Jesko Perrey, Dennis Spillecke

Most advertising vehicles are a lot less glamorous than the motor vehicles that grace the pages of How To Spend It, the monthly magazine on lifestyle and luxury that comes with the weekend edition of the UK's Financial Times. However, “How to spend it?” is the very question that governs media mix optimization: once you know which messages to convey and what the total size of your budget should be, it is all about how to spend it. While this may not be the most entertaining exercise, there is nothing as effective as a perfectly balanced media mix for driving a retailer's marketing ROI. If you play it right, you may have the means to read How To Spend It with a more urgent sense of interest than before.

To support retailers in their efforts to spend their marketing funds in value-creating ways, this chapter outlines recent changes in the media landscape and introduces the three principal media mix optimization approaches:

  • testing and learning;
  • comparative heuristics;
  • econometric modeling.

The media landscape is in rapid transformation, and the media mix used for advertising differs substantially across industries and between countries

The media landscape is changing at breakneck speed. For example, while the average German household had access to fewer than ten TV channels in the late 1980s, in 2012 they have a choice of over 300. The number of radio stations has quadrupled over the same ...

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