media and marketing-message effectiveness for wireless telecom

MMM5 Telecom Mobility Message-Mix Modeling

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The Bigger Story1. This is about an analytics/big data exercise designed to measure

the ROI or returns to marketing investment. We call it message mix modeling or MMM.

2. MMM is all about using the power of data and analytics to help STC communicate the right message to its customers at the right time with just the right level of investment, and no more

3. One of the more famous quotations in marketing comes from Mr. John Wannamaker, who said “I know that half of my advertising is wasted, I just don’t know which half”.

4. MMM will eliminate the uncertainty in your marketing investment, it will uncover the waste and direct you to spend your resources in the most effective fashion.

5. MMM is one of the most positive payback projects in which you can engage. We will literally save you millions and help you direct your resources such that marketing investment will be doing what it is intended to do: drive growth for your brand!

2


National Message Counts

0

5

10

15

20

Nat

iona

l Mes

sage

s

3

18

78

10

MMM4MMM3MMM2MMM1

• We’ve made substantial progress in reducing the number of messages since 2008 with the average month now being between 7 and 8.

Note: Covers all incremental National Television, Magazines, and Newspapers from TOTAL MESSAGING MASTER REPORT.

MMM5

Recent

Average 7.5


Summary of Findings

4

• Over 95% of media activity was message-coded for MMM5 slightly changing the results versus MMM4 (83% of media there).

• The latest four quarters ending 2011Q2 were saw spending behind traditional Other Messages (driven by ABS and External Affairs) increase 38% while Value declined36%.

• Overall contribution due to media was constant versus same period year ago at 24%, but overall gross adds increased by 3.1% based on significant Baseline growth.

• During the same latest four quarters, Exclusive Handsets saw significant increases in contribution with only minor declines in effectiveness while Phone Sales saw both a drop in contribution and effectiveness.

• Isolating on Q1/Q2 2011, ABS was the most effective (Gross Adds per $1,000 spend) messaging indexing at 194 while External Affairs was close to average with an 81 index.

• Optimization of the incremental messaging during Q1/Q2 2011 (excluding direct mail and online activity) suggests a total of 8 concurrent messages with 4 on television - this is closely aligned with current activity.


Message Spending Trend versus YAGO

5

Note: Uncoded includes Paid Search as well as Outdoor.

$0

$100

$200

$300

$400

2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2

Mill

ion

s

Quarterly Spend

• The latest four quarters were dominated by the change in spending behind Other (ABS and External Affairs) at +38% while Value was -36%.

• Devices growth continues at the declining trend for Network.

-10%

+19%

-36%

+38%

+17%

-100% 0% 100%

10Q3-11Q2 versus 09Q3-10Q2

ABS & External Affairs

Network Trend

Devices Growth


Message Contribution versus YAGO

6

4%9%

5%

2%

4%

3%

15%

58%

09Q3-10Q2 Gross Adds

• Overall contribution due to media was constant at 24% with growth in Other (led by ABS and External Affairs) making gains against Value.

• Baseline as a contributor grew against the iPhone Effect which was in steep decline until 11Q2.

4%9%

4%

3%

4%

4%

12%

60%

10Q3-11Q2 Gross Adds

24% 24%



Message Contribution versus YAGO

7

• Overall gross adds increased by 3.1% in 10Q3-11Q2 versus the previous four quarters with a significant Baseline growth (3.8%).

• Other Messaging (mostly ABS and External Affairs) as well as Uncoded(mostly Paid Search) overcame the offset in Network and Value.

0.25

0.19

0.160.17

0.19

0.18

0.21

0.22

0.08

0.08

0.14

0.10

0.10

0.07

0.09

0.08

0.50

1.00

1.50

2.00

2.50

3.00

2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2

Gro

ss A

dd

s in

Mill

ion

s

Quarterly Contribution

+3.8%

-1.7%

0.5%

0.9%

1.0%

-1.1%

+0.4%

-0.7%

+3,1%

-0.2 0.0 0.2 0.4

Gross Adds in Millions

10Q3-11Q2 versus 09Q3-10Q2

Total

Percentages add to Total


ABS & External Affairs

Baseline Trend


Message Effectiveness versus YAGO

8

• Messaging Effectiveness (Gross Ads per $1000 spend) for existing messages is generally falling as new messages are introduced.

-6%

-9%

NEW

-5%

+214%

-15%

-8%

-31%

0 5 10

Other Network

Network Coverage

4G Network

Fastest 3G

Other Devices

Phone Sale

Iphone

Exclusive Handsets

Devices and Network Effectiveness

-11%

-17%

NEW

+92%

+2%

NEW

+59%

-67%

0 5 10

Data Service

Other Brand

External Affairs

Rethink Possible

Other B2B

ABS

Other Value

Family Talk/Rollover

Value and Other Effectiveness

<1.3% of Spend

<0.3% of Spend



Message Effectiveness versus YAGO

9

Other B2B

Rethink Possible

Data Services Exclusive HandsetsiPhone

Phone Sale

Other Devices

Fastest 3GNetwork Coverage

Other Network


Other Brand Other Value

All Other

Uncoded

0

5

10

0.0 0.2 0.4

Effe

ctiv

enes

s

Contribution in Millions

09Q3-10Q2

Note1: Size of bubbles is the relative spending level, Effectiveness is Gross Adds per $1,000 spend.

Note2: Uncoded includes Paid Search as well as Outdoor.

Other B2B

Rethink Possible

Data Services Exclusive HandsetsiPhone Phone Sale

Other Devices

Fastest 3G

Network Coverage

Other Network


Other Brand

Other Value

All Other

UncodedABS

ExternalAffairs

4G Network0

5

10

0.0 0.2 0.4

Effe

ctiv

enes

s


10Q3-11Q2

• Exclusive Handsets saw significant increases in contribution with only minor declines in effectiveness.

• Phone Sales saw both a drop in contribution and effectiveness.


Exclusive Handsets Messaging Detail

10

• Exclusive Handset messaging (excluding iPhone) took off in 2010.• Effectiveness for Exclusive Handsets was highest at 3.0 during 2010Q3

when focus was distinctly on Blackberry Torch.

0

1000

2000

3000

4000

2010Q1 2010Q2 2010Q3 2010Q4

Tota

l GR

P A

lloca

tion

Blackberry Other Blackberry Torch HTC Suround LG Quantum Motorola Backflip Samsung Other Samsung Focus Samsung Mythic

Note: Spending in $000’s, Effectiveness is Gross Adds per $1000 spent.


Message Effectiveness Q1/Q2 2011

11

Data Services

Exclusive Handsets

iPhone

Phone Sale

Fastest 3G

Network Coverage

Other NetworkFamily Talk/Rollover

Other Brand

Other Value (mostly DM) Uncoded

ABS

ExternalAffairs

4G Network

0

2

4

0.00 0.12 0.24

Effe

ctiv

enes

s


Weighted Average 1.75

• ABS was the most effective (Gross Adds per $1,000 spend) messaging during Q1/Q2 2011 indexing at 194 versus the weighted average.

• External Affairs was close to average with an 81 index on the same scale.

Mostly Paid Search

Most Effective 3.44

Note1: Size of bubbles is the relative spending level, Effectiveness is Gross Adds per $1,000 spend.

Note2: Uncoded includes Paid Search as well as Outdoor.

Driven by $49 iPhone


Message Synergies Q1/Q2 2011

12

• Device and Network generate the greatest synergistic lift at 0.7%.• Device and Value as well as Network and Value are almost equal at 0.6%.

5.0%

2.3%

0.7%

0%

2%

4%

6%

8%

10%

Devices Network Synergy

Lift

Ove

r B

asel

ine

2011 Device and Network

5.0%

1.6%

0.6%

Devices Value Synergy

2011 Device and Value

2.3%

1.6%

0.6%

Network Value Synergy

2011 Network and Value

Note: Lift is incremental gross add contribution divided by baseline.


Message Optimization Q1/Q2 2011

13

• Optimization of incremental messaging (excluding direct mail and online activity) suggests a total of 8 concurrent messages with 4 on television.

• Other messaging (represented mostly by Brand messages) represent the largest number of messages with 3.

2

1

1

1

1

1

1

0

2

4

6

8

Television Newspapers Magazines Radio

Incr

emen

tal M

essa

ges

4

7

8

Note: Ordered by incremental rules (see appendix).

6

Brand


Message Recommendation Q1/Q2 2011

14

• Excluding Direct Mail, a pure mathematical optimization suggests a 22% decline in concurrent messages from 10.65 to 8.32 which was converted to the clear recommendation of 8.00.

Note: Averages are based on weekly DMA-level activity, ordered by incremental rules (see appendix).

Proposed Messaging

Incr

emen

tal M

essa

ges


Across Media Channels, there are significant synergies and benefits of integrated marketing

0

0.5

1

1.5

2

2.5

3

Independent Impact

Simultaneous Activation

Synergy

Local Newspaper

National TV

0

0.1

0.2

0.3

0.4

0.5

0.6

Independent Impact

Simultaneous Activation

Synergy

Banner Ads

Paid Search

Marketing Synergies National TV & Local Print

Marketing Synergies Digital Banner Ads and Paid Search

15


0.37

0.03

0.72

0.04

0.42

0.02

0.15

0.07

0.0

0.5

1.0

1.5

2.0

National Local

Gro

ss A

dd

s in

Mill

ion

s

09Q3-10Q2

Message Contribution by Source

16

0.33

0.02

0.77

0.03

0.32

0.02

0.26

0.06

National Local

10Q3-11Q2

• Both National and Local sources as a whole are fairly stable.• National Value messaging declines by roughly 24% (0.32MM versus

0.42MM), but Other (B2B and Brand messages) makes up the difference.

Represents 20% of total Gross Adds Represents 20% of total Gross Adds



Next Steps

17


Next Steps

18

• Generate Scenarios: The models can be leveraged to explain retrospective changes in the allocation of message spending and their impact on gross adds … with constraints defined, we can also estimate an optimization for the budget if requested.

– Scenario definitions before October 6th (two weeks)– Follow-up delivered via email before the week of October 17th

• Process data for MMM5B/6: Alpha brand finance data is expected to move to monthly, MEC full media data is starting to come in monthly, BLA message coding has started already … delivery phase October to December.


Appendix

19


Sources of Information

20

• Mobility Gross Adds: Cluster weekly totals from MEC and Alpha brand Internal Sources (post-paid consumer).

• Actual Spending: National quarterly totals by media from Alpha brand Finance

• Cluster/Regional Spending: DMA weekly totals by media (television, magazines, newspapers, radio, outdoor, online display, paid search, and e-comm) from MEC (Kantar and Atlas data).

• Cluster/Regional Target Population: DMA 18-54 adult population (target audience) from ACNielsen

• Cluster/Regional Spending: National and cluster drop totals for direct mail from Alpha brand (Internal Sources) and Accenture.

• Message Coding: National and Local (DMA) weekly execution from BLA (harmonization of wear-out chart, rotation summary, proof of performance reports, Alpha brand creative descriptions, etc.) for television, magazines, newspapers, radio, online display, e-comm, and direct mail (95% of 2010 spending).

• Other Data for Modeling but not Presented Here: Halo Wired spending (Alpha brand Finance and MEC Kantar data) as well as competitor (Verizon, T-Mobile, and Sprint) spending (MEC Kantar data).


Message Coding

21

• Media Coded: television, magazines, newspapers, radio, online display,e-comm, and direct mail (95% of 2010Q3-2011Q2 spending).

• Message Drivers Defined: network, value/plan, handsets/devices, data services, b2b, brand (new as a driver due to Rethink Possible for MMM4 and External Affairs for MMM5), and other.

• Media Uncoded for MMM5: outdoor and paid search.– Outdoor (2% of 2010Q3-2011Q2 spending) new media during MMM4.– Paid Search (3% of 2010Q3-2011Q2 spending) is agreed to be very

difficult to message code.

Note: Online Display and e-comm are once again message-coded for MMM5.


Driver Examples Q1/Q2 2011

22

Network (21%) Devices (27%) Value (6%)

“Ski Lift”Getting fast with 4G Network

“Spider – Samsung Infuse” Exclusive Handsets

“Mistake” Value Plans-Unlimited Mobile

to Mobile Calling

Note: Percents above reflect share of total 2011 spending.


Incremental Messages

23

0

4

8

12

2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2

Quarterly Average Incremental Message Counts

All Other

B2B

Brand

Data Services

Value

Devices

Network

• Average incremental messages across all media (not just National Television and Print) are growing with the reintroduction of Data Services in the Online Displays and e-comm that were added back to MMM5.

Incremental Ranking RulesNational Television

Local Television

National Newspapers

Local Newspapers

National Magazines

Local Magazines

Local Radio

National Online Displays

National e-comm

National/Local Direct Mail

Note1: Message counting based on all media except Paid Search and Outdoor.

Note2: To be counted, the same message must not appear in a given market and week for a media higher in the incremental ranking rules.


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