The Future of Direct Marketing: Data-Driven Media Mix Optimization

June 15, 2011 By Tim Suther

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The business of marketing has changed. A well known Bain & Company survey once found that 80 percent of CEOs believe they deliver a superior customer experience yet only 8 percent of their customers agree. These points represent an immense opportunity for brands to react by demanding accountability from marketing while also focusing on creating and increasing customer engagement and shareholder value. Consumers have now assumed a leadership role in defining the brand's success.

Optimizing the way you communicate with consumers—media mix optimization (MMO)—will soon rely far less on loosely connected econometric models, and far more on specific target audience identification and measurement of individual-level stimulus and response. Brands are seeking the accountability found in targeted media, such as email, and the line between mass and targeted media will keep changing as more traditional mass broadcast media, like TV, become increasingly addressable.

In this new dynamic, an increasing portion of media spend could still be classified as directly measurable and attributable, yet much of it will be delivered in the traditional channels that brands invest in today.

Personalized "Narrowcasting"
Selection and optimization of your media mix is fundamental to maximizing the precision of media investment. The future of media mix optimization is going to be a continual, real-time and integrated process driven by new capabilities made possible by two trends:

1. Media is becoming increasingly addressable, and thereby capable of being intentionally delivered and ultimately measured and optimized.
   

2. Customers are not all created equal. The top 20 percent of a typical customer portfolio delivers five times more profit than the bottom 30 percent, who actually consume 80 percent of profit.
   

The growing availability and reach of addressable media options will enable brands to shift increasing portions of their media investments from mass to targeted strategies. This will deliver on the promise of better accountability. This will create the capability to dramatically optimize media performance via the optimum mix of media. The shift to more addressable options will also enable brands to more precisely identify and optimize communications opportunities.

Based on the aforementioned vastly differentiated value of customers, brands will do more than just purposefully discern how they invest and optimize their media. They will plan and measure right down to the impression level. The benefits go beyond the concept of the "right message at the right time." Brands that have the capability to empower these new forms of media will be able to determine if the impression should even be delivered in the first place!

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