Google Pccity Ropo Study

8/8/2019 Google Pccity Ropo Study

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Google Confidential and Proprietary 1

Marketing ResponseUnderstanding the complete marketing ROI for PC City


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Background

PC City is an chain of computer superstores and e-commerce operation that

operates across Europe. As part of the the DSGi group PC City (& PC World) ithas stores and e-commerce operations across UK, Spain, Portugal, Italy,Greece and Sweden.

The business in Spain started via the acquisition of Ei System and todayoperates 32 stores across the country.

The business started its e-commerceoperation over 5 years ago and has used bothonline and offline media to drive traffic to itssite PcCity.es.

Online advertising historically has beendeployed at low levels with Catalogues andTV having been the dominant historical media(~95% of PC city media expenditure).
http://en.wikipedia.org/wiki/Dsgihttp://en.wikipedia.org/wiki/Dsgi


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Google Confidential and Proprietary

Research Objectives and Methodology

3

To understand and quantify the effectiveness of PC Citys marketing and

media spend in driving business outcomes

This across both online and offline businesses

To understand the role of Pc Citys paid and owned media (website) in driving sales

To optimise the marketing and media mix to generate greater revenue from

the same level of investment

Objectives

Methodology

Using Pc Citys internal and proprietary data (May 2007 Feb 2010) Sales volumes and revenues (split by channel (online vs offline)

Pricing

Website data (visitors, conversions) Marketing and Media costs

And data from a variety of other internal & external sources (including search volumedata from Google.es) Multiple econometric models (multiplicative logarithmic time series) wereconstructed to understand total Marketing ROI by media channel and informfuture optimal media resource allocation


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94%

Understanding the PC City business

Offline sales

Online sales4%

2% Reserved Online,collected Offline

Pc City owns and operates 32 stores across Spain

Although only Laptops, Netbooks and Desktops were analyzed as part of this workthese 3 lines of business represent approx 85% of Pc City revenue

Business Split Online/offline - Revenue Business Split Online/offline - Units

96%

Offline sales

Online sales3%

1% Reserved Online,collected Offline


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The Offline World

What are the drivers of offline sales?


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Understanding the drivers of offline sales

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Base Sales 42%

Seasonality8%

Regular price 12%Price promotion

2%

TV Advertising 5%

Catalogues 15%

Press 3%

Radio & OOH 1%

Other drivers 1%

11% of offlineconversions driven by

Pc City web traffic

11% of Pc Citys offline in-store sales comes as a result of visits to its websitewww.pccity.es.

OfflineSales

volumes

Sales(unitssold)


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Base

SalesSeasonality Regular

pricePrice

promotion

TV

Advertising CataloguesPress

Radio &

OOHOther Web traffic to

pccity.es

42%

12%

8%

2%

5%

15%

11%

3%1% 1%

Understanding the drivers of offline sales

62% of PC City sales are nonmarketing drivers

38% of PcCity sales areinfluenced by Marketing

Offline

Salesvolumes

The Website is responsiblefor 11% of offline revenue

which is nearly 1/3 of allsales driven by marketing

Catalogues and theinternet are the biggestdrivers of offline sales.

Base sales volume

includes influence fromexisting store network,

employee workforce,

existing infrastructure

distribution, seasonality,

underlying consumer

demand etc..

The Website is responsible for 11% of offline revenue which is nearly 1/3 ofall sales driven by marketing



The Online WorldWhat are the drivers of online sales?


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Sales(un

itssold)

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Understanding the drivers of incremental online sales

10%

Base 32%

Base 32%

Web traffic topccity.es 25%

Price promotion23%

TV Advertising3%

TV Advertising3%

Press 3%

Press 3%

Catalogues 4% Seasonality10%

Seasonality10%

Incremental online sales are

driven by predominantly by priceand underlying demand.

Graphic quantifiesthe drivers of

incremental salesvolumes i.e. salesabove the modelled

norm



Understanding the drivers of total sales

16% of the PC City Business is driven by the Web. 10% coming via research

online but purchase offline, a further 4% via ecommerce and 2% reserved online.

16%business driven by

online10%Via Online to Store

6%Via Online



Marketing ROIHow to optimise media spend to return



Due to the natural variance in both spend and sales levels over the

analysis period (May 2007 Feb 2010) the models are able to plot responsecurves for each of the different media cannels

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Understanding the effectiveness of marketing spend

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WeeklySales

(Units)

Weekly Media Spend

From understanding historical salesresponse to media spend it ispossible to understand the ROI ofeach channel

Additionally understanding theresponsiveness of each media indriving sales it is possible to definean optimal marketing mix

Media X



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klySales(Units)

Weekly Media Spend

Increase spend in

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WeeklySales(Units

)

Weekly Media Spend


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WeeklySales(Units)

Weekly Media Spend

Historicalspend

Optimalspend

Historical

spend

Optimalspend

Optimalspend

Historicalspend

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WeeklySales(Units)

Weekly Media Spend

Historicalspend

Optimalspend

An Optimal mix for PC City would mean reducing investments in TV and up-weighting investment in other media channels.

Note that the optimal recommendation takes into account the natural constraints (i.e. the available inventory) of each media.

Absolute values not shown due to client confidentiality ticks represent and indicator of000 Absolute values not shown due to client confidentiality ticks represent and indicator of000

Absolute values not shown due to client confidentiality ticks represent and indicator of 000Absolute values not shown due to client confidentiality ticks represent and indicator of 0,000

catalogues

TV

Paid search

Press

Increase spend in

Increase spend inDecrease spend in


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1.40

Using the optimal media mix

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Paid Search9%

Catalogues42%

Outdoor3%

Press3%

TV43%

PaidSearch

1%

Catalogue

32%

Outdoor

1%

Press2%

TV64%

6%

increase in

revenue

Last year 23 Aug 11 Oct 2009 (8 weeks) Optimal Mix for 24th Aug 12 Oct 2010 (8 weeks)

Aggregate

Marketing

ROI

Aggregate

Marketing

ROI

1.10

With the same budget a more optimal mix delivers an 6% revenue

Understanding of ROI of display within the media mix was compromised by a lack of datarelating to Display investments over the period analysed.


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Units(Sales)

Total Campaign Investment

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Historical BTS Investment

Optimal Mix

Historical Mix

Opportunity = 6%

Total Campaign Marketing Response Curves

The optimal media mix represents a 6% increase in sales



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Return on investment per media

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OnlineROI4.68

The ROI of each media is based uponthe media investment and return .

Paid search is the most cost

efficient media in the mix, morethan 10x the closest competingmedia

0.7 1.28 1.12 0.94 1.36 1.50

31.80

OfflineROI

27.14

1 invested in paid search delivers4.68 inrevenue online and27.14 in revenue offline.

Some very low level cross

channel ROI evident acrosspress & catalogues.



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Assuming all other media investmentsare held at the current level, it ispossible to understand the effectivenessof incremental media spend on sales

Further10k in Delivers additional Units sold

TV 9

Press 67

Catalogues 13

Paid Search 131

Increases in Paid search investmentwill deliver the greatest return



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Understanding Digital


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Paid search position and revenue

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Increasing position of Paid search has a noticeable effect on both online andoffline revenue

Averageposition

% increase inonline sales

% increase inoffline sales

Generic search terms across Laptops, Notebooks and Desktop

1.0 2% 9%

1.7 1.7% 7%

3.5 - -

3.5

Average Position

Generic Keywords

3.1

Average Position

Brand KeywordsAverage Cost

per Click

Historical Paid search metrics for

PC city


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Drivers of Branded search queries

In addition to driving web traffic and ultimately sales, Generic Paid Searchimpressions also drive 4% of branded query volume

Base Online Queries78%

Seasonality15%

Paid SearchImpressions

4%

Catalogues2%

TV

1% Press


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Conclusions


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Summary and conclusions

1 16% of PC Citys business is driven by the web

2

Eachuro invested in Paid search delivers27.48 in revenue

offline and4.68 online

3 By shifting the media mix Pc City could increase total revenue by6% with the same media expenditure

4 By changing average page position of paid search would increaseonline sales by 2% and offline sales by 9%


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Testimonials


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Testimonials

Jorge Benlloch CEO PC City Spain

We all know that the future is online, but we didnt know untilnow quite how powerful it was. Thanks to this research wenow understand the importance of each media channel. We

know that each media plays a distinct role in the salesprocess but we are now able to optimise media budget toalign to our business goals. We now have the data andanalytics to test significantly increased spending in paidsearch and are already doing so.


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AppendixSome other interesting bits and pieces


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Model Accuracy

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LaptopSales(Unit)

Modeled

Actual

98%Model explains of variation in


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Understanding the PC City business

Offline Sales

Online

Sales

Rainf

all

Holiday

Sporting

Events

Store Refurbishment

Competiti

ve Media

Traditional

Media

Web traffic

Online

Display

SEM

(Paid Search) Email

Online

Search

Online worldOffline worldBusiness

Outcome

+ Driver

- Driver

Legend

27

Price, Base Sales

& Seasonality

Short term

Promo days

Width of line

indicates size

of driver


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About MarketShare Partners

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World-Class Marketing Science + Real-World Industry Expertise

Strategic analytics firm deploying industrys most advanced analytic

models for marketing effectiveness, ROI and allocation

Reputation of being the most innovative firm in the category, withfocus on advanced math, thought leadership and action

Significant experience with new media, including search, socialnetworks and display

Heavy emphasis on application of analytics to make better decisionsgoing forward

An independently owned company delivering 100% objectivity inassessing marketing effectiveness.

All data analysis and econometric modelling was conducted by


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Thanks!

Google Pccity Ropo Study

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