The development of the internet has given brands many new and different ways to reach consumers, as well as the opportunity to sell to them globally – contributing to a growth in global brands.
This has also resulted in a mass of data which has given marketers the opportunity to react at speed. Some companies, however, are not yet set up to make cross-geography decisions and do not have a central team that decides marketing budgets across countries and brands – preferring to reduce complexity by working within countries.
So, what does this mean for marketers?
This has made marketers’ lives considerably more complex. There are many more brands to manage (across more territories) and many more ways to reach consumers. There is also the competition for budget if several products from one brand are looking to go across the same channels, in the same markets. For example, we’ve seen an increase in global brand portfolios where single companies own a range of brands and sub-brands across many countries. This is a result of acquisitions (Diageo is a good example – buying alcohol brands across the globe) as well as deliberate product development and extension under umbrella brands (e.g. the Dove brand which was deliberately created to benefit from halos across the many products in the portfolio).
Why thinking globally is critical to marketers
Ahead of the launch of our new report on Global Portfolio Management (GPM), we’ve considered how marketers should distribute their marketing budget globally across different brands, products and channels to maximise returns through the power of science and data. By implementing a GPM approach, the impact of optimisation can be significant.
GPM identifies the optimum allocation of media budgets – optimum in the sense that it creates the highest return possible within the strategic constraints faced by brands. Cross-market investment optimisation can in some cases nearly double ROI and research reveals that GPM can drive substantial profits and in some cases, deliver 9-digit profit opportunity figures.
Why science and data are important when allocating global marketing budgets
We know that data is crucial for marketers and GPM is based on econometric models and benchmarks.
Traditional econometrics, however, often fails to measure the impact of the many new digital channels that marketers are now using – such as search, display, brand websites and social networks. Some of this is paid for, much is owned and earned (brand websites, likes, shares) and it all impacts sales. Often one channel will drive others – many studies have shown how TV advertising can drive search and social activity – and it is important to understand how all the different channels work together to impact sales.
Digital Attribution has become popular as a way of measuring the many online touchpoints. It is based around the electronic trail that users leave when online (often called online journeys). We can regularly trace the touchpoints consumers have visited before a purchase and measuring these touchpoints across millions of journeys means we can start to understand how important a display ad is, for example.
The issue with this is that we can only measure the online touchpoints – so we developed our Total Attribution tool which cleverly combines econometrics and digital attribution in a way that gives a realistic measurement of both offline and online channels; of paid, owned and earned media. This approach provides rich input to GPM allowing us to give more accurate advice on how much should be spent on each channel and the likely impact this will have on sales, globally.
When we expand our analysis to manage our clients’ global investment portfolio, we may encounter countries where that client has not built models before, and hence we may have no existing response curves for our clients’ brands, products and media channels in those countries.
A solution, of course, would be to build models for the relevant brands in these countries and to then include the measured response curves in our optimisation. However, there may be time or budget constraints that could limit the opportunity for econometric modelling. So in these cases, we can often use existing norms and benchmarks to create response curves for brands, products and countries that have not been modelled before. Data2Decisions has over 3,000 response curves in our database across many countries and media channels. We can use this data to make educated assumptions about how consumers in different markets would respond to advertising, for instance, by taking the average TV curve in a country for a sample of similar products.
While data and statistics are a key part of GPM it is important to have a system that allows us to merge strategic requirements within the optimisation process. The GPM platform we have built includes ample opportunity for the user to set restrictions and change assumptions. For instance, setting minimum budget by brand/country, forcing spend into certain weeks (e.g. to support a new product launch).
Looking ahead, marketers should be thinking globally and utilising the advancement of data and science into 2017. Brands should be able to understand where the biggest gains are to be made from a global marketing perspective and small steps should be taken to make sure the recommendations are working and to build confidence internally – rather than making significant budget switches immediately. GPM presents a perfect opportunity for global client teams to listen to and address local market concerns, and for local client teams to start thinking globally. The rewards are tremendous; the opportunity, when it presents itself, is too significant to be missed.