Budget cut methods · Cost of SEO in thousands 280 260 240 220 200 180 160 140 20 22 24 26 28 30 32 34 Christopher Engman. PAGE• • Marketing Mix Modeling −Expensive and slow

Budget cut methodsFaster, cheaper & better

The scalable way of doing Marketing Mix Modeling

Christopher Engman, CRO/CMO Proof Analytics

Email me for the slide deck [email protected]

Open your camera and focus it on the barcode

••PAGE

Agenda

• 14 Classical decision making mistakes

• Budget cut methodso Shaving

o Panic

o Surgical

• Surgical cut options

• MMM and Automated MMM deep dive

• What data is needed?

• Surgical cut method steps

• Q&A

© PROOF • 20192

Jump the gunSelecting the first option rather than exploring alternatives

EGOFailing to request or consider input from people in the know

Silver bulletDo what’s easy rather than what’s best

Opportunity costThe loss of other alternatives when one alternative is chosen

Sunk costMoney that has already been spent and which cannot be recovered.

Analysis paralysisWhen over analysis or overthinking prevents individuals from making a decision.

Selective perceptionWhen a person only perceives what he/she desires and ignores other perceptions or viewpoints.

Frame blindnessNot identifying the options. One track decision making.

The Prudence trapWhen faced with high stakes, we adjust our estimates or forecasts with prudence, “just to be on the safe side...”

Sample of oneDrawing conclusions on one data point

The anchoring trapConsidering a decision, the mind gives disproportionate weight to the first information it receives.

Loss aversion2.5 times stronger

Thinking fast and slowOutside vs inside your expertise

Multiple dimensions vs association & memory4 variables, no timelag

•• ••

3 ways to handle budget cutsThe events around the globe are changing fast, and we needto adjust to the recession.

Christopher Engman

•• ••

The budget is cut by “shaving” off a fixed percentage evenly across all your various marketing activities.

1 The Shaving Method

Christopher Engman

•• ••

Only looking at the short term conversions, cutting off efforts that give mid- or long term effects.

2 Panic Mode

Christopher Engman

•• ••

Using Automated MMM and making decisions based on facts. With this approach, you optimize the budget spend: cutting less profitable efforts, and increasing where it’s most valued.

3 Surgical cuts

Christopher Engman

Surgical cut types

••

Know how to balance the spend between marketing, communications and sales

To bridge the language between marketing and the rest of the C-suite.

Know how should I split my marketing spend between TV, radio, social media, email, SEM, affiliates, events, sponsorships etc.?

To make changes in the marketing budget or gotomarket budget we need to…

••PAGE

In-Tools Measurement

Facebook, LinkedIn, Google Analytics, Marketing Automation, Optimizely, InZynk, Eventbrite etc.

• Many tools and data sources

• 4 variables vs 15-50 variables

• Not delayed effects

• A language that the rest of the C-suite doesn’t understand

COMPANY PRESENTATION • 201923

••PAGE

Visualization tools

Qlik, MS Power BI, Tableau

Visualizing data from various sources

+ Few variables and no delays

+ Presents information in compelling and easy-to-consume ways

− 15-50 variables -> The brain can’t see patterns between +15 variables and can’t see the delayed effects

− Does not compute a relationship between variables


•• ••PAGE © PROOF • 201925

Cookie deletionUntrackablesites for MTA

Delayed effects(time lag)

Branding & PROffline activities

Multiple devices

Multi-touch attribution is problematic

Christopher Engman

The Golden standard: Most Fortune 1000 companies use Marketing Mix Modeling

••PAGE

Marketing Mix Modeling

Big advantage is that it calculates the value and delayed effect AND calculates offline channels, branding and PR

+ Multiplier (1 USD in 17 USD out)

+ Delayed effect (Time lag between cause and effect)

+ Volatility/standard deviation


Sa

les

un t

hous

and

s

Cost of SEO in thousands

280

260

240

220

200

180

160

140

20 22 24 26 28 30 32 34

Christopher Engman

••PAGE

Marketing Mix Modeling

− Expensive and slow (weeks to months to get the results)

− Difficult to find talent (about 2/3 of all MMM profiles on LinkedIn are PhDs or higher)

− Example case: 7 out of 170 countries, 1-2 times per year instead of 170 countries and every month


Sa

les

un t

hous

and

s

Cost of SEO in thousands

28

0

260

240

220

200

180

160

140 20 22 24 26 28 30 32 34

Christopher Engman

••PAGE

PROOF: Automated Marketing Mix Modeling

AUTOMATED Multi variate regression modeling

• Multiplier (1 USD in 17 USD out)

• Delayed effect (Time lag between cause and effect)

• Standard error / volatility

• Spillover effect, if one BU or offering is promoted, how does it drive an adjacent area

• Adstock, a way to account for that some effects are persistent and (partly) carry over to future periods. A mathematically calculated brand value.


Christopher Engman

••PAGE

PROOF: Automated Marketing Mix Modeling

AUTOMATED Multi variate regression modeling

• Speed: Minutes instead of weeks or months -> GPS live traffic information vs paper map

• Cost: Thanks to automation, the cost of creating and running the models is often a small part of what it costs when using data scientists and a non-automated solutions

• Scale: AMMM can scale across global entities, across the entire marketing portfolio


Christopher Engman

•• ••PAGE

Acme Inc. India: marketing financial performance FebruaryFebruary Marketing ROI: 7 times the money, 5 months average time to impact, low volatility.

WINNERS

• Paid LinkedIn ads – 7 kUSD spend, 8 times the money, 4 months average time to impact, medium volatility

• Paid Blogs – 3 kUSD spend, 11 times the money, 2 months average time to impact, high volatility

o Look into the variety of podcasts since some of them might have a lower relevance, but high average multiplier

• Video productions – 15 kUSD spend, 12 times the money, 8 months average time to impacto high volatility on both the multiplier and the time to impact. Consider splitting video content into smaller

categories to improve the analysis further.

• Podcasts – 1.5 kUSD spend, 10 times the money, 4 months average time to impact, high volatility (same as for paid blogs)

• PR – 45 kUSD spend, 13 times the money, 3 weeks of average time to impact, medium volatility

o The short time to impact is common. Increases the trust close to the purchase decision.

© PROOF • 201931

•• ••PAGE

Acme Inc. India: marketing financial performance FebruaryNEUTRAL

• Paid search / SEM – 12 kUSD spend, 5.5 times the money, 2 weeks average time to impact, low volatility

• Paid Instagram ads – 30 kUSD spend, 6 times the money, 4 weeks average time to impact, high volatility (see comments on Facebook above)

• Email marketing – 4 kUSD spend, 3 times the money, 2 weeks average time to impact, high volatility (need to look into why)

• Own website – 20 kUSD spend, 8 times the money, 10 months average time to impact, low volatility

• Webinars – 3.5 kUSD spend, 4 times the money, 5 weeks average time to impact, high volatility (events, webinars etc all depend a lot on the topics and who is running them, high volatility is expected)

© PROOF • 201932

•• ••PAGE

Acme Inc. India: marketing financial performance FebruaryLOSERS

• Paid Facebook ads – 10 kUSD spend, 3 times the money, 3 weeks average time to impact, high volatility

o Likely high volatility due to too big knowledge differences within the social media team.

• Promoted tweets – 5 kUSD spend, 3 times the money, 9 months average time to impact, low volatility

© PROOF • 201933

Example cases based on the three budget cut methods- Shaving, same % across all- Panic, cut all except short term- Surgical, use regression modeling / MMM / A-MMM to know what to increase and decrease short-, mid-, and long term focus plus online, offline

••PAGE

A fintech company B2BOne of the leading fintech companies operating in a highly competitive market. New leads are mainly acquired online and through direct mails with an SDR conversion team and KAM.

Revenue: 24 M Euro

Profit: 1 M Euro

Marketing spend: 2,4 M Euro

Sales spend: 10 M Euro

Marketing mix

• Direct mail

• Affiliate

• SEM

• Facebook ads

SHAVING METHOD

COMPANY PRESENTATION LOREM IPSUM DOLORE • 201935

• Retargeting

• PR

• Events

• Email

• IP-display/ABM

• Guest bloggers

• Video production

• Case studies

•• ••PAGE

A fintech company B2BShaving method

Company is cutting costs with 20%, across all marketing tactics, 5% on sales.

Immediate yearly saving: 980 k Euro

Delayed effects:

• Incoming leads drops with 10% 1st month

• Incoming leads drops 25% following months

• Engagement drops with 30% over 6 months

• SDR conversion rate drops 10%

• Brand awareness growth stops

SHAVING METHOD


First quarterSales drop 12%

Second quarterSales drop another 14%

•• ••PAGE

A fintech company B2B

SURGICAL CUT


Surgical cut

Company is cutting costs with 7%, across all marketing tactics, 30% on sales.

Immediate yearly saving: 70 k Euro + 3 M Euro = 3.07 M Euro

Big cuts: sales staff + events

Small cuts: guest bloggers

Delayed effects:

• Incoming leads drops with 10% 1st month

• Incoming leads drops 3% following months

• Engagement drops with 4% over 6 months


Second quarterSales increase 3%

Profit!

••PAGE

Sports retailer, B2CWell-established company with both e-commerce & physical stores. E-commerce is growing but majority of sales is still in physical stores.

Revenue: 700 M Euro

Profit: 36 M Euro

Marketing spend: 76 M Euro

Store staff spend: 250 M Euro

Marketing mix

• Influencer marketing

• SEM

• Facebook ads

• Instagram ads

PANIC MODE (SHORT TERM)


• PR

• Events

• Email

• Blogs

• Website

• Article production


••PAGE

Sports retailer, B2CWell-established company with both e-commerce & physical stores. E-commerce is growing but majority of sales is still in physical stores.

Marketing mix

• Influencer marketing

• SEM

• Facebook ads

• Instagram ads


• PR

• Events

• Email

• Blogs

• Website

• Article production


PANIC MODE (SHORT TERM)

•• ••PAGE

Sports retailer, B2CPanic mode

Cutting all tactics that don’t effect short term sales.Immediate saving: 50 M Euro

• Store sales revenue drops with 5% short term

• Store sales revenue drops with 15% long term

• Footfall drops with 12%

• Conversion rate drops with 8%

• Online sales drops with 5%

• Brand awareness drops with 8%

• CLV drops with 15% (customer life value)

PANIC MODE



Second quarterSales drop another 25%

•• ••PAGE

Why surgical cuts with A-MMM

• Short-, mid-, and long term considerations (test implications of changes)

• ”True” ROI (not just short term ROI)

• Offline marketing, people, online marketing, out-of-reach-online

• From data to changes 1 week (can be shorter thanks to automation)


••

What data is needed to do surgical cuts in the marketing

budget using A-MMM?

Christopher Engman

••PAGE

Example of data

Example input file B2B / Industrial 2-3 years of history, CPG 1-2 years

NB These can vary a lot between different B2B and B2C companies


••

Surgical 6 method steps

Christopher Engman

Decide what we optimize and what constraints we have (first quarter, second quarter, min 7x)

Upload into ProofSpend data per marketing category & volumetric KPIs (2-3 years history)

Two min. analysis Ready to make surgical cuts based on the A-MMM

Contextual analysis with the CMO, head of analytics etc.

1 2 3

4 5 6

6 steps, surgical cuts method

Who are we?

World leader in Automated Marketing Mix Modeling

Clients like Samsung, Nivea, Daniel Wellington, Intel, Oracle, Johnson Controls, United Technology

Offices and clients in the USA, Sweden and India, 35 staff

Experienced team members incl.• CEO and founder – Mark Stouse, ex CMO

Honeywell• Analytics led by Prof. Dr. Magnus Söderberg• Software CTO and co-founder Tom Bishop• Global marketing and sales team led by

Christopher Engman

Thank you! Get more insights on proofanalytics.ai

www.linkedin.com/in/christopherengman/

[email protected]

+46 73 510 19 74

https://proofanalytics.ai/

https://www.linkedin.com/in/christopherengman/

•• 48

INSIGHTS

•• 49

1. Too many sales people, too little marketing

•• 50

2. Too many channels

•• 51

3. Too much lead gen vs closingdeals vs client growth

•• 52

4. Too little PR

•• 53

5. PR has the biggest effectnear the purchase decision

•• 54

7. SEM and the bath tub problem

•• 55

8. Too many events

Thank you! Get more insights on proofanalytics.ai

www.linkedin.com/in/christopherengman/

[email protected]

+46 73 510 19 74

https://proofanalytics.ai/

https://www.linkedin.com/in/christopherengman/

Documents

Budget cut methods · Cost of SEO in thousands 280 260 240 220 200 180 160 140 20 22 24 26 28 30 32 34 Christopher Engman. PAGE• • Marketing Mix Modeling −Expensive and slow