Jay Dittmann AUG 10 2009

7/31/2019 Jay Dittmann AUG 10 2009

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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
http://www.dilbert.com/strips/comic/2002-01-27/


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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


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
http://www.deploy511.org/images/marketing.jpghttp://www.deploy511.org/images/marketing.jpghttp://www.deploy511.org/images/marketing.jpg


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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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"ROI" Is Different Than "RSI"

ROI = $1.12 RSI = -4%



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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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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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

Jay Dittmann AUG 10 2009

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