According to published studies, about 30 percent of your customer base delivers the majority of your profits. And while 50 percent add absolutely nothing, the remaining 20 percent of customers are costing you money! So, why not cherry pick the ...best customers? It's possible, if you can determine who your high-value customers are, where to reach them, and how to find prospects like them. Start allocating dollars to the channels that reach your high-value customers. The steady proliferation of new marketing channels today means you must optimize your marketing mix to reach your best customers in their preferred channel. If you don't, you're leaving money on the table.

1. Tweet Up #AcxiomSeries
Media Mix Optimization
Dave Frankland, Forrester Research
JP Bewley, Acxiom
Hosted by: Tim Suther, Acxiom
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3. Media Mix Optimization:
Focusing on high value customers
Dave Frankland
Principal Analyst
Forrester Research
March 3, 2010

4. Agenda
• The changing customer
• How marketers are keeping pace
• The role of marketing mix optimization
4 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

5. Agenda
• The changing customer
• How marketers are keeping pace
• The role of marketing mix optimization
5 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

6. The world has changed
• People consume — and are a part of — multiple
media, simultaneously
6 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

7. The TV used to be THE tribal
camp fire…
7 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

8. …but now it’s just another light
source.
8 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

9. Technology continues to drive media
fragmentation
9 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
Source: 2008 North American Consumer Technographics

10. TV and Internet usage are almost equal
“In a typical week, how many hours do you spend doing
each of the following?”
Watching TV 13.1
Using the Internet
12.5
(personal+work)
Listening to the radio 6.8
Reading newspapers 2.6
Reading magazines 2.1
Base: US adults
Source: North American Technographics ® Benchmark Survey, 2008
10 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

11. 11 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

12. The world has changed
• People consume — and are a part of — multiple
media, simultaneously
• Consumers trust one another more than they trust
marketers
12 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

13. Consumers trust each other the most
13 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

14. The world has changed
• People consume — and are a part of — multiple
media, simultaneously
• Consumers trust one another more than they trust
marketers
• Social media gives them a way to connect
14 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

15. Consumers engage in social media in different
ways
Publish a blog
Publish your own Web pages
Creators Upload video you created
Upload audio/music you created
Write articles or stories and post them
Post ratings/reviews of products/services
Comment on someone else’s blog
Critics
Contribute to online forums
Contribute to/edit articles in a wiki
Use RSS feeds
Collectors Add “tags” to Web pages or photos
“Vote” for Web sites online
Groups include people participating in
at least one of the indicated activities at
least monthly.
Maintain profile on a social networking site
Joiners
Visit social networking sites
Read blogs
Watch video from other users
Spectators Listen to podcasts
Read online forums
Read customer ratings/reviews
Inactives None of the above
15 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
Source: North American Technographics Interactive Marketing Online Survey, Q2 2009 (US)

16. Social media usage continues to proliferate
16 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

17. The world has changed
• People consume — and are a part of — multiple
media, simultaneously
• Consumers trust one another more than they trust
marketers
• Social media gives them a way to connect
• Consumers determine what is relevant
17 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

18. Unfortunately, they view marketing as irrelevant
18 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
July 2009 “Marketers: Stop The Abuse! Adopt Preference Management”

19. And today, they often just say “No” to marketing
19 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
July 2009 “Marketers: Stop The Abuse! Adopt Preference Management”

20. Agenda
• The changing customer
• How marketers are keeping pace
• The role of marketing mix optimization
20 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

21. Most marketers claim that relevance is a key
factor in their customer communication
21 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

22. But, many fail to act on their customers’
preferences
22 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

23. They don’t allocate budgets in proportion with
where customers spend their time
23 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

24. They say they will shift budgets from
traditional to interactive
24 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
July 2009 “US Interactive Marketing Forecast, 2009 To 2014”

25. But, even projected growth won’t match
consumers’ media usage
25 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

26. And, budget allocation decisions don’t always
make sense
• Allocation is often based on:
– Historical spending
– Cost
– ROI
• But media measurement is mired in channel silos. As
a result, marketers are left with:
– Incompatible metrics across channels
– Different objectives – based on available measures
– Historical behaviors
26 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

27. Media measurement remains a top challenge
27 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
January 2010 “The Future Of Media Measurement”

28. Agenda
• The changing customer
• How marketers are keeping pace
• The role of marketing mix optimization
28 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

29. Marketing mix optimization
• The process of using statistical analysis to estimate,
optimize, and predict the impact of multichannel
promotional tactics on future business revenue.
29 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

30. Why invest in MMO?
• Marketing Mix Optimization helps firms
– Link marketing spending to sales results
– Quantify the impact of multiple demand drivers
– Reveal marketing's incremental sales impact
– Analyze geographic, media, or brand-level budget
allocations
30 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

31. Success factors
• Recognize the commitment required
• Create a deep, broad, and accurate historical view of activity
• Be clear about the business goal
31 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

32. Success factors
• Recognize the commitment required
• Create a deep, broad, and accurate historical view of activity
• Be clear about the business goal
• Acknowledge the role of earned, owned, and bought media
32 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

33. Earned, owned, and paid media serve different
purposes
33 Entire contents © 2010 Forrester Research, Inc. All rights reserved.
December 2009 “No Media Should Stand Alone”

34. Success factors
• Recognize the commitment required
• Create a deep, broad, and accurate historical view of activity
• Be clear about the business goal
• Acknowledge the role of earned, owned, and bought media
• Work with statisticians that understand marketing as well as your
industry
• Iterate the model
• Remember that not all customers are created equal
34 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

35. Not all customers are created equal
Pareto Principle applies to
profitability too!
• “The bottom 20% of
customers can drain profits
by at least 80%
• … while the top 20% can
generate 150% of a
company’s profit.”
• In the long run, precision
targeting will generate profits
far in excess of any
incremental cost.”
Larry Selden
Professor emeritus
Columbia University
35 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

36. Success factors
• Recognize the commitment required
• Create a deep, broad, and accurate historical view of activity
• Be clear about the business goal
• Acknowledge the role of earned, owned, and bought media
• Iterate the model
• Work with statisticians that understand marketing as well as your
industry
• Remember that not all customers are created equal
• Implement findings
– Plan for change
36 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

37. Change requires alignment across the business
Alignment
Measurement
Technology
Analytics
Process
Culture
37 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

38. Thank you
Dave Frankland
+1 212-857-0872
dfrankland@forrester.com
@dfrankland
Blog: http://blogs.forrester.com/customer_intelligence/
CI site: www.forrester.com/rb/ci
38 Entire contents © 2010 Forrester Research, Inc. All rights reserved.

39. Tweet Up #AcxiomSeries
Media Mix Optimization
Dave Frankland, Forrester Research
JP Bewley, Acxiom
Hosted by: Tim Suther, Acxiom
www.facebook.com www.linkedin.com www.twitter.com www.youtube.com www.delicious.com
/acxiomcorp /companies/acxiom /acxiom /user/AcxiomCorporation /Acxiom

40. Tweet Up
www.Twitter.com
Use hash tag #AcxiomSeries

41. Media Mix
Optimization
New York, NY
March 3rd, 2010
GLOBAL INTERACTIVE MARKETING SERVICES
GLOBAL INTERACTIVE MARKETING SERVICES 41
© 2009 Acxiom Corporation. All Rights Reserved.

42. 10-30%
GLOBAL INTERACTIVE MARKETING SERVICES 42

43. Consuming Cultures
Last year, despite the recession,
overall French cheese consumption
grew. Up from 25kg per person.
– The Economist, Feb 20, 2010
GLOBAL INTERACTIVE MARKETING SERVICES 43

44. Consumers, Creatures of Habit?
Does consumer spending shift between categories in
predictable ways?
What if we could predict these trends in consumer behaviors?
How do we as marketers take advantage of this insight?
GLOBAL INTERACTIVE MARKETING SERVICES 44

45. 25 Years of Eating
US Recessions
SOURCE: US Bureau of Labor Statistics Greater than -1%
Feb 2010 GDP
GLOBAL INTERACTIVE MARKETING SERVICES

46. 25 Years of Eating
US Recessions
SOURCE: US Bureau of Labor Statistics Greater than -1%
Feb 2010 GDP
GLOBAL INTERACTIVE MARKETING SERVICES

47. Marketing Trends
• The demand for insight is “Real Time”
• The need to leverage that insight to drive decisions is “Real
Time” and “Ubiquitous of Media/Consumption point”
• Plug the data leaks!!
• Shorter cycle times for interpretation of results and
redeployment of strategy
• A move beyond econometrics…. Trending to the segment
and the individual
GLOBAL INTERACTIVE MARKETING SERVICES 47

48. GLOBAL INTERACTIVE MARKETING SERVICES 48

49. GLOBAL INTERACTIVE MARKETING SERVICES 49

50. GLOBAL INTERACTIVE MARKETING SERVICES 50

51. CURRENT STATE
GLOBAL INTERACTIVE MARKETING SERVICES 51

52. FUTURE STATE
GLOBAL INTERACTIVE MARKETING SERVICES 52

53. GLOBAL INTERACTIVE MARKETING SERVICES 53

54. IT’S A JOURNEY
GLOBAL INTERACTIVE MARKETING SERVICES 54

55. Four Key Ingredients
+ + +
DATA MATH REPORTING JOURNEY
GLOBAL INTERACTIVE MARKETING SERVICES 55

56. What you should expect
• Between 10-30% Budget efficiency over 36 months
• Insight into the benefit of combining Above the Line (e.g.
TV) with Below the Line (e.g. Email)
• Implementing Media Mix Optimization (MMO) will require
coordination of budgets and KPIs across channels
GLOBAL INTERACTIVE MARKETING SERVICES 56

57. Marginal ROI – Client Example
Direct
…
Display
Search
Outdoor
Print
Radio
Email
$0.00 $0.50 $1.00 $1.50 $2.00
MARGINAL ROI ‐ RETURN ON NEXT DOLLAR SPENT
(given current spend level)
GLOBAL INTERACTIVE MARKETING SERVICES 57

58. Total Product Units
Millions
14.60
14.80
15.00
15.20
15.40
15.60
15.80
16.00
$0
$5
$10
$15
$20
E-mail
$25
Search
$30
Print
$34
$40
GLOBAL INTERACTIVE MARKETING SERVICES
$45
$50
$55
OOH
Radio
$60
Response curves
$65
$70
Display
$75
$80
$85
Direct Mail
$90
$95
58
$100
$105
$110
$115
$120
$125
Media Investment ($M)
$130
$135
$140
$145
$150
$155
$160
$165
$170
$175
$180
TV
$185
$190
$195
$200
$205

59. What it is Vs. What it is not
What it is? What it is not
A process and journey An application, model or event
Organizational Change Refinement to campaign strategy… or
optimization of a budget for a particular
department
Transformational business model Incremental efficiency improvement
GLOBAL INTERACTIVE MARKETING SERVICES 59

60. Media Optimization Defined (Take #2)
The people, process, and technology required to get better
gas mileage out of Marketing George… (above or below)
… across the customer lifecycle that allows you to impose
constraints and evaluate scenarios
GLOBAL INTERACTIVE MARKETING SERVICES 60

61. JB1
Linking Media Strategy to Customer Lifecycle
Above the line spend
Below the line spend
Customer Value
Intelligently Prospect Lengthen and Deepen Identify and Address
to Minimize CPA Customer Value Potential Attriters
Y1 Y2 Y3 Y 4
Time
Y 0
Acquisition Strategies Retention and Growth Strategies Attrition Strategies
Optimal Marketing Allocation
Across Customers Across Products Across Channels
Enabling Capabilities Around People, Processes, and Infrastructure
Maximize Return On Investment
Adopted from: Dr. V Kumar
GLOBAL INTERACTIVE MARKETING SERVICES 61

62. Slide 61
JB1 Synergies? How does above the line create halo effects for my below the line activity?
JP Bewley, 1/4/2010

63. Example Lifecycle Social Interaction
Triggers Incremental
Device and Additional
User and Consumer
Lifecycle
Consumer
Value
Content Purchase
Device Music
Registration Transmitter
Feature
Service
Device Next Device Upgrade
Purchase Purchase
“The Cliff”
Consumer Life
GLOBAL INTERACTIVE MARKETING SERVICES 62

64. Approaches
Applied to… Goal…
Traditionally above the line Seeks to correlate media
Inferred marketing spend (Print, TV, spend with sales results,
Attribution Radio) accounting for: seasonality,
competition
Seeks to close the loop on
Traditionally below the line channel specific
Direct Attribution marketing spend (Direct: campaigns, then optimize
IPTV, Mail, Email) across
Introduces benchmarking
How do I perform against my
Normative
into the equation to create
vertical market, geo, or
Performance an “open system”
market at large?
GLOBAL INTERACTIVE MARKETING SERVICES 63

65. JB2
Linking Media Strategy to Customer Lifecycle
Above the line spend
Below the line spend
Customer Value
Intelligently Prospect Lengthen and Deepen Identify and Address
to Minimize CPA Customer Value Potential Attriters
Y1 Y2 Y3 Y 4
Time
Y0
Acquisition Strategies Retention and Growth Strategies Attrition Strategies
Inferred
Direct Attribution Direct Attribution
Attribution
Normative Performance
Adopted from: Dr. V Kumar
GLOBAL INTERACTIVE MARKETING SERVICES 64

66. Slide 64
JB2 Try to represent synergies between inferred and direct
JP Bewley, 1/4/2010

67. Connecting the dots…
Inferred Redeployed Media Redeployed Media
Attribution Mix #1 Mix #2
1 3 6
10-15% Reduction in Up to 30% Reduction off
Media Spend original media spend
Channel
Lifecycle Enhanced
Direct Attribution Propensity
Marketing Customer Profiles
Models
2 4 5 7
Up to 20% top line 10-15% reduction in
growth direct spend
The “last” 5% Normative Performance
8
GLOBAL INTERACTIVE MARKETING SERVICES 65

68. Tool Examples – Inferred Attribution
Intuitive
Easily create constraints based scenarios
Transparent
Allow complex manipulation of the models
“Under the hood” where appropriate
Actual Vs. Forecast
Ability to contrast results against the model
predictions
Constraints based optimization
Allows user to input spend/activity and
smooth a result to revenue, or profit targets
Side by Side contrast
Ability to contrast one planed scenario
against another in an easy to interpret
interface
GLOBAL INTERACTIVE MARKETING SERVICES 66

69. Tool Examples – Direct Attribution
Configurable Dashboards
Point of View, Point of Time Reporting
Statistical Analysis
Use of complex concepts to create Readable
Visual Results
Top Demographic Analysis
Net out top segments such as; age, income, and
geography
Real Time Reports
Up to the minute/day campaign information makes
decisions nimble
UI Ergonomics
Focus on simplifying interpretation, faster
decisions
Key Metrics
Top marketing metrics like CPR, CPA in real time
GLOBAL INTERACTIVE MARKETING SERVICES 67

70. Linking Media Strategy to Customer Lifecycle
Above the line spend
Below the line spend
Customer Value
Intelligently Prospect Lengthen and Deepen Identify and Address
to Minimize CPA Customer Value Potential Attriters
Y1 Y2 Y3 Y 4
Time
Y 0
Acquisition Strategies Retention and Growth Strategies Attrition Strategies
Optimal Marketing Allocation
Across Customers Across Products Across Channels
Enabling Capabilities Around People, Processes, and Infrastructure
Maximize Return On Investment
Adopted from: Dr. V Kumar
GLOBAL INTERACTIVE MARKETING SERVICES 68

71. In summary…
• There are multiple approaches and definitions of MMO
• You should pick an approach that is consistent with your
goals
• To get the best return, you should link above the line and
below the line MMO efforts
• Normative performance expands your horizons
• It’s a journey, not an event – “Don’t Stop Believing!!”
GLOBAL INTERACTIVE MARKETING SERVICES 69

72. Thank you. Questions?
The global interactive marketing services company
www.facebook.com www.linkedin.com www.twitter.com www.youtube.com www.delicious.com
/acxiomcorp /companies/acxiom /acxiom /user/AcxiomCorporation /Acxiom
GLOBAL INTERACTIVE MARKETING SERVICES

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Use hash tag #AcxiomSeries