The benefits of using econometrics over time.
The issue
One of the benefits of a long-term partnership with a client is seeing how the use of Econometrics evolves over time as business’s needs change. One example is a major blue-chip client, for whom our partnership has enabled them to grow their ROI significantly over a ten-year period. Their key question asked, “How can we balance maintaining our ROI whilst strengthening long term brand health?” The client wanted to use previous data insights to make confident ongoing decisions about how to maintain ROI gains achieved over the years whilst maintaining high levels of brand awareness and reach.
Our Econometric Approach
In the early days of working with our client, the models we built identified opportunities that would enable them to increase their ROI. Some quick wins were easily achieved, ensuring budgets were optimised. An example of this was identifying the opportunities available through optimising the impact of the halo* effects within their brand portfolio. Due to the nature of their organisation, the impact of their products had a huge halo opportunity.
*What’s a halo effect? A halo effect is where advertising for one product “spills over” and has a sales effect on another product in the range that was not directly supported.
The Solution
Our econometric models demonstrated, over time, to the client that increasing the ROI was initially impactful and achievable but would, at some point, slow or even stop. Over the years, the rate at which they increased ROI did start to slow, but only because the more efficient you become, the harder it is to find new efficiencies that have the same level of impact. There were also concerns that a very single-minded focus on chasing growth in ROI could damage the long-term health of the brands because it tended to move investment away from Broadcast channels like TV into more targetable, higher ROI digital channels.
The Business Outcome
Once the strong ROI gains had been delivered, we worked with the client and their media agency to understand how ROI could be maintained while reintroducing some of the channels that were more aligned with delivering brand health objectives, such as TV. ROI planning moved to a more “balanced scorecard” between ROI and Brand Health.
At MetaMetrics, we collaborate closely with our clients to enhance their marketing effectiveness. By leveraging their data, we provide our clients and their teams with the confidence to ensure all campaigns are impactful and efficient.
