MarketUp

Published in Aug 2022. Proposed by Rohit Karvekar.

Silly Bean, a big retail company, reached out to MarketUp Analytics because they want to optimally allocate an annual budget of 1 million dollars into four marketing channels: Print, TV, Search Engine Optimization (SEO), and Social Media.

The goal is to maximize the return of investment (ROI) across the four marketing channels.

However, it was crucial for the business to make sure that the marketing plan stayed within the budget and met additional business constraints put forward by the marketing team:

At least 40% of the total budget must go towards conventional channels: Print and TV;
Annual allocation to the Print channel can't be more than 100,000 dollars;
The marketing strategy says that investment in Social Media should be at most three times the investment on SEO;
The target is to reach at least 1.5 million customers annually with the campaign.

Before contacting MarketUp Analytics, in preparation for this project, Silly Bean had hired a consulting company for collecting relevant statistical data from their existing and potential customers. The consulting company effectively derived coefficients for the expected ROI and customer penetration associated with each of the four marketing channels. These coefficients are summarized in the following table:

    Channel
    ROI
    Penetration
  


    Print
    16%
    2.1
  

    TV
    9%
    2.5
  

    SEO
    6%
    3.0
  

    Social Media
    14%
    0.9
  

For example, if Silly Bean decides to invest 100K dollars in Print, then they should expect to hit 210K viewers and a net profit of 16K dollars as a consequence of the investment.

What strategy should MarketUp prescribe to Silly Bean?

All use cases

See solution

Additional complexities

Silly Bean also had data showing that Podcast would yield a good ROI of 21% and customer penetration of 0.8.

The reason why they didn't want to include Podcast as one of the channel alternatives was that it requires a kickoff investment, estimated at 50K dollars (this initial investment is required to buy equipment and set up a team to run the podcast).

After some discussions, MarketUp Analytics convinced Silly Bean's stakeholders to add Podcast to the list. However, MarketUp Analytics must account for the fact that, if Silly Bean was to invest in Podcast, then they would have to draft the additional 50K dollars from the total budget, but that 50K would not count towards ROI.

What strategy should MarketUp prescribe to Silly Bean in this new scenario?

Propose a solution