We Don’t Live in a Linear World

Paul Kulavis, Managing Partner of the Sterling Park Group, shared the latest developments in Marketing ROI with the NJ chapter of MENG early Friday morning, February 5th. According to Paul, Marketing ROI is a rapidly evolving discipline which more and more companies are using to quantify the impact of their marketing spending. Paul highlighted the following analytical tools being used to measure and evaluate marketing activities.
• Media Mix Modeling: determines the optimal mix of media activities
• Market Mix Modeling: similar to Media Mix Modeling, but goes further to include external factors such as distribution, PR, trade promotion, etc.
• Test Marketing: In-market testing
• Simulated Test Marketing: less expensive alternative to Test Marketing which includes historical testing norms (e.g. BASES)
• Statistical Regression: workhorse of marketing analytics
• Genetic Programming/Neuronet: looks for relationships among all of the available data
• Structural Equation Marketing: derives variable importance based upon its impact to surrounding variables
• Simulation: conduct what if scenarios (e.g. Monte Carlo simulation)

According to Paul, there is no silver bullet and the best tool to use in a particular situation depends on the project’s objective , available data, time, budget, and any previous research that has been conducted. Paul cited examples of how this methodology has been used to determine the most effective marketing activities for Navy recruiting and the optimal circulation for a direct mail catalog.

David Montfort