A for Analytics in A for Advertising

Fri, May 2, 2014

In Focus, Industry Speak

Ever wondered how TV ads today are becoming more popular on YouTube rather than TV? So how do we decide where to display the ads more? Thanks to analytics for gulping up most of the areas where decisions are being taken based on data available. So that we would know what we are trying to do. A consumer electronics giant was measuring how it’s TV, print, radio, and online ads function independently to drive sales by adopting new data analytics techniques. The analyses unfolded that TV ads, after eating up 85% of the total advertising budget for one product campaign, were half as effective in prompting searches leading to purchase of product, as YouTube ads which had a 6% slice in the budget menu. Search ads on the other hand, having just 4% of the company’s advertising budget share, generated one fourth of total sales. Playing smart and going for predictive analysis, the company, after reallocating its budget had a 9% upward lift in its sales without adding any more pennies on advertising.

Advertising is a newly discovered arena where data analytics is playing a major role in influencing decision making. After making such a creative ad, it’s equally important to place that ad where your consumer can not only see it but act on it at the same time. Media-mix modeling (introduced in early 1980’s) helped marketers on deciding the allocation of marketing resources by linking scanner data with advertising. Then came in digital marketing (late 1990’s) by which we have this amazing ability to monitor each and every mouse click such that we can measure the relationship of advertising and purchasing easily. For example, when a consumer (in online activities) clicks on an ad, his/her purchasing behavior is attributed to that click. When the consumer sees an ad on TV, s/he can make buying decisions instantly, but s/he can’t buy the product at that very moment.

But it’s not the same with online advertising. Watching the same ad on YouTube, the customer may click on it for more information, giving his/her email id and getting a mail piece from the company offering a deal. The customer may then end up visiting the store and buying the product.Data analytics thus helps the companies in making investing decisions to invest the right amount at right points in the customer –decision journey, sparking customer to act on their decisions.

If you are a start-up and you are looking forward to predictive analytics, bingo! You’ve found just the right thing. Eric Siegel in his new book “Predictive Analytics,” says that it’s the power to predict who will click, buy, lie, or die. Look at his book, predictive analytics will show you the power of data and ‘big data’ will help you with all the experience that you need to learn from. One of the examples is very interesting. It is about predictive advertisement targeting, which is online since everyone wants to display the ad a customer is most likely to click on. It’s a win-win situation, as the customer is spared from looking at irrelevant ads.

It’s a new arena which is gaining momentum at a very fast rate. We need to make informed decisions that can pay us back without getting our funds wasted. Well, as stated before, we may have found just the right thing.

References

1. http://hbr.org/product/advertising-analytics-2-0/an/R1303C-PDF-ENG
2. Predictive Analytics by Eric Segel


Pratha Pareek
MBA 2013-15

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