Combining Decision Analysis and Analytics

Marketing Investment Decision Analysis, LLC

John Busbice, Founderjohn@mida.us.com(804) 467-0969

About my perspective

2Copyright 2013, Marketing Investment Decision Analysis, LLC. All rights reserved.

• Background in marketing analytics• 5 years as statistician in marketing and sales analysis (mostly

pharma)• 5 years consulting, utilizing marketing and sales analytics

• Relatively new to DA• Introduced to concepts while integrating DA consultancy• Concurrent self-study of statistical decision theory• Sought to leverage DA for in-market and launch marketing

optimization

• Now combining statistics and DA• Founded firm that combines marketing mix modeling and DA

What I wanted to do when I grew up…

3

Surfing’s Gidget days…

4Copyright 2013, Marketing Investment Decision Analysis, LLC. All rights reserved.

Waves

Wind

Surfing!Where to Surf?

100 ft wave!... (Garrett McNamara, January 2013 in Portugal)

5

Big wave surfing: Analytics in action

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Surf Forecasts

Waves

Wind

Surfline.comStormsurf.com

Big Wave Surfing!

Where to Surf?

Marketing’s “Gidget days”

7

Half the money I spend on advertising is wasted; the trouble is I don't know which half.

John Wanamaker, (attributed)US department store merchant (1838 -

1922)

Marketing today: MIDA uses a combination of statistics and judgment

Statistics Human Knowledge

Strength

Weakness

Pattern recognition

Creative and Logical

reasoning

Limited by data Limited by instinctual

biases

8Copyright 2013, Marketing Investment Decision Analysis, LLC. All rights reserved.

Managers are faced with many difficult questions when making marketing investment decisions:

Objectives:• Are we spending too much or

too little? • What is the risk of missing

revenue targets?• Are we maximizing value? …

cash flow? • Are we building the brand?• What is the optimal mix

across sales and marketing channels?

• What should we forecast given our sales and marketing budget?

Pain points:• Complexity: Multiple channels,

interactions, non-linear impact, long-term effects, uncertain returns

• Conflict: No two analyses converge, different people responsible for different marketing efforts

• Cost: Marketing mix modeling and Big Data lead analysts to digging through imperfect information for months on end.

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Decision Analysis vs. Analytics: Heart of the debate about the role of people and information.

10Copyright 2013, Marketing Investment Decision Analysis, LLC. All rights reserved.

Decision Analysis Analytics

Information

Decision

Data

Decision

Probability Frequency

Human emphasis Machine emphasis

People

Computers

KEY

What can the Analytics worldview can learn from the Decision Analysis worldview?

11Copyright 2013, Marketing Investment Decision Analysis, LLC. All rights reserved.

• Decision-making is a human process; people are key.• Judgment is good and necessary; clarifying what’s in your

head may be enough.• There’s more to decision quality than having the right

model populated with lots of data.• Identify important uncertainties rather than statistical

significance.• Bigger is not always better.• Discussion…