Optimizing Synergy

Ever since the marketing industry began to use the term quotoptimizationquot it has helped us all think more deeply about our profession even as its operational usage has improved our marketing results We went through a long and slow evolution from optimizing reach and today some of us are already optimizing ROAS return on ad spend and ROI latter includes promotion and other nonadvertising leversThe innovators and fast followers in the industry have in the past 30 years come to respect multiple regression analysis as providing a decent estimate of ROAS and ROI Even though 99 of them could not accurately describe the math involved Normally a practitioner would not use any method they did not feel comfortable explaining to bosses and clients However MMM marketing mix modeling and its subset media mix modeling by filling a void in helping to rationalize decisions involving millions of dollars per decision forced its way into nearuniversal usageIn the same 30 years MMM was brought down to the household level from the geographic level by the use of small longitudinal panels Behaviorscan ScanAmerica Apollo and earlier singlesource panels in US UK France Germany and by the use of big data by TRA in the US TRA using big data provided greater granularity in tactical decision making and statistically significant findings for the thousands of smaller brands not well served by small panelsAs both MMM and householdlevel ROAS analytics matured they began revealing an intriguing phenomenon certain combinations of marketing activities produced effects greater than the sum of their parts Two or more media types used together exhibited more than additive effects on sales and full funnel brand lifts This synergy effect emerged repeatedly in different contextsThe RMT Semasio study provided one of the most striking examples combining two different psychographic targeting approaches quintupled the KPI whereas each approach used alone only doubled effectiveness a classic case where 225 Similarly in tunein advertising homes receiving both paid tunein ads and the same ads shown on networkowned channels showed a 47 higher ratings lift compared to homes receiving paid ads aloneEven traditional multiple regression analysis caught glimpses of these synergy effects though they proved difficult to measure consistently FOX BHC39s metaanalysis of ROAS revealed compelling evidence when used alongside linear television advertising automobile advertising on CTV saw a 45 ROAS increase while YouTube performance jumped 85 For food advertising linear TV boosted social media ROAS by 51These recurring hints of highvalue synergy effects captured my attention The evidence suggested that marketing39s true impact was being systematically underestimated by examining channels in isolation I became convinced that someday we would develop tools capable of measuring synergy effects at tactical granular levels Such tools would usher in a new age where much higher results in brand and sales effects both short and longterm would be achievable through optimization We would move beyond optimizing individual elements to understanding and leveraging the crosssynergies and net compound effects holisticallyThat new age is now hereYou will probably not be surprised to find out that what has opened the door to this new quantum leap is amp8212 as you might have guessed by now amp8212 AIHuman beings are not simple nor is any part of reality Nonscientists prefer to simplify and even to oversimplify Einstein famously said that quotscientific laws should be made as simple as possible but not simplerquot I have in the past railed at marketing39s stubborn insistence on oversimplification Now new analytic methods made possible by AI are able to capture the complications rather than to oversimplify themInterestingly at least in this case the way AI is able to make this great leap is by mimicking the way the brain works Before the innovation known as the Transformer which gave us Large Language Models LLMs the most advanced form of AI was known as neuronal networks The way the neuronal network works is that it copies the way the brain is organized and the way information from anywhere in the brain is capable of connecting to information practically anywhere else in the brain The recursive nature of the way our brains and minds work is that every microsecond we are experiencing updates based on new associations and predictions being made The feedback loop is continuous as the brain looks at a situation from every possible perspective prioritizing this survey based on all that it has learned in the past This is how we can change our minds in a split second when conditions require itIn the last decade many academic researchers have brought up the idea of using neuronal networks to improve upon the measurement analysis and optimization of fullfunnel short and longterm ROI These include papers from MIT Cornell HBR NYU and other academicsOne research company whose founders come out of the major agencies has emerged to lead this charge into the future and it39s called DataPOEM I reported on this company39s appearance at the ARF Sequent Marketing Analytics Accelerator two months ago and have just been engaged as their consultant I am busily assimilating their findings and will share them with you here as the process evolves Staying for now within my normal article length here are a few of the most important findings so farSynergy is a huge factor in ROIROAS Because synergy has not been thoroughly included in ROIROAS estimates the entire industry has been underestimating the ROIROAS effects of media all along by about 20 and given the overemphasis on short term effects the understatement of ROIROAS by the combination of these factors averages about 35amp160amp160Synergy is not just between media types DataPOEM measures online vs offline sales distribution price promotion influencers retail media networks context effects targeting effects creative effects and especially timing effects because the tactical leverage a marketer has includes the ability to better synchronize the timing of elements discovered to have strong synergy effects A major QSR advertiser for example increased ROIROAS 27 by better timing alignment between broadcast sports and digitalamp160Synergy is not just between pairs of stimuli attributes for example in one campaign the combination of TV and shopper marketing enhanced the ROIROAS impact of digital by 14 It was also found that shopper marketing impact synergy among retailers added 25 additional ROIamp160amp160The synergy effects between RMNs retail media networks and traditional channels are substantial One client saw a 22 improvement in RMN ROIROAS through better integration with traditional channels In return traditional media channels showed a 24 halo effect from RMNsamp160Synergy relationships are constantly changing DataPOEM currently recommends agile monthly reoptimization in order to take advantage of this In a communique to ARF DataPOEM reported quotA global automotive client implementation of this program demonstrated the crucial importance of measuring evolving marketing synergies By capturing the dynamic relationship between influencer marketing and traditional channels the brand achieved a 28 improvement in marketing efficiency The system39s frequent updates revealed that the effectiveness of marketing combinations varied significantly over time enabling the brand to adjust its channel mix proactively and achieve a 31 increase in conversion ratesquotMore to come The combination of neuronal network AI tactical granularity synergy fullfunnel brand and sales all media and all marketing inputs rapid frequent reoptimization on any weighting of short vs long term goals and forecasting accuracy is a potent combination of improvements available to marketers DataPOEM reports that a typical client engagement starts with a few months of comparing results with their own data and validating the accuracy of DataPOEM39s ability to forecast actual sales and brand results after which the alwayson integration into workflow becomes the standard process I39m looking forward to adding RMT39s Resonance ROIROAS enhancing system to DataPOEM39s quiver in 2025 This will be an exciting year for marketersPosted at MediaVillage through the Thought Leadership selfpublishing platformClick the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillageorgMyersBizNet

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