Econometric Modelling

How a high street bank tested the effectiveness of their television campaign.

The relatively high costs of television advertising mean that businesses should take extra care that every pound is well spent. StatCore worked with a major high street bank to test the effectiveness of their television adverts and to ensure that there was a predictive relationship between the adverts’ screening and sales increases. StatCore’s challenge was to:

  • Consult with a variety of key stakeholders in the business to find out all the different factors that could have been predictive of sales; over 100 variables were tested, e.g. changes to the product, other product launches, price changes.
  • Research and incorporate external data on other variables that could have led to a difference in sales, e.g. actions by competitors, seasonality, the advert’s decay rate (how long its stays in the customer’s mind).
  • Build econometric models for a range of products to estimate how many sales resulted from the television adverts. We do this by:
    • comparing how a range of variables behaved in the past
    • correlating those behaviours with weekly sales both before the advert and after.
  • Quantify halo effects of advertising – where the advertising of one product (e.g. credit cards) positively affected the sales of another (e.g. loans)
  • Communicate results to non-technical audiences, using charts to visually represent the time series models.

Many businesses outsource this advanced level of analysis, however working with the client in-house over nine months meant that StatCore could:

  • Produce richer, more sophisticated results through daily consultation with stakeholders.
  • Devolve knowledge and skills to the in-house team
  • Offer a better value service

The bank was able to accurately calculate their Return On Investment for the television campaign and make a confident decision to continue running similar television advertising. StatCore’s work also informed a company -wide optimisation project to determine which of their products should take centre stage in television advertising for the future.

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