|Comparison in generating checking accounts between online and offline.|
|Online Channel||Offline Channel||Hint for information|
|Percent of checking accounts||Case text|
|Number of checking accounts||Table 3 (for the first 11 months)|
|Annual Advertising Budget||Table 3 and Table 2|
|Cost per application (CPA)||Table 3, information above, and remember that this is only for the first 11 months|
|Fee Income (qualitative info)||Case text|
|Retention rate||Case text|
|Measurability and accountability of channel (qualitative info)||Knowledge of marketing.|
Are these media sources independent? How might they interact to affect the acquisition of a new account?
What is the true acquisition cost of an online account? Your have a cost per application from the case, (Table 3), but is a completed application the same as an account?
You can’t increase the budget, so how can you use it more effectively?
This is the real problem in the case. There are no precise alternatives for this case, but you need to develop an answer of how would you like to allocate the scarce resources across both display and search advertising.
I would encourage a couple of tables, one to look at the effectiveness of the search budget (Exhibit 5), one on the display ads (Exhibit 7). For both what you are really looking for is the CPA, how much of the budget is spent on each individual source, and what percentage of completed applications comes from each.
A problem for online media is something termed attribution. Do the search and display ads interact? What is the purpose of display ads? So you can adjust the CPA for display ads based upon attribution through this method
- Find the conversion rate for search WITHOUTdisplay ads from the first line on Exhibit 10
- Find the conversion rate for the search WITHdisplay ads for the display network
- The increase in conversion rate due to the display network is the second rate divided by the first rate.
- The cost for for the CPA based upon the total search marketing from Exhibit 5 ($73)
- Find the cost for adjusted search CPA without the display network by taking the $73 times the increase in conversation rate from step 3
- Find the savings in search CPA due to the display network by taking the result from step 5 minus the average cost for search CPA from step 4
- Adjust the cost of the CPA for the display network by taking it CPA from Exhibit 7 minus the savings you found in step 6.
This will lead to a significantly different ordering of which seems to be most cost effective.
But also consider the reach and duplication of each network from Exhibit 8.
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