Unlocking growth for a cosmetic brand
When diving into the data of any brand, there are so many factors up for consideration. As we already know - advanced attribution is not a one size fits all game and nor should it be - all data is different and all company’s needs and targets are too.
Getting to the meat of any brand - we first need to get to know them better and jump in with two feet in order to deeply understand the value of the business.
When we first began our engagement with a well known cosmetics brand, the team was trying to answer a few simple questions, like ‘What is the ROI from our media investments?’ or - more pointedly, ‘How much budget should be allocated to the Top of Funnel?’. The last question, and probably one of the most important ones - is, ‘What is the Contribution Margin and Revenue per customer?’
All valid angles to approach and all important for making and the next move.
Understanding the true value
Let’s begin -
In order to take the first step, we need to understand the true value being driven by marketing.
Our first step in the process was to understand the Contribution Margin from an observed media perspective and an advanced attribution standpoint. For us to calculate the contribution margin, the team worked closely with the brand’s marketing team to gather their underlying factors, such as Cost of Goods Sold (COGs), Promotional Spend, and Shipping Cost. Once we understand the client's contribution, we can begin the analysis of Revenue per customer.
To calculate this, we divide the newly discovered contribution margin by the total number of customers as shown in the graphic below:
Analysis of media spend
Diving even further - once we understood the contribution margin, we wanted to look at the entirety of media spend to understand the impact seen across their media portfolio. Since the client had no custom attribution methods, we used platform-driven attribution as our anchor. In order to understand the advanced attribution of their media portfolio we applied M-Squared’s multipliers to estimate the true impact of their media.
Through this process we were able to gather some impactful insights; such as their Meta campaigns are drastically underperforming as compared to the industry average. Another insight would be that their Google Shopping campaigns are the most impactful to their overall bottom line, and we should continue to fund that platform. The final insight that caught our attention was that affiliate marketing is one of the strongest driving factors within their overall media portfolio. Have a look at the graphic below highlighting the lowest and highest returns:
Test and Growth Plan
Now that we had some hard facts to play with, we could start testing different marketing routes and develop a sustainable growth plan. From our analysis of their media performance, we can instill what’s called a ‘test and grow plan’. This specialized report calls for shifts within the company to go bigger - such as budget reallocation to more robust performing media channels, conducting measurement experiments to better understand diminishing returns within specific platforms that are not performing the way we wanted them to and why.
Some examples of the recommendations would be to run a Geo Scale test within Meta and some of their display partners in order to ascertain the scaling opportunities within the market. We also recommended a Pulse Test for their affiliate program to better correlate the impact of sales periods and the affiliate program itself. In the next graphic you can see that through our analysis, we estimated that we can grow revenue by 10%, all the while cutting the budget by 80k!
