Marketing and Research Consulting for a Brave New World
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MMA Global, just introduced a new brand growth framework called Outcome Based Marketing v2.0 (OBM2) that was demonstrated to increase advertising ROI by 50% and do a better job of building brand penetration vs. typical media plans. The key is to focus media on a predictably higher responding consumer segment called the “Movable Middle” and to not worry about maximizing reach which leads to UNDER-performance.

The MMA has high hopes that this will become a new industry standard for media planning, replacing reach as the primary solve. (Full press release here.) White paper on request by e-mail joel@rubinsonpartners.com.

I was gratified to be a thought (and math) leader in developing OBM2 as part of the MMA team, building on The Persuadables research I led three years ago. I also want to highlight the collaboration of Neustar. They provided us their agent-based simulation models that incorporate media and purchase data from their targeting platform. Numerator was also instrumental by sharing years of their receipt scanning data on dozens of brands to calibrate and validate our model.  

To understand why this new media planning approach works so well, let’s start by understanding Who the Movable Middles are.  They are the consumers who have a probability between 20-80% of choosing the given brand. And they are mathematically proven (math here) to offer a minimum of 5 TIMES the ROAS of low unresponsives (the segment that most non-buyers fall into). If you want to think of it conceptually, the Movable Middles are consumers for whom you (and other brands) are in their consideration set.  You need to fight for their purchases AND to retain your spot in their consideration set.  Because they like you, they DO pay attention to your advertising.

What targeting the Movable Middle really means. For most brands, targeting the Movable Middle is about taking approximately 20% of media weight away from the 80-90% of consumers who are low unresponsives (mostly non-buyers) and using it to fund 2-3X heavier weight levels against Movable Middles and their Lookalikes.  Yes, a small reduction in spending from a large group of consumers where your advertising is wasted, turns into a huge and profitable increase in media weight against the smaller group of consumers who are predictably hyper-responsive to your advertising.

Note: you are NOT going dark on non-buyers and low unresponsives (not even possible as targeting and media choices are not that precise) but you ARE placing much more weight on those who are 5 times more responsive. You WILL achieve LESS media reach but it buys you a huge improvement in outcomes.  If you think of this as a weighted average, the typical reach-based plan weights media too heavily to low ROAS consumers, while the OBM2 plan rebalances for marginal response leading to a 50% increase in ROAS. Pretty intuitive when you think of ROAS as a weighted average.

What about converting non-buyers?  It turns out that OBM2 and targeting the Movable Middle leads to MORE CONVERSION OF NON-BUYERS AND HIGHER OVERALL BRAND PENETRATION…so it is also best for long-term growth…vs. a reach plan! How could targeting what is essentially a buyer group lead to reaching more non-buyers?  Because you are selectively also targeting non-buyers who are lookalikes for the Movable Middle as a by-product of the process and the extra media weight is needed for profitable conversion (also comes from the math.)

Putting OBM2 into action. The math and the research are straightforward for sizing the Movable Middle for a brand and for finding target rich segments and audiences.  That means marketers or their media partners and media agency can proactively build this into their plan leading to a win/win…marketers get more for their money and the media and agency partners are heroes.  High concentrations of Movable Middles can be found in many places. For example, if a marketer has strong first party data assets, it should be noted that heavy and moderate buyers are much more likely to be in the movable middle.  Your social following on Facebook or Twitter, Instagram…friends and followers are disproportionately likely to be in the Movable Middle.

Because it is straightforward as to who the Movable Middle is for a given brand and where to find them, OBM2 encourages much-needed transparency across the ecosystem of marketers and service providers.

The Movable Middle can be sized by using the Beta probability distribution…you just need to know who the category buyers are, and the share and repeat rate of the brand (maps to mean and variance of the Beta). In fact, the share of buyers is the first moment and the repeat rate from a markov matrix […]

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