The Objective
One of the leading multi-brand fashion retailer in the US capitalized on the DTC growth story by driving $107 million in revenue from an $10 million ad budget. They were investing heavily across Meta, Google, and OOH but were unable to accurately quantify their contribution to revenue. As a result, budget allocation became a challenge for the brand when they wanted to scale, notably in the case of OOH advertising. OOH quickly became saturated for them, with a notable decline in ROI – prompting a strategic reset of their marketing strategy.
The Challenge
- Measuring OOH campaign impact: Measuring revenue contribution from OOH and
deciding how much they should optimally spend was a challenge for the brand.
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Unable to scale their ad channels: The brand was unable to identify the channels that had become saturated and found it difficult to scale their ROI from advertising.
Strategic pivot with Lifesight
To counteract diminishing returns from OOH advertising, the brand teamed up with Lifesight to pivot its strategy. Here’s a breakdown of our approach:
- Lifesight’s Causal Inference pinpointed the non-linear impact of OOH ad spend on revenue, suggesting a 25% cut in the next quarter budget, would not adversely affect their revenue at a confidence level of 95%.
- Through calibrating Lifesight’s MMM model with Causal insights, we saw a granular breakdown of channel performance, showing their most effective channels – Facebook ASC, Google Display, and Facebook Awareness – while also revealing the less impactful ones, such as Google Search and Google Pmax, guiding strategic reallocation of next quarter’s ad budget.
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To achieve their target iROAS, we used Lifesight’s Budget Optimizer, incorporating insights from the Saturation (Diminishing Returns) Curve. This allowed us to strategically shift 25% budget from out-of-home (OOH) advertising to TV commercials aimed to diversify their ad mix for an optimum ROI and secure additional budget for newer initiatives.
Conclusion
The future of retail lies in an omnichannel approach that blends the strengths of online and offline experiences. With causal inference and MMM recalibration, the brand not only found their way out of a saturation impasse but also unlocked new avenues for growth. D2C brands that successfully navigate this transition will be well-positioned to capture a wider audience, build stronger brand loyalty, and achieve lasting growth.
