Rethinking path to and from purchase

Prof. Koen Pauwels

From impressions to expressions

• “A lot of us remember when the role of the CMO was much simpler. Information flowed in one direction: from companies to consumers. When we drew up our plans and budgets, the key metric was consumer impressions: how many people would see, hear or read our ad?”

Joe Tripodi, Chief Marketing and Commercial Officer, Coca-Cola, 2011

Like

TV Sales Paid

Search

Unlike

PriceDistribution

Websites Visits

Now online media even drive toilet tissue sales!

Srinivasan, Rutzand Pauwels 2015

Reaching the right customer with the right offer at the right time …

Past Metaphor: The purchase funnel

Purchase LoyaltyConsiderationAwareness

ConsiderationInitial

Consideration Set

Moment of Decision

Loyalty Loop

Post Purchase ExperienceOngoing process

Active EvaluationInformation gathering, shopping

McKinsey 2009The Consumer Decision Journey

Has the Web made the funnel fat?

Purchase LoyaltyAwareness

And how about path from purchase?

• Prospective customer may postpone purchase because they feel overwhelmed or uncertain

• Satisfied customers unsubscribe because they feel overwhelmed by marketing/’relationship’

But do consumers really

• Switch brands near the end of the purchase process?

• Change their feelings online ?

• Have these feelings best captured by online metrics ?

It depends

So what is the evidence?1) From individual search data

2) From aggregate metrics

And what future research do we need?3) Including controlled experiments

Search for cameras (Bronnenberg et al. 2016)

• Consumer finds choice in mid to late search,stays close to mean of early search

attributes, later narrows search for each attribute.

• % of search/site visits represents % of choice• Consumer revisits the chosen product• Generic search more at start, but only 7% Branded Search more often later: up to 97%

But Search varies across categories

Cars, insurance: search starts3 months before purchase(Lecinski, Google 2011)

Groceries: search, if any, on same day as purchase

So when should paid or

owned media work best?

and Across Brands

• Ineffectiveness of paid search forHeralded as ‘Paid is dead’

• But paid and multiple touchpoints synergyshould be key for less familiar brands such

as

Explained from theory (Pauwels et al. 2016)

• Goods differ in knowledge consumers need:a) Experience good: deep, trusted info (Nelson 1974)

b) Search good: fast info by search (Erdem et al 1999)

• Low familiarity lifts need for cross-channel media:a) Tough to build brands online (Erdem 1999, Sandom 2010)

unfamiliar brands need online + offline mediab) Familiar brands leverage within-online synergies

With marketing effect implications

Experience goods

(services)

Search goods

(products)

Unfamiliar

brandElasticity: Owned > Paid

Synergy: Cross > Within-online

Synergy: Cross-channel >

Within online synergy

Familiar

brandElasticity: Owned > Paid

Synergy: Within online > Cross

Elasticity: Paid > Owned

Synergy: Within online > Cross

Driven by reach & trust of media

Source: Nielsen (2013) survey across continents

Our findings confirm hypotheses

• Owned > paid media if high enduring involvement (e.g. fashion, GMAT testing) but paid > owned if need only at specific time (e.g. furniture, toaster )

• Cross-channel synergy higher than within-online synergy for unfamiliar brands, within-online synergy highest for familiar brands

• Earned media highest elasticity across conditions

and give managers specific advice

Experience (Service) Search (Product)

Unfamiliar

brandOwned (and Earned) key to purchase

Spend on offline media for synergy

Owned key to Purchase

Spend on offline media for synergy

Familiar

brandOwned key to purchase

Spend within online for synergy

Paid (and Earned) key to purchase

Spend within online for synergy

Initiated by:

Content Separated

Content Integrated

Firm

Email, TV

PR, product placement

Customer

Retarget SEA

Affiliate SEO

OK, but which paid online actions?

DeHaan, Wiesel and Pauwels 2016

Integrated: the category (TV) the consumer comes to

the site for

Separated: other

categories

Content Integration best in later stages

and differ by conditions :

• Among Content-integrated ads:Affiliate sites if high involvement (e.g. shoes, fashion, cars, alcohol)Paid search, price comparison site if high need NOW (e.g. refrigerator)

• Among Content-Separated (e.g. retargeting)When mood of website matches your offer

21

Implications for marketing?

• Positioning and targeting less important as consumers rely less on marketing.

• Let the market sort out user segments• Metrics like Customer Lifetime Value (to justify

customer acquisition costs) less useful • Instead of brand perceptions, preference,

loyalty, track online metrics (Simonson 2016)

But no perfect mindset metric:

Online metrics• Unobtrusive• At time of interest

in the category • What? Where?• Often platform-owned

Classic Surveys• Representative• At regular intervals,

providing time series• Why, to what extent?• Often Customized

MSI best paper (Pauwels and van Ewijk 2013)

1) How much do classic funnel metrics and online journey metrics explain and predict brand sales?

2) Does it differ by involvement and brand spent?3) How can managers affect metrics that matter most?

36 brands in 15 categories: durables (cars), services (internet, energy, travel, lodging, insurance), food (cheese, butter, snacks, candy, dairy, beer, soft drink) non-food (tissue, sanitary napkins) packaged goods

All variables endogenous in the Dynamic System

Accounts for short and long

term effectsVolume sales

Environment

Marketing

Price Promotion

Distribution Advertising

Classic funnel

Loyalty

Preference

Awareness

Consideration

Intention

Online Journey Owned

Paid

Earned

General Results

1) Classic funnel still matters, but online journey metrics substantially add to sales explanation

2) Classic Awareness drives search clicks and site visits, but is also driven by these online metrics

Classic ‘mid-funnel’ less effective

Awareness Consider Preference Buying intention

Loyalty0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

0.30% 0.28%

0.02%

0.07%

0.20%0.17%

Consider, Preference, Buying intention and Loyalty matter less than Awareness

Consumers need to be aware, then look online!

How to read? If awareness

increases by 1%, volumes sales

increase on average by .28%

Moderators: involvement, online spent

• Online Journey metrics matter more:a) The higher category involvementb) The higher % of brand budget spent online

‘Best’ combination of classic funneland online metrics iscategory and brand specific

Integrate slow moving attitudes and fast online actions (Pauwels & van Ewijk 2013)

Web visits

KNOWCOGNITION

Aware

Consider Buy

LIKEClick

Visit

AFFECT

Prefer

Loyalty

Experience& Express

DOSearch

TV best offline action to lift online behavior, even outperforms online on pageviews & social media

Clicks

Branded search

Generic search

#Web visits

#Pageviews per visit

or

#Pos web co

nversations

#Neg web conversa

tions0.000.100.200.300.400.500.600.700.800.901.00

.17 .17 .17.25 .19

.74

.07

.95

.71.51

.41

0

.70

.20

TV Online

How to read? If TV expenditures increase by 1%, # website visits

increase on average by .25%

Marketing effects vary by stage• Display ads in early stages funnel, search

throughout the journey (Abhishek et al. 2012)• Content-integrated ads same traffic impact as

content-separated, but much better conversion (DeHaan et al. 2016)

• TV ads lift branded search, conversion, eWOM, page views (Joo et al. 2016, Pauwels & van Ewijk 2013)

And continue to show trade-offs

• Persuasiveness drops 10% with each 1M extra views if provocative ad (Tucker 2016)

• Digital does not change “richness versus reach” tradeoff - just alters the parameters.

• There is still a role for paid media• But pointless to persuade consumers about

quality: they go to others (Simonson 2016)

Initial Consideration

SetMoment of Decision

Loyalty Loop

Post Purchase ExperienceOngoing process

Active EvaluationInformation gathering, shopping

Implying new marketing objectives

Get consumer familiar with your brand Advertising general, contextual or category-based.Incidental contacts with earned media (PR and Social)

Re-confirm purchase: listen to feedback via earned media Resist temptation to over-contact lest customer unsubscribes

Ensure you are found and respected online: when consumer drops by website, help with info access, paid ads focus on behavioral targeting

Persuade consumerWith Promo, Ads

Did funnel hips really get larger ?

• Pauwels & van Ewijk (2013), Simonson (2016) argue that mid-funnel metrics less predictive of purchase and less sensitive to marketing

• Instead the more trusted opinion of others is key and now readily available in social media

• Tested in large scale stock market study with daily mindset metrics, owned + social media

Owned media works top & bottomStock

Returns

Stock Risk

Owned

Positive WOM

Advocacy

Intent

Aware

Negative WOM

Colicev, Malshe and Pauwels, Revising for JM

Helps get route awareness, not intent

Why do we need experiments?

• Self-selection bias: it’s not just that consumers have to click on a search or display ad, they also have to visit the website displaying the ad

• Context matters: on which site, device, where with which creative, extent of exposure, …

• Personalization technologies allow us to show multiple messages, and then choose best one

Real-time feedback: the multi armed bandit

Consumer behavior changes online

• Going from more to less mobile device (phone to PC) doubles conversion (DeHaan et al. 2015)

• Talking about purchase on social media increases store traffic (Pauwels et al. 2016)

• Social media critics buy more (Weiger et al. 2016)

• Touching product on device feels like owning it

Touching feels like ownership

Touchscreen devices give this touch (Basel 2016)So Focus decision on concrete product attributes

For fast moving goods, interface touch suffices

Future research needed on

• Mapping of classic to online metrics

• Under which conditions do consumers change thoughts, feelings and decisions online ?

• What are the implications for consumers, for managers and for society ?

• Contact me at koen.h.pauwels@gmail.com• LinkedIn/Twitter handle: koenhpauwels• My blog: https://analyticdashboards.wordpress.com• Professional Facebook page:

https://www.facebook.com/pages/Smarter-Marketing-with-Analytics-Dashboards/586717581359393

• And check out my practical book:It’s not the Size of the Data, it is How You Use it:Smarter Marketing with Analytics & Dashboards

Want to learn more?