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MROI and Performance Paradigm In Digital Marketing Silicone Free Conference Moscow, 27 April 2012. ©+® Marcin Winkler
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Silicon free conference 27 april marcin winkler presentation

Dec 04, 2014

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Page 1: Silicon free conference 27 april marcin winkler presentation

MROI and Performance ParadigmIn Digital Marketing

Silicone Free Conference

Moscow, 27 April 2012.

©+® Marcin Winkler

Page 2: Silicon free conference 27 april marcin winkler presentation

The trend:Where we are now with online

advertisement?

Page 3: Silicon free conference 27 april marcin winkler presentation

Source: Forrester Research

Interactive Marketing Spend

Online advertisement grows fast and becomes more diversified

Page 4: Silicon free conference 27 april marcin winkler presentation

Key question

How to measure result in monetary terms?

Page 5: Silicon free conference 27 april marcin winkler presentation

Answer: Return on Marketing Investment

MROI = ΔProfit

Cost

Page 6: Silicon free conference 27 april marcin winkler presentation

Key principles

• Incremental approach

• Acquisition cost and customer value (LTV)

• Result attribution

• Optimization

Page 7: Silicon free conference 27 april marcin winkler presentation

Incremental approach

Page 8: Silicon free conference 27 april marcin winkler presentation

Incremental approach

MROI = ΔProfit

Cost

Δprofit = Δsales - cost

How much would we sale without any advertisement?

Page 9: Silicon free conference 27 april marcin winkler presentation

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)

Page 10: Silicon free conference 27 april marcin winkler presentation

Total sales = baseline sale + incremental

Page 11: Silicon free conference 27 april marcin winkler presentation

Lifetime Value of Customer

Page 12: Silicon free conference 27 april marcin winkler presentation

Example:

the client is in the basket and purchases a phone for PLN699 and a tariff of PLN139 a month

Page 13: Silicon free conference 27 april marcin winkler presentation

Is Value of PLN699 our incremental revenue for ROI?

Page 14: Silicon free conference 27 april marcin winkler presentation

No! It is single transaction value that does not take into account

other revenue streams

Page 15: Silicon free conference 27 april marcin winkler presentation

Lifetime Value of Customer

Source : The University of Chicago Booth School of Business “Data Driven Marketing”

Page 16: Silicon free conference 27 april marcin winkler presentation

Example

LTV should be the reference for acquisition cost and budget level

Source : The University of Chicago Booth School of Business “Data Driven Marketing”

Page 17: Silicon free conference 27 april marcin winkler presentation

Attribution

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The fundamental question marketers should ask:

“Whereshould spend my

marketing $ to get the best return?”

Page 19: Silicon free conference 27 april marcin winkler presentation

Source : Ignition One

GOOGLE PAID SEARCH

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FACEBOOKSPONSORED STORY

Source : Ignition One

Page 21: Silicon free conference 27 april marcin winkler presentation

MAIN PORTALDISPLAY ADVERTISEMENT

Source : Ignition One

Page 22: Silicon free conference 27 april marcin winkler presentation

GOOGLE PAID SEARCH

TRANSACTION!!!

Source : Ignition One

Page 23: Silicon free conference 27 april marcin winkler presentation

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!

Page 24: Silicon free conference 27 april marcin winkler presentation

ROI Optimization

Page 25: Silicon free conference 27 april marcin winkler presentation

Reallocation of budget

• €150, 000• 300 Sales• CPA €500

• €150, 000• 370 Sales• CPA €405

Page 26: Silicon free conference 27 april marcin winkler presentation

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

Page 29: Silicon free conference 27 april marcin winkler presentation

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!

Page 31: Silicon free conference 27 april marcin winkler presentation

Thank you for your attention