Next Generation Media Mix Optimization

Using audience and media management to create certainty in

an increasingly uncertain world
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Executive Summary:
People have more media choices than ever to research the products and services they buy. CMOs are
challenged to rationalize their budgets and demonstrate increasing ROI while embracing new media and
distinguishing the media consumptions of their customer. Next generation media mix optimization is how
winning marketing organizations will allocate their investments to target high-value audience and media options,
while delivering accurate attribution, cross channel measurement and tools for high-performance planning.

Like clockwork, each year marketing organizations provide

marketing plans and budget recommendations that outline
sophisticated media investments, spanning a growing number of
channels — chasing an increasingly fragmented customer and
illusive return on investment.

The world is more complex. Your company’s audience — your existing and prospective customers — have changed and
so must your marketing. Consumers are connected to a greater array of devices and media outlets than ever before.
They Twitter and browse social networks on smart phones, check email in their local coffee shops, and choose from over
100 TV channels every day1. They seek and use information: 51% of U.S. and UK consumers always compare products
and services before a purchase; only 5% rely upon advertising or promotional features for advice2. In this cacophony of
change, 80% of CEOs believe their brand delivers a superior customer experience yet only 8% of their customers agree3.
And, only one in five “targeted” online ads actually reaches its intended audience4.

s !RE YOUR MEDIA INVESTMENTS DELIVERING AGAINST THE PROMISE OF RETURN ON MARKETING INVESTMENT
s #AN YOU IDENTIFY AND TARGET THE APPROPRIATE AUDIENCE USING THE MOST EFlCIENT MEDIA TOOLS
s #AN YOU PROPERLY ATTRIBUTE AND TRACK MARKETING EFFORTS ACROSS MEDIA INVESTMENTS
s !RE YOU BETTER THAN YOUR COMPETITOR AT OPTIMIZING A SOPHISTICATED MEDIA MIX

These are very difficult questions. Gaps in answers create immense issues: Waste — 47% of U.S. ad spend reaches the
wrong audience5. These gaps in delivery accuracy mean that when marketers can’t align their target audience strategy
closely to their ad delivery, they make investment decisions based upon averages and educated hunches, causing them
to overspend on low value customers and media channels while under spending on the high value ones. Given the top
30% of a brand’s customers are typically five times more profitable6, the inability to create certainty in audience and
media management costs advertisers huge profits.

To address these challenges, many companies are turning to the next generation in media mix optimization, delivering
high-performance audience and media management. Designed to optimize the performance of media mix investments,
the solution takes the guesswork out of planning — helping marketers to better orchestrate and execute their
marketing strategy.

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Challenges to effective
media mix optimization
Today’s chief marketing officer is tasked to deliver incremental customer is a static average. The reality is that
increasing results in the face of decreasing or flat budgets, only 30% of customers typically return a profit, yet cost as
while also adopting and embracing technology changes much to acquire as the 50% that are profit-neutral, or the
that influence consumers. Here are some of the key 20% that actually cost you money to service. To significantly
challenges: increase your ROI, consider the impact of customer value
and target your best customers first.
Existing media mix optimization
solutions break on several levels
,EGACY SOURCES FOR MEDIA MIX OPTIMIZATION — While
While nearly all top marketing executives have used or
advertising agencies and consultants have driven media
researched solutions in this area, there are many who
optimization solutions for many years, there are issues
have not experienced success or have seen that success
to consider:
wane in recent years.
s !DVERTISING AGENCIES CAN PRESENT AN IMPROPER
alignment of business objectives and tend to focus on
,EGACY NOMENCLATURE — The delineation between
the channels of their expertise. This is natural as their
traditional mass advertising (ATL – Above the Line) and
talent also pools around those areas of expertise.
promotional or addressable-based advertising (BTL –
And, while primarily done through test programs,
Below the Line) efforts is blurring. The continued increase
the connection to actual consumer behavior and
in media addressability is delivering new opportunities,
correlation to revenue lift is usually soft, at best.
like household based television commercials driven
s %CONOMETRIC MODELS HAVE LONG BEEN USED BUT INVARIABLY
from advertiser segmentation and data insight. While
rely upon superhuman leaps in assumptions and
optimization efforts tend to focus on either ABT or BTL, in
footnotes in their reports to achieve their mathematical
the end, one consumer is the same person whether they
summations. Also, they tend to focus on either ATL
view a TV commercial or receive a display advertisement.
or BTL programs, limiting their effectiveness to drive
And, they see your brand as one entity… regardless of
performance and attribution, while fragmenting the view
organizational and technological silos.
of current and future customers.

$IFFERENTIATED Today, digital media accounts for nearly 35% of the

CUSTOMER VALUE average U.S. consumer’s media consumption yet less
 
 — The key to real than 15% of ad spend is directed toward these new


optimization is to channels7. Successful media mix optimization solutions
reduce wasted ad need to drive consolidated answers for BOTH above the
impressions on two line and below the line investments. Your target audience
  dimensions: audience doesn’t know that “line” exists and transcends channels

and media channel. with the greatest of ease. The struggle for marketing
One of the most leaders seeking to optimize against this new reality is to
difficult assumptions find models adaptive to the rate of change that drive shifts
 

of existing media mix in media investment and more closely mirror the shifts in
optimization solutions media consumption of their target audience.
is that the value of an

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US Adults (millions)
Fast-forward to the current decade. Today’s
250 All US Adults teen has become a moving target. Nearly all
are double or triple tasking while watching TV.
Mobile Phone
200 Internet U.S. teenagers trust information from each
Camera Phone
other 5X more than adults and 10X more than
150 ads11. If you think about what this world looks
Laptop like 5 to 10 years from now, this scenario will
MP3 Player
100 Digital Still Camera be even more complex as this demographic
will be your future target. It will pay to get on
Satellite Radio
Portable Navigation
50 Device top of this challenge sooner than later.

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Actual Forecast
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: July 25, 2008, “Benchmark 2008: Forecast Growth of Devices And Access In The US” report
Note: Actuals from 2005 and earlier are adjustments based on surveys of household heads.
“Reaching” consumers has become more difficult
The challenge has increased exponentially. There are more
channels, more screens and more data than ever and the
rate of change is increasing. Adoption driven by accessibility
and affordability, technology enables consumers to access
a vast wealth of information, on their terms. Starting in the
last few decades, the trajectory of change has ramped up
fast and is not projected to slow down.
Selecting one of the top spend channels, TV, we can
see dramatic intra-channel shifts: From a peak year in
mass TV advertising, 1965, until 2002, the number of
60-second spots necessary to reach 80% of one’s target
audience has increased from three to 1178. Translating this
to trust and recent research surrounding brand message
acceptance, 60% of respondents said they need to hear
information about a company three to five times before
they believe it9. Correlating these two points, an advertiser
would need to provide at least 351 60-second TV spots
to provide sufficient TV exposure to satisfy 80% of one’s
target audience need for message acceptance. This,
all while nearly 40 million U.S. households have DVR
capabilities and 59% of them “currently use a DVR to skip
through the commercials.”10
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 79%

* ) 50%
Note: *top 15% most active and engages myYearbook Members
Source: myYearbook and Ketchum, “Social Media Teen Influencer Survey,”
provided to eMarketer, May 25, 2010
116033 www.eMarketer.com
Complicating this, pushing more “noise” at consumers
who have become increasingly insensitive to the charms
of marketers has proven to risk exacerbating the issue and
drives negative long term brand impressions.
The solution: Next generation media mix
optimization
Next generation media mix optimization seeks to develop
a causal relationship between consumers, segments to
response, and to drill down into which media mix actually
drives consumer behavior for your high value audience.
It reduces the guesswork through better attribution;
quantifying media mix decisions through causal channel
contributions to sales. The solution is designed to
eliminate misleading performance measures and align the
marketing organization through common goals.
3
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Start with your best customers

Of finer resolution than your target audience,
Incremental Revenue People, Process &
determine those customers who tend to buy more, Opportunities Technology Media Spend
buy more frequently, return less, and refer you to  "
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base who deliver 100% of your profitability.    "
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Value People, Process and Email Executiion, Direct Mail,

Determine what this elite class looks like — Proposition + Technology

+ Banner Purchases, etc.

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demographics, purchase habits, media habits, *

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What data is available
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Top down and bottom up

The resulting analytics should include both ATL
Economic value proposition
and BTL data in a holistic model. Driven from a steeped
Through elimination of media wasted on the wrong
understanding of your best customer portrait, you can
audience or mix of channels, a successful media mix
then use syndicated segmentation methodologies and
optimization program should cover at least the cost of
“look alike” analysis to drive acquisition media decisions,
incremental resources. Sure, this is a worst case scenario
in particular those above the line. While the value of a
but given the pressure on cost containment and hurdles
customer is not static, neither are their needs, desires,
for justification, this is the safest decision for today’s CMO.
demographics, attitudes or behaviors. It’s not about
customer averages or the mean, but adding a level of Put tools in the hands of decision makers
intelligence and insight. 0LANNING TOOLS — Rather than a static report in a
dynamic market, you need to be able to adjust and form
Using historic media placement data, company sales recommendations based upon your planning cycles and
history and third-party demographics, your statistical needs. Three degrees of resolution you should consider:
model should be agnostic to the legacy view of the
s -EDIA TYPE EG 46 RADIO PRINT OR ONLINE
advertising “line”. This approach delivers several
s -ARKETING CHANNEL EG EMAIL DIRECT MAIL POSTCARDS
incremental benefits;
etc.)
s !TTRIBUTION PROBLEMS BECOME LESS OF A CONCERN AS
s 2EGION METRO STATE COUNTRY ETC
the full picture of media consumption is viewed by
h7HAT IF SCENARIOSv — Marketers are seldom happy
a single model. You see the overlapping effects of
with inflexible rationale. Instead, consider the impact of
alternate channels rather than the internal flurry of
tools that allow you and your team to examine “what-
discussion seeking to claim “last click” ownership.
if” scenarios to understand how constraints impact the
s #URRENT SHIFTS IN MEDIA CONSUMPTION TEND TO FAVOR
media mix and campaign outcomes by accounting for
BTL, digital channels yet concurrent monitoring
parameters such as budgets, partner obligations, regional
alleviates the need for constant tweaking of the
investments or revenue mandates.
underlying analytics.

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6ALIDATION REPORTING — Media mix optimization solutions The Acxiom advantage

are only as helpful as the validity of their predictions. Next generation media mix optimization is crucial
Consider the need for a system of self checking for marketing organizations to meet their business
the accuracy of your optimization model and its’ objectives. Winning marketing teams will target their
recommendations by testing and measuring initial results investments toward high-value audiences with the
against objectives. Incremental adjustments will increase right media options. With more than 40 years of
visibility, accuracy and ROI. global marketing experience across all industries,
Acxiom is the partner of choice for those who want to
It’s a journey
impact their bottom line.
Start with bit-sized chunks, the building blocks; don’t
try to boil the ocean. Begin as a self-funding practice
With offices in the United States, Europe, the
through a crawl, walk and then run with your differentiated
Middle East, Africa and Asia-Pacific, Acxiom is
customer strategy, revving the engine of your new media
well-equipped to meet the global needs of our clients.
optimized machine. Like any journey, you’ll need a
Start improving your marketing ROI, let Acxiom be
destination and roadmap to guide your way as you deploy
your guide.
the appropriate engagement strategies and tactics while
balancing customer demands and organization goals.
4O LEARN HOW !CXIOMS MEDIA MIX OPTIMIZATION
Throughout the journey, you’ll identify ways to reallocate
SOLUTIONS CAN INCREASE MARKETING 2/) AND REDUCE
budget from less profitable media channels to other, more
BUDGET WASTE CALL !#8)/- 
profitable ones as you measure and refine your tactics.
OR VISIT WWWACXIOMCOMCONSULTING

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1
Nielson, 2008
2
Alterian ““Your Brand: At Risk? Or Ready for Growth?”, 2010
3
Bain & Company, “Closing the Delivery Gap”, 2005
4
Comscore, 2009
5
Rex Briggs and Greg Stuart, ”What Sticks: How most Advertising Fails and How to Guarantee Yours Succeeds”, 2006, Kaplan Publishing
6
Acxiom, average customer analysis
7
Forrester Research, 2009
8
Tim Stengel, former CMO at P&G
9
Edelman Trust Barometer, 2009
10
eMarketer — Mintel, “Attitudes toward Traditional Media Advertising and Promotional marketing — US”, 2009
11
eMarketer — Deloitte, “State of the Media Democracy Fourth Edition: Select US Highlights”, 2009
 See how Acxiom can work for you.
For more information, visit our website
at www.acxiom.com/consulting or call:

1.888.3ACXIOM

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