In The Media
Predictive Modeling for Advertising Campaigns
The New Metrics Frontier
Source: MarketingSherpa Newsletter,
June 06, 2004
Predictive modeling, the science of analyzing past campaign
results in order to forecast and proactively improve future
results, has long been the holy grail of direct marketing.
Analytics experts make, on average, the highest salaries in
the marketing field. And the companies that employ them are
able to get better response rates, and much higher profits.
The question is, can predictive modeling be applied in any
sophisticated way to advertising campaigns? We reviewed a
new analysis methodology that claim to help advertisers figure
out exactly how to tweak future campaigns for a better response,
and enhance long-term reader engagement.
Taguchi Method-based Tactics
The Taguchi Method was invented to help industrial researchers
(such as automakers) who wanted to conduct tests with multiple
elements, in a short-time frame, with small test cells.
Dr. Jim Kowalick (a respected product engineering consultant
with a marketing background) decided to try applying this
to advertising campaigns for folks who wanted to test a broad
range of variables without creating a separate test cell for
every single one of them.
Instead of classic tests where you measure one varying factor
per test cell against your "control", you could
measure hundreds or even thousands of varying factors -- and
the way they interact with each other -- per test cell.
The returning data would tell you what factors go toward making
campaign creative that wins.
If it works, this tactic could be a godsend for marketers,
or those who need to launch completely new creative instead
of just tweaks to what's already working.
Malloy Insurance Agency, an insurance firm based in Northern
California, whose regular campaigns to a house list of 7,500
weren't working very well, tested Dr. Kowalick's services
in May 2003.
Over a two-week period, Malloy split his list into 12 test
cells of 625 each, and sent out each a very different email
creative -- ranging from short HTML to long-copy text-only
-- hoping to measure the success and interaction of more than
2,000 different specific creative factors.
Dr Kowalick tells us he was able to determine the winner and
the specific elements within that creative that made it win
with a "95-98% confidence level."
Then Malloy relied on his list of winning elements to craft
new email letters to clients and prospects fortnightly from