Actionable Insights From APT's Financial Services Practice

Big Data Zeroes in on Ad Inefficiency

February 19th, 2014 | Posted by JDouglass in Financial Services

As data sophistication increases and advertising channels multiply, one question is becoming increasingly relevant in the banking industry: How can banks optimize ad spend across all channels and ensure they aren’t wasting money on marketing that won’t provide returns? In his recent Editor and Publisher blog, Alan Mutter poses the same question. The main solution he identifies is using APT’s Test & Learn to measure the incremental impact of media investments and other marketing activities. Please see an excerpt from the blog below:

“John Wanamaker, the innovative Philadelphia merchant who pioneered the modern department store in the Gilded Age, was such a fan of newspapers that he is credited with buying the first full-page ad. But even Wanamaker knew that the most efficient form of advertising available in the 1890s wasn’t terribly efficient at all. “Half the money I spend on advertising is wasted,” he is famously reported to have said. “The trouble is, I don’t know which half…”

“Nowadays, Wanamaker could find out, with considerable precision, by hiring Applied Predictive Technologies (APT), a Virginia-based company that mines all manner of data to determine not only the optimum ways to buy advertising but also where to locate bank branches and which under-performing entrees to nix from restaurant menus….”

“In a white paper published at its website, APT reports that it ran the numbers for an unidentified national “big-box” retailer with a $100 million advertising budget. ‘On average,’ APT stated, ‘newspaper advertising did not pay back,’ unless the merchant had saturated a market with a large number of stores. ‘In markets with low presence, the cost per store far exceeded the incremental marginal dollars created by the [ad] circular,’ said APT. ‘Removing underperforming markets eliminated an additional $5 million in waste from the marketing budget, while having minimal impact on revenue.’”

Click here to read the full blog. You can also read the cited APT case study about the profitability of newspaper ads here.


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