Interactive Marketing Blog

This can be an interesting case-study by itself. AdAge yesterday reported about an interactive agency, Organic which did something inspirational stuff to say the least. The company in question is Chrysler and its digital agency, Organic.

What it did is in a way mind-bloggling – In July, last year before the financial system crumbled, the credit market ballooned away or before the top automakers were on the verge of withering away – this agency predicted Chrysler’s total retail sales. Noteworthy here is that, understanding future sales is quite critical for automakers as cost of production (batch or assembly production) has to be in tune with sales volume – otherwise excess inventory can become much of a burden. Nonetheless, carmakers across the world face this problem year round.

But the amazing feat they achieved via statistical analysis is here as follows:

It estimated that Chrysler would sell 418,000 vehicles in the U.S. during the second half of 2008. In actuality, it sold 411,000. Organic was off less than 1% for Jeep sales in the 2008 fiscal year, and its calculations for the Chrysler and Dodge brands for fiscal year 2008 were off 3% to 6%. Generally, an automaker is satisfied, even happy, if it can predict sales within 10% to 15%.

While I was reading this piece, I was amazed at this and was wondering how have they done it.

It seems that when Chrysler tasked the agency with building a predictive econometric model that could help it optimize its 2008 marketing spending, the agency pulled together a large set of inputs, including social-media and search data, and then went a step further: What if it turned the media-optimization model around? Instead of using retail sales to determine media allocation, it would use media spending to predict sales.

I say kudos to the team for such efforts. After this, I wonder if we can use the same paradigm for different business like consumer products, B2B entities etc.

More on the same thoughts later! May be I’ll some crude analysis on the same and present my findings if possible.

Till then, what do you think about it? Do you have any idea or specific examples in mind seeing this. Please share!