Media mix: helping marketers find the right balance
Modern marketers have more ways than ever to reach consumers. Television commercials. Print ads. Banner ads. Product web sites. Online search promotions. Viral videos. And an ever-expanding menu of social media.
Yet, no matter how “big” the data at their disposal, finding the optimal mix of media remains elusive, according to Oliver Rutz, an associate professor of marketing at the University of Washington Foster School of Business.
A new study by Rutz and co-authors Shuba Srinivasan and Koen Pauwels begins to disentangle this proliferation of media channels that marketers employ to make a sale. From deep analysis of a comprehensive campaign—on TV, search and social media—promoting a common grocery store staple, they developed a model that identifies the role and relative importance of each channel along the path to purchase of this or any other product.
“The ‘Holy Grail’ for marketers is knowing the value of each touch in this multi-touch world,” Rutz says. “We’ve made the first step in creating a more holistic view on all of the marketing metrics and media, and to understand how they work together, not just individually.”
The art and science of product promotion has grown ever more complex since the pre-Internet days when marketers largely debated the merits of TV, radio and print.
Marketing organizations, of course, have evolved to meet the increasingly diversified media landscape. But as each new Internet-based channel has emerged, most have created a distinct department to address it. So, one department handles social media, another handles website, another online search, another offline advertising, and so on.
The problem, Rutz says, is that these marketing silos tend to run independently rather than in concert.
This creates internal competition. Departments vie for a bigger slice of the resource pie by arguing their channel’s predominance in convincing consumers to buy.
“Marketing has become so fragmented and internally competitive that nobody can see how it works as a network,” Rutz says. “Even if I have perfect data on how many times a consumer viewed our commercial or visited our product site or liked us on Facebook or mentioned us on Twitter or searched for us on Google, it’s difficult to put a dollar figure next to each interaction. How do I distribute credit across a marketing campaign?”
Addressing this dilemma begins with comprehensive and credible data. Five years ago, Rutz, Srinivasan and Pauwels were awarded access to the full set of customer impressions—across television advertising, online search and social media—of a “fast moving consumer good” that can be found in every grocery store.
“It’s rare to have data from everything,” says Rutz. “Our idea was to observe not only TV and sales or search and sales or social and sales—but to observe everything at the same time so that we can see the interplay.”
Analyzing the entire basket of marketing data against sales allowed Rutz and his colleagues to form an integrated picture of how each effort ushered customers along the path to purchase. This “know-feel-do” pathway encompasses learning, feeling and, ultimately, behavior. And each marketing channel plays a part.
In the household staple test case, the researchers found that the traditional marketing levers of distribution and price proved to be the main drivers of sales. But web site (10 percent), social media (3 percent) and online search (2 percent) together played a substantive role, as did TV advertising (5 percent).
This revealing analysis helped them construct a framework that could be applied to any product campaign, the beginning of a greater understanding into how multiple marketing channels work—or fail to work—in concert.
Rutz was intrigued to find that online customer engagement had an impact on sales of even the humblest of consumer commodities that are bought in a store.
But he stressed that the optimal mix of marketing media will vary by product. More complex and researchable purchases—say, a dishwasher, a bicycle, even a good raincoat—are best served by their own distinct suite of promotion via some combination of television, print, Internet, search, web and social media… as well as the old marketing standards of product, price and place.
Integrating these players is the key. And so this model, built upon the observation of a simpler product’s promotions, may show the way to better marketing in the Information Age.
The stakes are high. Understanding the systemic interplay of online and traditional marketing channels can help sell more products today and anticipate tomorrow’s sales more accurately.
“From a forecasting perspective,” Rutz says, “these online engagement metrics are leading indicators of future sales.”
He adds, “the firm that is best able to figure out how these channels go together and how to assign value is going to do much better than competitors who are spending money on everything in hope that it will lead to greater sales.”
“Paths to and off purchase: quantifying the impact of traditional marketing and online consumer activity” is published in the July 2016 Journal of the Academy of Marketing Science.