Thursday, January 16, 2014

5 Analytic Steps in the Shift to Digital

How should marketing approach shuffling the budget?

Business objectives haven't changed a whole lot over time - drive growth, build brand/category leadership and create operational savings.    Broadly speaking these goals end up requiring shifting money around based on three steps.
  1. Freeing resources from non-productive programs,
  2. Identifying how marketing impacts key metrics among key segments, and
  3. Re-purposing marketing dollars to more productive programs
Transferring money around at a tactical level, e.g. spot to national TV, display to search, print to tablet, and understanding the impact is fairly common and a tractable analytic problem.  But in a world of stagnant same store sales imagine that 33% or more of the largest budget item is focused on a single offline tactic, e.g television, flyer/circular, or out-of-home, and that money is put on the table as the foundation of 'doing things differently' and moving to digital.

We're not talking about our discretionary spend or bucket for experiments here, we're talking about betting the farm. 

In this case, there are numerous known unknowns, like 'what is the sales impact if we don't do that anymore', but also a very real potential for unknown unknowns - things we simply don't know to ask about yet. This begins to sound like a three-to-five year program, not a single campaign, that has as many cultural and process changes as it does tactical ones.

To help break down such a large problem from an analytic perspective, it is helpful to identify specific programs that shape our understanding and thus our planning.  Here's my initial categorization:
  1. Document "Cost of Sales" attributable to each key tactic
  2. Identify productivity of each tactic by geographic zones, e.g. store trading area.
  3. Develop consumer segmentation model(s) based on how they choose and decide
  4. Build a model for how different types of content work
  5. Define how wholesale changes in the media mix impacts sales
Each of the above categories can then be further broken down into analytic projects, data-related activities as well as in-market pilots.   These will be the focus of the next set of posts that will list out 15-20 specific questions per goal marketers should be asking their data teams whose single biggest contribution to the transformation will be reducing risk by quantifying uncertainty.

(Disclosure - this problem is something we're facing at work and I'm sharing my thinking process of how we're helping clients get from A to B.)

This is the second part of a continuing series about the 'shift to digital'.  It started here.

No comments: