ 120.6 $ 85.0 $ 35.5 29%

5. What Is The ROI Of Individual Marketing Programs/Channels?


18

Below shows the relative attractiveness of the QSR’s marketing investments and campaigns. Online media represents the best upside opportunity, while FSIs and Local OOH should be reduced

Diminishing Returns-Reduce

Increase/Maintain SpendingIncrease

Significantly

Significantly Decrease

Marketing Investment ROI Matrix

6. Which Marketing Activities Represent The Best OpportunitiesFor Increased Funding? Which Should Be Cut Back?


19

0%

20%

40%

60%

80%

100%

Current Mktg Contrbution Current Spend Optimal Spend

Online Search Online BannersLocal TV Short-Term Effect, Breakfast Message Local TV Short-Term Effect, Promo MessageLocal TV Breakfast Message Local TV Promo MessageNational TV Promo Message National TV Branded MessageNational TV Breakfast Message Local OOH Local Radio FSI's New Salad Buffet Media and Proomo Healthy Menu Launch

The QSR can optimize sales by decreasing FSI’s, National & Local Promotional TV and Online Banners, while keeping total spending constant

Increase spending on the Healthy Menu initiative, Local & National Breakfast TV, Radio and Online Search. This solution is expected to generate an 8% increase in overall sales

Marketing Spending Optimization by Channel

7. What Is The Optimal Total Spend And How Should That BeAllocated Across Programs/Channels?


Marketing Spending Optimization by Region

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Current Mktg Contribution Current Spend Optimal Spend

West SouthWest Southeast Central Northeast

8. What Is The Optimal Total Spend And How Should That Be Allocated Across Markets?

The greatest upside opportunity is to increase relative marketing investments in the Southeast and West Regions


21

0

5,000

10,000

15,000

20,000

25,000

30,0001/

6/20

003/

6/20

005/

6/20

007/

6/20

009/

6/20

0011

/6/2

000

1/6/

2001

3/6/

2001

5/6/

2001

7/6/

2001

9/6/

2001

11/6

/200

11/

6/20

023/

6/20

025/

6/20

027/

6/20

029/

6/20

0211

/6/2

002

1/6/

2003

3/6/

2003

5/6/

2003

7/6/

2003

9/6/

2003

11/6

/200

31/

6/20

043/

6/20

04

Model Actual

Overall R^2 = 96.7%, Holdout R^2 = 94.0% ,MPE=+/- 2.4%

Model Validation

Sales $Mil

One year after this project, due to significant increases in breakfast media and new-product investments, this QSR increased same-store sales 11% and net income 17%

Our models do a good job of predicting sales


Today’s Agenda



• The Vision

• QSR Case Study

• The Plan


23

• Developing the analytics and measurement tools• Building measurement and accountability into

business plans• Measuring and monetizing the customer experience

with social media measurement• Developing a measurement and accountability

culture• Entering and realizing the path to superior profits

and growth

The Plan


Contact

• Michael Wolfe– Principal - Bottom-Line Analytics LLC – [email protected]– (o) 770.485.0270 – (C) 678.314.8446

• David Weinberger– Chief Marketing Officer - Bottom-Line Analytics LLC– [email protected]– (O) 770.649.0472

24

mailto:[email protected]

mailto:[email protected]