1. Copyright 2011 AiMark 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. Copyright 2011 AiMark Copyright© 2012 AiMark Classic funnel or new decision journey?

3. Copyright 2011 AiMark Copyright© 2012 AiMark 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. Copyright 2011 AiMark Copyright© 2012 AiMark 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. Copyright 2011 AiMark Dynamic system of Sales, Marketing, Classic & New Funnel Accounts for short and long term effects Volume sales Environment (temperature, economy) Marketing Price Promotion Distribution Advertising Classic funnel Loyalty Preference Awareness Consideration Intention New funnel Website Search Social media Clicks

6. Copyright 2011 AiMark Copyright© 2012 AiMark Empirical Findings 1)New funnel explains sales beyond classic funnel 2)Classic funnel often driven by new funnel metrics 3)Among classic funnel metrics, awareness most important, before consideration and preference 4)Classic funnel predicts best for FMCGs 5)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

7. Copyright 2011 AiMark Copyright© 2012 AiMark Adjusted R 2 similar across funnels in FMCGs, much better for the new funnel in durables and services

8. Copyright 2011 AiMark Copyright© 2012 AiMark Out-of-sample Forecast Error lower for classic funnel in FMCGs, for new funnel in durables and services

9. Copyright 2011 AiMark Copyright© 2012 AiMark Awareness matters more to sales than preference How to read? If awareness increases by 1%, volumes sales increase on average by.29%

10. Copyright 2011 AiMark Copyright© 2012 AiMark 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

11. Copyright 2011 AiMark Copyright© 2012 AiMark 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. Copyright 2011 AiMark Copyright© 2012 AiMark The multi armed bandit principle

13. Copyright 2011 AiMark Copyright© 2012 AiMark Cheap offer now-mentality Branding = Indirect conversion Real time feedback loop for long(er) term objectives Real time feedback loop for long(er) term objectives

14. Copyright 2011 AiMark Copyright© 2012 AiMark

15. Copyright 2011 AiMark Copyright© 2012 AiMark Future of marketing: Feel The Force 1.Validate predictive value of new & classic funnel 2.Define the best funnel for your brand 3.Connect with The Force: real-time consumer response 4.Launch & Iterate

16. Copyright 2011 AiMark THANK YOU!! QUESTIONS ? JORISM@GOOGLE.COM KOEN.PAUWELS@OZYEGIN.EDU.TR KOEN.PAUWELS@OZYEGIN.EDU.TR