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Is the classic purchase funnel dead? Sales impact of classic and new funnels

Is the classic purchase funnel dead? Sales impact of classic and new funnels. Koen Pauwels @ Ozyegin University Joris Merks @ Google AiMark Media Efficiency lab project. Classic funnel or new decision journey?. Why does this matter to Business?.

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Is the classic purchase funnel dead? Sales impact of classic and new funnels

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  1. Is the classic purchase funnel dead?Sales impact of classic and new funnels Koen Pauwels @ Ozyegin University Joris Merks @ Google AiMark Media Efficiency lab project

  2. Classic funnel or new decision journey?

  3. Why does this matter to Business? • “Walmart made a common mistake repeated hundreds of times in the business world: they relied on what customers said in a survey versus what they actually do in the stores (and online)”, Phil Terry, Founder of The Councils (2011) • “You need to capture a customer and keep them engaged more than ever. The funnel doesn't account for this in a robust way (…) i.e. people talking about your brand during their own exploration, driving awareness and preference at what would be mid-points to the funnel.” (Cooperstein 2011). • “As marketers we still need to effectively allocate dollars across multiple touchpoints as not everyone in every industry is living/engaging full in the digital space” Camille (2011)

  4. With Dutch Google, GfK & Alterian we ask: 1) How much do classic (offline survey-based) and new (online behavior) funnel metrics predict brand sales? 2) Does it differ in high vs. low-involvement categories? 3) How can managers affect funnel metrics that matter most to weekly sales? • We study 36 brands in 15 categories: durables (cars), services (internet, energy, travel, lodging, insurance), food (cheese, butter, snacks, candy, dairy, soft drinks, beer) and non-food (tissue, napkins) packaged goods

  5. Dynamic system of Sales, Marketing, Classic & New Funnel Awareness Classic funnel Consideration Marketing Distribution Preference Advertising Search New funnel Clicks Intention Loyalty Website Promotion Price Social media Accounts for short and long term effects Volume sales Environment (temperature, economy)

  6. Empirical Findings • New funnel explains sales beyond classic funnel • Classic funnel often driven by new funnel metrics • Among classic funnel metrics, awareness most important, before consideration and preference • Classic funnel predicts best for FMCGs • New funnel metrics are key in high-involvement categories, such as durables and services • After online marketing, TV most powerful in driving new funnel, outperforms online in engagement

  7. Adjusted R2 similar across funnels in FMCGs, much better for the new funnel in durables and services

  8. Out-of-sample Forecast Error lower for classic funnel in FMCGs, for new funnel in durables and services

  9. Awareness matters more to sales than preference How to read? If awareness increases by 1%, volumes sales increase on average by .29%

  10. Online, but also TV ads drive new funnel metrics How to read? If TV expendituresincreaseby 1%, # website visitsincreaseon average by .25%

  11. How do our findings help managers? • Should I replace classic funnel with new funnel tracking? 1) Cost-benefit trade-off: while classic funnel metrics are ~ 5x as expensive, adding them to new funnel improves out-of-sample prediction with 27% for low-involvement products 2) Cross-funnel effects imply overlap, but also help you track how campaigns move between digital to physical settings: note the high impact of TV on online engagement • For my specific brand in my specific category? New funnel key for high-involvement categories, but best combination ‘hybrid’ funnel differs by brand and category A high-value tracker for small-budget brands could combine classic awareness with new funnel metrics • How can I leverage the real-time value of online behavior?

  12. The multi armed bandit principle

  13. “Cheap offer now”-mentality “Branding” = “Indirect conversion” Real time feedback loop for long(er) term objectives

  14. Future of marketing: Feel The Force Validate predictive valueof new & classic funnel Define the best funnelfor your brand Connect with The Force: real-time consumer response Launch & Iterate

  15. Thank You!! Questions ? jorism@google.com Koen.pauwels@ozyegin.edu.tr

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