Background
A leading furniture retailer wanted to optimize its media strategy for two distinct brands. While overall sales were strong, the business was heavily reliant on TV advertising and faced challenges including declining brand equity for its established brand and macroeconomic pressures like rising inflation and a subdued housing market.
The retailer needed to understand if their media investment levels were right, how to balance their channel mix, and what the long-term impact of their marketing was on brand health.
Solution
We implemented an annual marketing mix modeling (MMM) program to provide a holistic view of performance for both brands. Our unique Unobserved Component Modeling (UCM) methodology was included to address the client’s specific concerns around brand equity. This approach treats baseline sales as dynamic, allowing us to separate short-term sales spikes from the more gradual, long-term impact of marketing on brand health.
Alongside advanced analytics, our consultants helped the retailer to get data-informed answers to urgent business questions, such as the impact of changing existing consumer credit programs, as well as recommendations on how to increase the overall impact of their media investments.
Results
The insights from the MMM gave the retailer the confidence to make significant changes to their media investment strategy.
For their growth brand, our recommendation to significantly increase media spend year-on-year led to media being the main contributor to an 8% YoY increase in total business sales. For their established brand, a more modest increase in media spend contributed to a 7% increase in total business sales.
These gains were achieved by reallocating spend across the media mix, moving budget into more effective channels and testing platforms such as TikTok and Reddit for the first time.
increase in total business sales
