A leading online real estate marketplace tasked Gain Theory with understanding the impact on their business of changing economic conditions, notably rising gas prices and inflation, as well as interest rate hikes. Given there was no precedent for existing models to fall back on, our client wanted to know how they should optimize their marketing and media budget while continuing to deliver growth.
Gain Theory collected a large set of relevant data – from economic factors to consumer sentiment metrics and general market trends – and built a marketing mix model with time varying parameters to understand how economic factors were impacting the business and how they changed over time.
Once the economic factors were isolated, our client was able to re-balance marketing and media investments at different levels of inflation and interest rates. Interest rate fluctuations, for example, significantly impact new customer acquisition levels and our modeling showed this impact doubled once the base rate surpassed 5%.
We identified the minimum necessary budget to hit short-term goals and refocused the remainder of the budget on broad reach campaigns and brand building activations for long-term growth. We also advised that budget be moved from saturated channels and partners into those that had the potential to drive growth in an uncertain climate.
The optimization recommendations across all marketing touchpoints in line with changing economic conditions saw the cost per acquisition of a new customer, one of the company’s KPIs, fall by 17%. This was achieved while enabling our client to meet short-term goals and increase long-term brand awareness.
fall in the cost per acquisition of a new customer