Determining media ROI for a travel company

Determining media ROI for a travel company

Situation

A travel company, with product offerings for multiple geographies, came to PwC’s strategy consulting team Strategy& in order to understand the effectiveness of their media spend. 

The company had a multi-million marketing spend which was allocated to 3 annual campaigns, with lower-level interim activity. This spend included both above-the-line and below-the-line media.

This marketing budget was under review, and with reduced spend a likely outcome, the client wanted to understand the effectiveness of their current media spend to enable optimised budget allocation.

The project objectives were to:

  • Determine the relationship between historical media spend and incremental bookings
  • Define media ROI
  • Provide recommendations to optimise media effectiveness
How we helped

The client had a legacy budgeting tool in place, however, this did not link media spend to revenue uplift. Strategy& built a new excel model that directly linked marketing spend to bookings revenue to quantify true marketing ROI. This model could be used to make media planning decisions, including how many campaigns should be run each year and what spend and media mix should be used to optimise the number of travel bookings.

To calculate the ROI from media spend, Strategy& used an excel-based multivariate regression approach, as seen below.

Excel modeling process for ROI estimation

Re-format data and define input variables

Media spend was adjusted to reflect specific advertising effects like carryover and diminishing returns.

De-seasonalise

Google ‘travel’ search trend data was used as a proxy for seasonality, thereby removing the effect of standard travel booking patterns over the year.

De-seasonalise

Regress for base and incremental bookings

The variables were regressed in excel to determine what proportion of travel bookings were incremental due to media spend, versus those that were ‘base’ bookings.

Regress for base and incremental bookings

Calculate ROI

Once incremental bookings per campaign media spend were identified, media spend ROI could be calculated.

Results

The ROI analysis highlighted which campaign spend had not driven incremental travel bookings. It also highlighted which customer segments and travel destinations had the greatest response to media spend.

From here, areas of recommendation were developed to enhance media ROI, including cancelling inefficient campaign spend and increasing media targeting of responsive customer segments and travel destinations.