The marketing team of a FMCG brand felt that while their models were identifying the ROI of the marketing spends, the spends were over time getting skewed in favour of short term promotions and the brand was not focusing on building brand value. The basic reason for this was the estimated ROI from advertising was lower than that of promotions – both consumer and trade and therefore, the skew in spends. RainMan agreed that this is a possible outcome as the long term (LT) impact of advertising is not taken into account by these models. The real ROI can be found only if suitable modelling methodology that takes LT into account.
Data was collected for a period of 5 years at a monthly granularity, and RainMan’s solution based on academic studies, was to build a 2 stage model. The first model would estimate the short term impact of advertising and also the impact of other marketing inputs. The second stage model would use a dynamic Base to understand what drives accretion to the base effect – which is positive for the brand.
It was found that the LT effect of advertising was as much as that of the short term impact as one of the effects of advertising apart from recruiting a customer is to retain a customer. This customer gives sales over a period of time and therefore this value need to be considered while deciding on budget allocations.
The marketing plan was optimized based on these new ROIs, with the result that the Brand has grown in strength over a period of time. The marketing team had enough ammunition to defend their correct decision to restrict promotions and invest on building their brand.
An Alco-Bev major wanted to understand the sizes of each of the categories of alcohol such as Whisky, Vodka and so on into the future for a plan strategy for a 5 year period.
The advantage of this methodology is that ROI of key digital channels can be compared and spends optimized in line with these insights, significantly improving overall efficiency.
The problem this CPG brand was faced with was a typical problem- Brand had presence across multiple connect points, paid media, owned media ( website, Facebook page etc) and earned media ( Twitter and other social mentions) but not knowing clearly what works across market clusters, and the interrelations between these connect points.