Advanced Marketing Mix Optimization Solution Offers Transparency Into Spend and Outcomes

Business Objective

Our client is a leading US-based bank and stockbroker, offering an electronic trading platform to trade financial assets. It also provides margin lending, cash management services, as well as services through registered investment advisers.

The client was using a market-leading proprietary marketing mix optimization solution that allowed them to plan their annual budget but did not provide sufficient transparency into individual relationships between marketing spend and business outcomes or the effect of macroeconomic and other variables on base demand. They wanted an in-house replacement for the external tool.

  • Our client had a complex marketing plan worth more than $150 million across 60+ marketing touchpoints. Data for spend and other internal variables were provided through 90+ spreadsheets and needed to be consolidated to create the modeling dataset
  • Spends ranged from $500 to $20 million and required the contribution of each touchpoint towards all of three business outcomes for three customer segments
  • To ensure business acceptance of results, the attributions needed to be stable quarter-on-quarter
  • With more than 60 touchpoints at different levels of granularity (national vs. local and segment-specific promotions), it was challenging to create an optimization engine that would generate a spend plan for a given budget and a variety of business constraints.

Solution Methodology 
  • Cleaned the incoming dataset and built a comprehensive dataset that would feed into other business reporting as well
  • Developec a suite of Hierarchical Bayesian Path models to measure the effect of the base (Economy, Price, Competitor Media, Social Media, etc.) and touchpoint variables (TV, Newspaper, Online Display, Online Video, etc.) on the outcome variable through direct and indirect paths
  • Created an optimization engine that allows users to enter business constraints and outputs an optimized spend plan at the appropriate granularity
  • Developed a customized web-tool to allow users to enter spends, simulate impact, run the optimization engine and view reports
Business Impact
  • Transparency into the spending process and ability to provide business users with answers to their queries about the relationships between control, touchpoint variables and business outcomes.

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