silicon free conference 27 april marcin winkler presentation
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MROI and Performance ParadigmIn Digital Marketing
Silicone Free Conference
Moscow, 27 April 2012.
©+® Marcin Winkler
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The trend:Where we are now with online
advertisement?
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Source: Forrester Research
Interactive Marketing Spend
Online advertisement grows fast and becomes more diversified
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Key question
How to measure result in monetary terms?
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Answer: Return on Marketing Investment
MROI = ΔProfit
Cost
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Key principles
• Incremental approach
• Acquisition cost and customer value (LTV)
• Result attribution
• Optimization
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Incremental approach
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Incremental approach
MROI = ΔProfit
Cost
Δprofit = Δsales - cost
How much would we sale without any advertisement?
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Example: incremental brand effects
Source: IAB
Brand engagement index
In this case measured brand is established one and achieves 29% brand engagement index without any advertisement (control group)
Two other groups were exposed to advertisement (TV or TV+ Internet)
We can conclude that internet builds here an incremental brand engagement of 4%
We can do exactly the same with any marketing metric (e.g. sales)
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Total sales = baseline sale + incremental
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Lifetime Value of Customer
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Example:
the client is in the basket and purchases a phone for PLN699 and a tariff of PLN139 a month
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Is Value of PLN699 our incremental revenue for ROI?
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No! It is single transaction value that does not take into account
other revenue streams
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Lifetime Value of Customer
Source : The University of Chicago Booth School of Business “Data Driven Marketing”
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Example
LTV should be the reference for acquisition cost and budget level
Source : The University of Chicago Booth School of Business “Data Driven Marketing”
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Attribution
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The fundamental question marketers should ask:
“Whereshould spend my
marketing $ to get the best return?”
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Source : Ignition One
GOOGLE PAID SEARCH
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FACEBOOKSPONSORED STORY
Source : Ignition One
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MAIN PORTALDISPLAY ADVERTISEMENT
Source : Ignition One
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GOOGLE PAID SEARCH
TRANSACTION!!!
Source : Ignition One
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What caused a user to convert?
Display Advertisement(Banner)
Social Media Paid Search
We need to model path to purchase and attribute the success based on
inNot just on last click!
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ROI Optimization
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Reallocation of budget
• €150, 000• 300 Sales• CPA €500
• €150, 000• 370 Sales• CPA €405
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Scenario testing
Use A/B or Multivariate testing to choose optimal scenarios:
•Offers•Creative lines•Channels
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Example: Scenario testing - emailing
vs.
Samsung Galaxy Gio for $1Exchange $1 for a Smartphone
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Making purchase easy
•Analyze purchase funnel in your eShop•Streamline the process•Reduce number of steps to minimum•Help them•Retarget
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Help customers to close the deal
LIVE CHAT AND PRIORITY SERVICE FOR ENGAGED USERS
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Summary
• Use incremental approach
• Set budget in line with ROI and LTV
• Attribute results
• Keep on optimizing!
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Thank you for your attention