Entertainment Company: Marketing Spend Optimization
An interview with Stefan Boedeker
A global entertainment firm, and specifically its DVD marketing and distribution branch operation.
The company needed to market more efficiently hundreds to thousands of titles per year across 50 to 60 countries worldwide, with integrated marketing planning and execution. The client wanted to track marketing spending in a way that gave visibility to upper management for quicker decision making. It wanted an integrated dashboard with a built-in program to recommend optimal marketing spend for each product in each country and across each medium, in real time.
The key concern was that if decision makers did not have the right data, the approval cycle could be unnecessarily long, wasting money and revenue potential. The dashboard idea was important because it would allow global marketing teams to communicate with each other.
A tool was needed that would integrate the tracking of ad campaign investments and returns. First, an econometric model was developed that correlated marketing spending in different areas by product and geography, using a calculated coefficient measuring the effectiveness of different marketing spending.
The econometric analysis involved feeding the right information into the dashboard based on historical data that the company had collected for different markets and titles.
The second component involved an optimization algorithm that put the individual coefficients into an overall optimization model. This enabled a marketing budget to be allocated based on a mathematical formula that gave an optimal solution, given the relationship between individual spending and individual success, and return on that spending.
The ad campaign planning and execution cycle time was reduced by 25 percent.
A major benefit from the work was that everyone drew from the same pool of knowledge, implementing this idea of best practice. People did not just do what they thought was right. They now did what had been proven to be right.
Non-core marketing investment was reduced by 17 percent in the first year after introducing this approach. That was for the same marketing spending—so for 17 percent less marketing spending, the client had the same output in terms of return and revenue.
Lastly, the model gave decision makers real-time information, so they would have a decision-support tool for strategic marketing planning. Decision makers were presented with an intuitive visualization, which made real-time analysis and decision-making easier.
A complaint about how the system had worked before the analysis and modeling was done was that there was too much information. One executive said, "In the end, I made decisions based on my gut feeling, because I wasted too much time reading through all these non-standardized, different reports." The benefits of the model were that it reduced planning and execution time, provided a common pool of knowledge, increased individual real-time knowledge, decreased marketing investment, and provided a real-time decision support tool for strategic planning.