A Resource-Allocation Perspective for Marketing Analytics

Abstract

Managers must understand their marketing efforts as precisely as possible in order to determine how much to spend on each marketing channel. This technical note explores marketing analytics—the process of systematically using empirical data about customers, companies, and industry context to inform strategic marketing decisions and create models that are helpful in understanding consumer behaviors. Resource allocation is the endgame of analytics. Using marketing analytics properly, any firm should be able to determine the optimal level of spending it should make on each of its marketing channels to maximize future performance and success.

Excerpt

UVA-M-0861

Rev. Oct. 1, 2019

A Resource-Allocation Perspective for Marketing Analytics

Your friend has sent you on a treasure hunt. She has given you clues about how to find the treasure, but you'll be left to draw on your own treasure-hunting skills to put the clues to good use.

Who is this friend of yours? It's your boss, the owner of the company for which you are the marketing manager. What is the treasure you seek? It's a business advantage that will allow your company to allocate its marketing dollars optimally and come out ahead of the competition. Those clues? That's data your company has gathered about the past behavior of customers. And what are your treasure-hunting skills? They are the tools you will find in this note—the techniques needed to analyze past marketing performance and discover unknowns that will allow you to predict the future.

The broad view of how this is done is the discipline of marketing analytics—the process of creating models helpful in understanding consumer behaviors. It is the systematic use of empirical data about customers, companies, their competition and collaborators, and industry context to inform strategic marketing decisions. The function of marketing analytics can range from reports on regular marketing activities—such as paid search advertising click-through rates—to allocating marketing resources to maximize future performance of a company's digital presence.

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Keywords: marketing analytics, resource allocation, marketing strategy, optimization, channel marketing