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Optimized SEM Spend Across Pet Categories for A Large Retailer In The US

Summary

The client’s marketing team wanted to understand how to maximize their ROI, while optimizing the spend allocation each week across Search Engine Marketing Channels for the Pet Categories. The objective was to design a framework for finding the optimal weekly SEM spend bucket with high degree of statistical significance and help visualizing the diminishing returns, thereby supporting the business to make a case for spend redistribution.

Approach

  • Developed a multi-touch attribution model using the Markov chain concept to accurately identify the contribution of SEM channel on the GMV and ROAS across the Pet categories.
  • Established the relationship between Spend vs Gross Margin from SEM channel using the polynomial Regression model.
  • Optimized spend by maximizing ROI of channels using Linear programming and simulation models.

Key Benefits

The client can maximize the overall ROI by allocating more budget to the SEM channel which has higher returns

Results

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With reallocated spend across SEM channel and ROI, the business would achieve ~25% higher GMV across the pet categories when compared to the previous spend allocation.

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