This study shows how a custom analysis and full view of cross-channel impacts can inform a marketing budget optimization to reach growth goals.
Background:
In the changing retail landscape, companies need to evolve their business and continue to improve their marketing ROI. Above all, traditional brick-and-mortar retailers must grow their ecommerce and digital marketing presence without losing efficiency or store sales.
In this case study, a top-20 retailer led the industry in realizing the need for an omnichannel strategy. They developed programs to create a seamless customer shopping experience across channels and now needed to grow their ecommerce and digital marketing presence to meet four key goals:
- Increase ecommerce sales to 20% of the business
- Protect the sales of their 600+ stores
- Maintain their marketing ROI
- Understand the sales channel impacts of each media in the marketing mix
Action:
HRG’s marketing mix models measured the incremental impact of each media on both the store and ecommerce channels (Figure 1). This revealed that certain media had a distinct role in the primary channel they drove.
As a result, a simple marketing optimization would ignore the ecommerce goals and favor stores (the larger share of the business). Meeting the new goals required a more tailored approach to determine the optimal marketing mix.
HRG used the Integrated Marketing Allocation Plannerâ„¢ to work with the client on a multi-step scenario plan:
- Determined the sales channel trade-offs of shifting out of traditional media to a digital-heavy strategy
- Built total budget scenarios with the priority of achieving maximum ecommerce growth while protecting store sales
- Further optimized locally controlled spend (e.g. Social and Direct Mail) at the market level
Recommendation:
A few key recommendations came out of this process. Some examples include:
- Invest in Search as the most important digital driver to grow the ecommerce business
- Protect the Promotional Video budget to help maintain store sales
- Reduce Direct Mail spend through surgical cuts, only supporting key markets
Results:
The client used this guidance to evolve their marketing mix. As a result, they pivoted from a brick-and-mortar-focused company to a growing omnichannel business:
- Ecommerce sales grew from 5% to 20% of the business
- Digital media increased to 35% of the mix
- The total marketing ROI surpassed $8