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Marketing budgets are always based on regression analysis. So each year’s budget is determined by the marketing activities of the previous years and their effectiveness. This is not only an outdated system but also is dangerous for the brand.

Recently Forrester research came up with a report to look at marketing firms that used methods other than regression analysis to determine marketing budgets and investments. Most firms were specialized marketing consulting and analytics firms and almost all of them had developed techniques to use predictive analytics for marketing budget allocation.

So let me give you an example of how this works. In India, this year a lot of hype was created by the Formula 1 race held at the Buddh International circuit in Greater Noida. As last year this event was never held, regression analysis would not have factored this event as a possible marketing opportunity and hence the budget could not have been allocated for this. So most marketing managers using regression techniques would have lost a good opportunity to showcase their brands.

Also in the era of social media and the internet, things are more dynamic. Let’s look at the 50 odd brands that tied up with the Eros/Red Chili’s production Ra One. Now most marketing managers would have taken into account the release of Rajni starrer Robot and the possible impact that movie had on their brands. If they had used a forward looking model like Predictive analytics instead, they might have been able to factor uncertainties and would have gotten a better deal out of the association. Now we have 50 brands associated with a dud. Not sure how many of those brand managers are getting promoted this year.

Finally the time for predicting the future by looking at the past has come and gone, now it is time to look at the future while allocating marketing investments.

Dr Vikram Venkateswaran is a marketing professional with more than 10 years of experience in Healthcare, Life Sciences and Information technology industries. He blogs at He can also be followed on Twitter @drvikram. The views expressed here are his personal views and not of his organization.


November 17, 2011 at 3:46 pm 6 comments

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