Background:
Hudson River Group was hired by a multi-department fashion retailer with ~800 stores in more than 40 states. The goal of the work was to measure the impact of historical marketing to improve future marketing allocation and expand highly efficient media while avoiding significant diminishing returns.
The client drove positive comparable growth in Year 2 and Year 3 versus LY through increased marketing investment (Figure 1). However, the marketing department was required to reassess spend levels in Year 4. Year 4 spend decreased by -6.5% versus LY, and Year 5 spend decreased by -5.3% versus LY (Figure 1).
Action:
Based on guidance from Hudson River Group’s quarterly MMM analysis and optimizations, the client reallocated 22% of their marketing mix over the next two years. The share of mix for inefficient media, such as CRM Tactic 2 and Print, was reduced in favor of other more efficient media (Figure 2).
Results:
Despite budget declines, the client had a 30% increase in Total Marketing ROI from $1.90 in Year 3 to $2.50 in Year 5 from mix reallocation (Figure 3). Saturation in vehicles with an expanded share of mix was avoided as marketing-driven revenue increased (Figure 3). The client also successfully expanded into Digital Media.
Conclusion:
Opportunities exist to contribute to comparable growth when budgets tighten through reallocating your marketing mix to support more efficient media.