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Marketing ROIProfitably Activating Consumers
Jay DittmannVice President, Marketing Strategy
Hallmark Cards, Inc.
August 10, 2009
DRAFT5/27/2012 6:58 AM
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Hallmark
Kansas City-based, family-owned company, founded in 1910 $4.4 billion in sales
Ranked in top 100 on Forbes list of privately held United States companies
Social expression industry leader
Two primary business segments North America: US, Canada, Puerto Rico, Mexico, Latin America (export) International: UK, Australia, New Zealand, Japan, Netherlands
Over 16,000 employees worldwide
Products distributed in 140,000 retail outlets globally 70,000 in US
Social expression businesses include Greetings, Ornaments, Party Goods, Gift Wrap, Gifts, Stationery, Albums,
Books, Music, Candy, Plush
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Top 10 Chief Marketing Officer Challenges
0 10 20 30 40 50 6
Measuring marketing's effectiveness on ROI
Improve image or brand awareness
Coordinate programs across channels
Drive customer-centricity thru the organization
Increase efficiency & speed to marketCollect & manage customer data
Align marketing efforts w/ corporate objectives
Master analytical marketing techniques
Comply privacy, Spam, DNC regulations
Other
Lead generation / management
Source: Forrester Survey, 2006
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Marketing Effectiveness
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Marketing
Started 1952 79 Emmys
Started 1994 14 MM members
Logo 1 st used in 1928 print &
radio ads
Launched 200180 MM + HHs
Launched 2006 Launched 1996
that was often driven by leadership beliefs or gut
Hallmark has a long, rich marketing heritage
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Marketing
Hallmark continues to make significant investments in Marketing ...
TV Online Print PR Direct
supporting our business across a variety of retailers
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MarketingIn the late 90s, we started to implement a variety of marketing decision support tools
Planning &Development
'Parking'
HallmarkSoundCards
Average
HallmarkEveryday
CardsAverage
MB OnlineAired
AverageDecision criteria A X Y ZWill the ad be able to break through and
generate advertising awareness?
* Link awareness index (AI) 13 13 8 5
* Brand rating top box (%) 47 Z 48 48 34
* Enjoyment top box (%) 46 YZ 42 36 22
* Passive-active mean 7.56 XYZ 5.84 3.97 5.01
* Brand cues mean 2.79 XZ 2.63 2.80 2.63
Does ad communicate intended message?
* Link total communication
Primary message (%) 53
Secondary message (%) 2
* Link main impression
Primary message (%) 37
Secondary message (%) 21
Is the ad likely to grow short-term volume?
* Link Awareness Index (AI) 13 13 8 5
* Link persuasion 14 21 19 16
Copy Testing
but we werent always disciplined in how we applied the learning from the tools
In-Market
Tests Markets
Ad Performance at Comparable Media Weight
AdGeneralRecall
BrandLinkage
Promotional Plush (full campaign)2007 Snow What Fun Sledders 50% 81%2006 Very Merry Trio 71% 81%2005 Piano Snowman 57% 74%Keepsakes (one week)2007 What Will You Keepsake? (15 sec) 40% 72%2006 "Gig" -Radio & Mp3 (30 sec) 68% 84%2005 Record Player (30 sec) 60% 78%
IAG
PostAnalysis
Media Mix Modeling
Marketing Tracker TV Ad Timing TRPs % Prime
Ad Awareness*
SN Card
2008 Parking 1/30-2/14 510 14% 41%2007 Wild Thing (re-aired) 2/1-2/14 511 21% 43%Promotional Plush2008 Sweet Talkin' Trio 2/1-2/14 325 25% 30%2007 Hug-a-Bunch 1/24-2/14 328 23% 30%CD2008 Reba McIntire 2/4-2/14 200 0% 19%2007 Josh Groban 1/24-2/14 225 25% 23%*Source: Marketing Tracker
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Marketing
That changed as Hallmark focused on building corporatecapabilities needed for sustaining profitable growth ...
Business Transformation Capabilities
Consumer Insight Driven Innovation
Commercialization
Differentiated Customer Solutions
Merchandising Effectiveness
Flexible Supply Chain
Marketing Effectiveness
which lead us to be more disciplined in our marketing decision making
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Marketing As A "Center of Excellence"Ensure marketing objectives and activities are linked toclearly defined business objectives
Provide consumer-insight based input for category andcustomer plans
Leverage fact-based and granular marketing analytics tounderstand key segments in the marketplace
Evaluate marketing activities with both financial (ROI) andnon-financial metrics
Clarify the consumer targets, objectives, and metrics for eachactivity
Deliver marketing plans with high impact and quantifiableresults
A foundational component for our Marketing Center of Excellence is theanalytic capability to measure the return of our marketing investments ...
within a period, across time, and among media tactics
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An analytical approach which identifies andmeasures how various marketing activitiesimpact consumer shopping behavior
Models estimate how changes in marketingsupport relate to changes in retail sales
Models are custom by industry and incorporatemany types of variables that may impact sales
Models are based on weekly sales for severalyears in order to isolate the normal seasonalitypattern
What is Marketing Media Mix Modeling?
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Background History & Benchmarking
Companies we talked with used M4 to estimatemarketing ROI, but they had different expectations
Payback hurdles varied Considered both short-term and long-term effects of
advertising Looked for improvement over prior year ROI
Use complementary measures in addition to ROI
Marketing media mix models (M4) are widely used
to measure the impact of marketing CPG companies were the first users in 1980s, but now arewidely used in various industries (e.g., retail, automotive,telecom, financial services)
Hallmark began using M4 in 2002 to measure the impact
of our "Remembering" ad campaign, a national greetingcard effort
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Store Openings & Closings
Retail Price
Economic Trends
Category Trends
Holidays / Calendars
Unusual Events
U n
c on
t r ol l a
b l e
TV Advertising
Radio Advertising Print Advertising
Retailer Promotions
1-to-1 Marketing
Online Marketing C on
t r ol l a
b l e
A marketing media mix model estimates sales impact based on controllable marketing factors, plus uncontrollable but known marketplace factors
Whats Included In Media Mix Models?
Management of data is crucial to accurate and credible media mix models
Sales
Factors
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Model Illustration
A marketing media mix model solves for multiple factors
simultaneously
$
$
$
$
# of HallmarkGold Crown Stores
Economy
Pricing
Seasonality
Total Hallmark Retail SalesExample of Base Sales Factors
$
Time
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Total Hallmark Retail Sales
A marketing media mix model solves
for the impact of marketing while controlling for all other known factors
Marketing Impact
$
Time
Total Hallmark Retail Sales
$
$
$
$
# of HallmarkGold Crown Stores
Economy
Pricing
Seasonality Model Illustration
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Media Mix Models isolate
current year sales driven by marketing activity
Marketing Driven Sales
Base
Factors impacting marketing driven sales
Type of media, level ofmarketing support, timing
Content or type of offer
Factors which impact ongoing base sales
Number of stores Pricing Seasonality New product launches Economic conditions
Calculating Marketing ROI
Marketing-Driven Sales
------------------------------- Marketing Investment
= ROI Marketing Driven Gross Margin
Marketing driven sales
are a key component of ROI
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Marketing Driven Sales
"ROI" Is Different Than "RSI"
ROI = $1.12 RSI = -4%
Marketing Driven Sales
Marketing Driven Sales
Base 2008
Base 2008
Base 2007
Marketing ROI is simply
the return on
investment for the sales lift due to marketing.
RSI depends on a broader set of
factors.
Return on Investment Retail Sales Increase
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Marketing EffectivenessExamples
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$0.58
$0.63
$0.63
$0.80
$1.50
$2.15
$2.66
$2.75
$0.96
$1.70
$2.08
$0.00 $1.00 $2.00 $3.00 $4.00
Circulars
Newspaper ROP
Keepsakes TV
Other Promo TV
1-1 Marketing
Key Promo TV
Season Card TV
Radio
Magazines
Online
PR/Other
Contributed positively to ROI
2008 Full Year
S-T ROI: $1.35Short-Term ROI
$1.35
ROI on Short-Term Marketing Spend
Marketing ROI - By Media Type(Illustrative Example)
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Marketing Effectiveness - Overall Impact(Illustrative Example)
Chart shows impact on retail sales (scale),ROI (financial return), and budget (size of circles)
1-to-1Marketin
g
Key Promo TV
Other Promo TV
PR/Other
Magazines
Keepsakes TV
Radio
Online
Circulars
$0.00
$1.00
$2.00
$3.00
$0 $100 $200
R e
t u r n o n
I n v e s
t m e n
t
SeasonCards
TV
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Marketing Effectiveness - Contribution To Sales(Illustrative Example)
1600 1680
235 2801835 1960
+7%
Year 1 Year 2
Store Group 1
10501030
230 2701280 1300
+2%
Year 1 Year 2
Store Group 2
2650 2710
465 5503115 3260
+5%
Year 1 Year 2
Overall Combined
Market-Driven SalesBase
+80Base 1 +45
Marketing 1-20
Base 2
+40Marketing 2
+145Total
Group 1: +7% RSI, both strong base and marketing-driven sales
Group 2: +2% RSI, weaker base but strong marketing-driven sales
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Marketing Effectiveness
Discipline religious about Retail Sales and ROI reviews
Accountability in individuals objectives
agency incented on results Transparency results shared broadly beyond Marketing
Granularity ability to more deeply dig into and cut the data growing company capability asset
Dialog versus presentation
Action use learning to influence the next set of decisions
Key principles that have helped us make progress to date include
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Marketing Effectiveness
Leadership buy-in on ROI results If sales are up, the marketing worked. If they arent, it didnt. Regardless of results, we need more innovative marketing approaches.
Instability in M4 estimates particularly for new media
Incorporating other tools to aid in development ofmarketing strategy
Striking the right balance between ROI and othermeasures
Becoming more disciplined in setting goals for eachperiod
So, we've make progress, but still face a number of challenges including
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Establish a holisticROI mindset and behaviortowards marketing activities
and investments acrossHallmark
ROI
RSI,Brand
2008 ROI Target -- $1.12
ROI ROI ROO
Marketing Objective
Marketing Metric
(Examples)
Shared Greetings
Metric (Examples)
Shared Hallmark Retail
Metric (Examples)
Consideration Ad Awareness Attitudes
HallmarkPurchase Intent
Attitudes HallmarkGold CrownPurchase Intent
Activation Transactionswith MarketedItems
Greetings Usage Hallmark GoldCrownTransactions
Outcome MarketingDriven RSIROI
HallmarkGreetings RSI (allchannels)
Hallmark GoldCrown RSI
2007 - 2008 2009 +
Marketing Effectiveness Evolution
ROI is a key component of a broader ROO approach
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Marketing Framework Summary
EconomicConditions
MarketingChoices
MarketingInvestmen
t
Strategy Role of Media Timing of Media
Consumer Confidence
Unemployment Gas Prices
Total Marketing Spend
Spend by Tactic
Marketplace Retail Performance Consumer Behavior
ROI RSI ROO
MarketingResults