Use data analytics for best return on marketing spend

Transcription

1 Use data analytics for best return on marketing spend EyeForTravel Smart Travel Analytics

2 Use Data Analytics To Get The Best Return On Your Marketing Spend 1) Implement a data-driven SEO strategy for higher ad position, better conversion rates, higher ROIs, and lower cost per click 2) Use attribution wisely for accurate media spending in ) Only buy the media that work: track visitor behavior and every dollar spent 4) Measure and track behavior to improve your mobile website or application and use it to engage with customers 5) Time your marketing mix for maximum return using attribution and reservation data.

3 Agenda 1) Goal of channel spend 2) Consequences of inaccurate attribution 3) Approaches/levels of attribution a) Algorithmic attribution b) Arbitrary attribution i. Bracketing ii. Tactical spend decisions by channel

4 Positive Return on Incremental Channel Investment ROI = (VCM Spend) Spend Abbreviation Term Definition ROI Return on Investment Indicator of investment profitability. Positive = good. VCM Variable Contribution Margin The amount of profit driven by a given transaction. Spend Channel Spend The amount spent driving traffic to the site during the period in question Calculated over a specified time period of investment and return

5 Which marketing treatment(s) triggered the purchase? "Half the money I spend on advertising is wasted; the trouble is, I don't know which half. -John Wanamaker Father of Modern Advertising

6 Hard to Know Random We may not find the correct answer, but the answer does exist.

7 Agenda 1) Goal of channel spend 2) Consequences of inaccurate attribution 3) Approaches/levels of attribution a) Algorithmic attribution b) Arbitrary attribution i. Bracketing ii. Tactical spend decisions by channel

8 Google Analytics attribution options Google offers several attribution mechanisms out of the box Choosing the wrong model can have consequences.

9 How badly do you want to know? Boyd: What are you packing? Raylan: You'll pay to find that out.

10 Choosing your attribution strategy *Do you have: 1) Large enough budget? 2) Multiple channels? 3) Belief in ROI knowability? Do you have data guys? Can you access your data? Yes Do you want/need true attribution*? Yes No No Use your site metric solution s attribution Yes Do they have bandwidth for this? DIY Yes No No Hire a vendor

11 Agenda 1) Goal of channel spend 2) Consequences of inaccurate attribution 3) Approaches/levels of attribution a) Algorithmic attribution b) Arbitrary attribution i. Bracketing ii. Tactical spend decisions by channel (skip)

12 Collecting the necessary data Site metrics tool Clicks Visitors distribution tool SEM Bid Management tool Impressions Clicks Spend Meta search feeds Impressions Clicks Spend Sends Opens Call Center IVR Channel-specific phone #s Ad server Impressions Spend Analysis space e.g. SAS, Revolution Analytics, SPSS, Teradata Warehouse Miner Spend Manual spend entry table Back office system Bookings VCM Media impressions Television plan GRPs Spend

13 Connecting the necessary data Sends 1 Opens 1 Clicks 1 Site monitoring tool Clicks:Transactions 1 Back office CRM system 1 1 Transactions Profiles Customers IVR Calls Sessions 1 1 Ad server Impressions Impressions TV plan 1 GRPs

14 Forrester 2012Q2 survey of attribution vendors Our Stats PhD audited the players, settled on pilot with new upstart Datasong (formerly Upstream. )

15 Algorithmic attribution: Survival Modeling Given all the history we know, how likely is this shopper to convert soon? Datasong answers with a 2-stage model: -Are Brand shoppers (BSEM, BSEO, DTI) likely to book? Yes -Did your last TV spot cause their brand loyalty? Maybe 1 Model 1 Accuracy 68% 1 Model 2 Accuracy 81% NonConverters Converters NonConverters Converters

16 Algorithmic attribution: Survival Modeling NonConverters Converters 1) The Axes show the time since last channel exposure 2) Dots represent converters vs. nonconverters 3) The Orange line represents the relationship between 2 variables, e.g.: a) time since last and b) time since last affiliate visit 4) Responders: everyone above the line. We count the folks above the line and see what our accuracy is 5) Attribution: once satisfied with a model(s), we d: a) take a given order, b) see the time since last and affiliate and based on the timing, and; c) where we are on the orange line, so; d) we have a means to allocate which was more causal.

17 Survival Modeling: DIY Recommended by one of our PhD statisticians. SAS usage is not necessary.

18 Algorithmic attribution: Interaction Method Brand SEM Affiliate 5.6% Conversion Brand SEM Affiliate 5.8% Conversion Some channel interactions may actually take conversion backwards. Only by examining all interactions can you know for sure

19 Running the process 1) For each site visitor a) Assemble visit history b) Create variables to represent: i. Channel impressions ii. Channel clicks iii.past purchases 2) Regress or use machine learning algorithm a) Ascertain which channel touches predict booking b) Give VCM credit to causal channels 3) Calculate ROI a) Use each channel s VCM and spend b) Where ROI is positive, spend up c) Where ROI is negative, cut spend or change tactics

20 Agenda 1) Goal of channel spend 2) Consequences of inaccurate attribution 3) Approaches/levels of attribution a) Algorithmic attribution b) Arbitrary attribution i. Bracketing ii. Tactical spend decisions by channel (skip to end)

21 Round up all the clicks! Leaves out: Offline bookings Multiple profile activity Impressions (Display or Television/Radio/etc) Cleared-cookie clicks

22 55% of shoppers clear cookies every 3 months Cookie clearing is a serious problem causing the true impact of online channels to be massively understated. The Consumer Side of Analytics - Forrester/Jupiter Research 2009

23 Bracketing 1) Assume for the sake of argument that one of the site tool s attribution schemes reflects reality, but you don t know which one. 2) Find (or create) the scheme that is most and least generous to digital channels. a) Last click: usually the least generous to digital channels b) 3-tier: a scheme we created to favor NBSEM and Meta/Travelsearch 3) Assume that the true attribution (& ROI) lies between these extremes 4) Adjust spend and see which scheme better predicts reality.

24 Tactical decision-making Ignore the big picture and focus on the borderline projects in each channel Brand advertising SEM (Brand and Nonbrand)

25 Tactical decisions: Brand Easy decision: advertising heavily in geographies of known high customer concentration during periods before high demand. Hard decisions: national vs. regional whether uniform or in intermittent bursts invest more in air time or fresh creative Tactical solutions: 1) A/B test across identical municipalities/regions, observe rise in Brand-attributable (BSEM, BSEO, DTI) bookings. 2) Hire Comscore to measure brand awareness/intent after broadcast.

26 Tactical decisions: Search Engine Marketing Easy decision: spending to capacity on Brand SEM, which looks profitable under almost all attribution schemes Hard decision: whether to spend up on NonBrand SEM keywords which don t appear profitable no matter how you attribute. Tactical solution: A/B test whether reduced BSEM spend is offset by increased BSEO booking volume

27 Tactical decisions: distribution Easy decision: ing up to 1x/week, hitting each site visitor with the message he or she is most likely to convert from. sending messages advertising exceptional deals. Hard decisions: whether to upgrade to rules-based campaign (e.g. Responsys, ET) whether to saturation-bomb your list, raising overall yield but boosting unsubscription. whether to push loss-leading promo code, boosting overall conversion but training site shoppers to expect discounts

28 Take-away lessons 1) Be intentional about your attribution decisions, and creative about how to test your assumptions. 2) For top competitors in each vertical, the question is no longer should we do algorithmic attribution? but rather How can we operationalize our attribution model? 3) If your data aren t yet in shape to support attribution & other ad hoc analyses, get that project underway

29 Attribution: arbitrary methods Which channel(s) gets the credit in the ROI calculation for any given booking? C C C 2 C 1 C T SEO W. Carib. cruise 6/1/13 Meta search ATL-NYC flight 1/1/13 NYC hotel 1/1/13 45-day lookback BSEM NYC hotel 1/1/13 DTI NYC hotel 1/1/13 NYC hotel 1/1/13 # Channel Rationale 1 Last click ABC: Always Be Closing. 2 Last paid click Direct is a point of sale, not a marketing channel. 3 Average/hyperbolic Every channel is special. 4 First click First attracted the consumer 5 First relevant click Started the conversation that led to the purchase. All of these make assumptions about causality but give no evidence of causality

30 DataSong s Modeling Architecture UPSTREAM DATA FORMAT (UDF) Functions to read Hadoop output; xdf creation Exploratory data analysis GAM survival models CUSTOM VARIABLES (PMML) ETL N marketing channels Behavioral variables Promotional data Overlay data Scoring for inference Scoring for prediction 5 billion scores per day per customer

31 What analysis method was used? Survival Response Model on Accounts and Cookies Analyze effects of marketing on response over time In terms of both what worked and what didn t Time-dependent: Inputs: estimate the speed of marketing effects decay Outcome: look at times where a bkg has or hasn t yet been made Create models specific to: LOB: the impact of SEM varies from auto to packages Customer: repeat purchaser motivations are more knowable Controls for non-marketing effects: Anniversary effects: many sales driven by season demand Customer-driven activity: many customers driven by loyalty

32 VCM The all-inclusive profitability of the transactions driven Transaction revenue minus variable non-marketing expenses: Revenue: Supplier Commissions, GDS incentives, Overrides (lumpy: average/booking must be assumed) Media (not transaction-driven, but has to be modeled in somewhere) Attached bookings / Lifetime value: try to gauge full value without doublecounting Expenses: Website hosting/capacity costs Data processing expenses

33 Marketing Farming 1) Fertilizing/irrigating = brand advertising 2) Planting = presence on the digital shelf Which factor or factors caused you to have a good (or bad) crop yield?

34 Attribution options - broad view Provider Method 1x Cost monthly Timing Comments Adobe Attribution model Varies wks Consulting arm willing to address attribution questions as one-off modeling projects. Adometry Econometric model Low High 12 wks Forrester-acclaimed industry co-leader. Highly display-focused. Datasong Attribution model w/ Customer scoring Med Med Med 6 wks Comprehensive model which pulls in both online and offline spend impacts. Per-customer demand curve to predict the expected return on every campaign Google Analytics Interactions model - - now Has delivered digital-only channel interactions model to beta clients. Gauge LLC Simple regression High - 10 wks General consulting analysts, not on the efficient frontier for this deliverable. Kenshoo Unknown algorithm - Med 4 wks Primarily targeted towards SEM spend, but can be expanded to comprise other digital channels Visual IQ Econometric and Attribution models High wks Med- High wks Econometric model. Offers cross-channel allocation guidance, including offline spend. Attribution model. Offers within-channel campaignlevel spend guidance. No offline.