Re:Tooling -- Marketing Campaign Optimization: Optimization for the Masses

Marketers are particularly attuned to emerging trends, so most of them are already aware that their immediate future involves a series of reductions: smaller roles, lower profiles, and, most painfully, vastly reduced budgets. Making the most of what they’ve got is the only answer.

“Here’s the thing with marketing campaign optimization [MCO],” explains Suresh Vittal, a principal analyst at Forrester Research. “It’s a high-volume, direct-marketing–centric task.” Vittal says interest is on the rise thanks to the explosion in mass direct marketing, which didn’t used to be an easy option. 

“The original MCO tools were not made for every marketer, because, unless you were a credit-card company or [telecommunications vendor] that had a large, installed base of customers, you didn’t need it,” he says. “The original paradigm was, ‘We’ll pick the customers for the campaign.’ Now, it’s ‘We have the customer—what’s the right offer for [her]?’”

Adam Sarner, a research director at Gartner, cites two main drivers behind the demand for MCO: event-based marketing (sometimes called trigger marketing) and e-marketing. “You can do a direct-mail campaign, and the communication takes months,” he says. “[But] you’ll find out in 10 minutes if a campaign is working as planned online…. You get instant feedback. E-marketing, as far as cost optimization or optimization in multichannel campaign management [MCM]—that’s big.”

Vittal says there are two levels to MCO: offer optimization and campaign optimization. “With email marketing growing in volume, the opt-in challenge of [acquiring] customers is becoming larger,” he adds. “You’re basically in a world where marketers are trying to manage the opt-out while at the same time trying to [establish] relevance among growing volumes of email.”

Those difficulties, however, are precisely what MCO can help with, Vittal says. A successful implementation will help manage opt-outs and customer churn—essentially, he says, “extending the life of a [marketing] list…. It should also help you identify the most-relevant message to send out…based on modeling and business rules, as well as help you manage channel constraints.”

Sound complicated? Perhaps, but it may not stay that way for long. Vittal says there’s a big push right now to simplify MCO. “As the mass market for this technology develops and it goes mainstream,” he says, “a lighter version of MCO is necessary.” 

And yet, in Gartner’s view, MCO isn’t even its own market, but rather a segment of MCM. And Forrester’s Vittal says that MCO basically boils down to two vendors with far and away the largest installed bases: Marketswitch (acquired by Experian in 2004) and SAS Institute. (For a side-by-side comparison, see below for our online-only exclusive, “Marketswitch or SAS? You Decide.”)

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ONLINE-ONLY EXCLUSIVE — SIDEBAR: >> Vendor Shortlist

• Source: CRM magazine research

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Pricing can run between $200,000 and $1 million, depending on the number of records in a customer database, external data that may need to be manipulated, number of campaigns to optimize against, and period of time. “It’s easy to just think about [those] software costs,” Vittal says. “If you think about the true total cost of ownership, you have to think about the cost to optimize each time, which includes data, people, and process. There’s a cost associated with that.”

While it may seem like a lot to juggle, Vittal says that in the end—if done properly—MCO is worth it. “You can reduce the volume you send out, and increase response rates,” he says. “The benefits are self-evident.” 

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SIDEBAR: What to Ask, What to Do

Suresh Vittal, principal analyst at Forrester Research, suggests the following features and best practices when it comes to marketing campaign optimization:

Questions to Ask

• Can the offering allow for multigoal optimization?
• How does the user interface work? Can a marketer do scenario planning and simulation? 
• Is there a strong, underlying data management capability?
• Can I do sensitivity analysis—which variables drive what kind of behavior?

Best Practices to Follow

• Understand exactly what you’re optimizing for.
• Put your data house in order. 
• Establish a solid data-modeling infrastructure.

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SIDEBAR: The Sticking Point

Marketers seem to have embraced some best practices. Between 50 percent and 56 percent of respondents to a recent CMO Council survey said that: 

• operational marketing improvements have the most significant impact and value on go-to-market effectiveness and efficiency (50.5 percent);
• tracking performance, effectiveness, and efficiency across the marketing organization is the primary benefit of solution implementation (55 percent);
• they use Web analytics and e-metrics (55.7 percent); or
• they utilize email campaign management (55.5 percent).

And yet only 9.7 percent said they use technology to monitor channel productivity and opportunity management. 

Source: “Calibrate How You Operate,” CMO Council

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SIDEBAR: Multichannel Campaign Mangement Leaders

• Oracle’s Siebel 
• SAS Institute 
• Teradata 
• Unica

Source: “Magic Quadrant for CRM Multichannel Campaign Management,” Gartner (April 2009)

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Contact Assistant Editor Christopher Musico at cmusico@destinationCRM.com. 

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