Copyright 2011 AiMark Is the classic purchase funnel dead? Sales impact of classic and new funnels...

Copyright 2011 AiMark

Is the classic purchase funnel dead?

Sales impact of classic and new funnels

Koen Pauwels @ Ozyegin UniversityJoris Merks @ Google

AiMark Media Efficiency lab project

http://www.google.com/imgres?imgurl=http://scm-l3.technorati.com/11/06/23/46047/google.jpg?t=20110623082250&imgrefurl=http://technorati.com/business/article/google-hits-one-billion-unique-visitors/&usg=__KeFGFHiCiwZymLP8RtBpWmB-RFY=&h=300&w=425&sz=34&hl=en&start=2&zoom=1&um=1&itbs=1&tbnid=cIGPCF08mCk7nM:&tbnh=89&tbnw=126&prev=/search?q=google&um=1&hl=en&rlz=1T4WZPC_enNL401NL406&tbm=isch&ei=G_IaTvXqN8_oOabs8PUI

Copyright 2011 AiMarkCopyright© 2012 AiMark

Classic funnel or new decision journey?



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)



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



Dynamic system of Sales, Marketing, Classic & New Funnel

Accounts for short and long

term effectsVolume sales

Environment (temperature, economy)

Marketing

Price Promotion

Distribution Advertising

Classic funnel

Loyalty

Preference

Awareness

Consideration

Intention

New funnel Website

Search

Social media

Clicks



Empirical Findings

1) New funnel explains sales beyond classic funnel 2) Classic funnel often driven by new funnel metrics3) Among classic funnel metrics, awareness most

important, before consideration and preference4) Classic funnel predicts best for FMCGs5) New funnel metrics are key in high-involvement

categories, such as durables and services 6) After online marketing, TV most powerful in driving

new funnel, outperforms online in engagement



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

FMCG Durables&Services0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

26%

47%

24%

39%

25%

47%

New onlyClassic onlyHybrid



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

FMCG Durables&Services0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.260.23

0.19

0.33

0.26

0.37

New onlyClassic onlyHybrid



Awareness matters more to sales than preference

Awareness Consider Preference Loyalty0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.29

0.05

0.09

0.17

How to read? If awareness increases by 1%, volumes

sales increase on average

by .29%



Clicks

Branded search

Generic se

arch

#Web visits

#Pageviews per v

isitor

#Pos web co

nversations

#Neg web conversa

tions0.000.100.200.300.400.500.600.700.800.901.00

0.17 0.17 0.160.25 0.23

0.67

0.19

0.93

0.66

0.470.38

0.00

0.260.16

TV Online

How to read? If TV expenditures increase by 1%, # website visits

increase on average by .25%

Online, but also TV ads drive new funnel metrics



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 categoryA 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?



The multi armed bandit principle



“Cheap offer now”-mentality

“Branding” = “Indirect conversion”

Real time feedback loopfor long(er) term objectives



Future of marketing: Feel The Force

1. Validate predictive valueof new & classic funnel

2. Define the best funnel for your brand

3. Connect with The Force: real-time consumer response

4. Launch & Iterate



THANK YOU!!

QUESTIONS ?

[email protected] [email protected]

mailto:[email protected]


Copyright 2011 AiMark Is the classic purchase funnel dead? Sales impact of classic and new funnels...

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