Performance Marketing – the Next Frontier in Supply Chain Optimization?

    
“Imagine a world, within our reach today, where brand marketing forecasts auto-magically feed into the demand forecasts that drive inventory planning.” According to Randall Beard, this is a near reality. . .with the right technology behind it.

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The current hot topic in the world of consumer marketing? Performance Marketing. Data and analytics can now help marketing organizations go beyond simply paying for audience or activity, to paying for business results. Increasingly, marketing organizations can contribute to ROI goals through measurable business conversion, not only from digital marketing programs at the end of the marketing funnel, but also from activities further up the funnel. And media and performance marketing platforms are increasingly offering services where their compensation is based on attributable revenue conversion across all channels - digital, video and print.

According to McKinsey, investments in such performance marketing solutions will triple from $900 million in 2018 to $2.6 billion in 2022. For marketing, the advantages of a performance marketing first approach include:

  • Better understanding of which activities drive the best marketing return on investment,
  • Simulating future goal based scenarios for optimizing revenue, EBITDA, etc.,
  • Determining optimal spending by activity, location and time period, and
  • Real-time optimization of marketing campaigns in flight.

For the estimated $570 billion spent annually on global advertising, according to statistica, this will undoubtedly improve marketing ROI. And, that’s only the beginning.

But why is this important for Supply Chain Operations? Imagine a world, within our reach today, where brand marketing forecasts auto-magically feed into the demand forecasts that drive inventory planning. And that these forecasts more accurately capture the complete impact of marketing across all channels, by time period, and on a more localized basis. All the impact of a future trade promotion, for example, can be incorporated in inventory assortment and allocation, with both Marketing and Operations sharing a common view of the expected outcome.

This, of course, assumes that S&OP has the ability to incorporate this new level of marketing data and forecasts into the systems that drive inventory planning. It’s one more reason why Chief Supply Chain Officer’s (CSCO’s) need to embrace a data-driven world that supports a universal view of the business opportunity and move on from the siloed world of data management that causes data distrust and finger pointing. Data, analytics and machine learning are changing the world, and that change is happening quickly. CSCO’s need to heed that evolution and join the movement!