Powershop
Utilising mathematical modelling to determine the cost effectiveness of offers vs. media CPAs.
30%
CPA of acquisition falling PoP
Challenge
Powershop often ran promotional offers in order to increase sales during key promotional periods. However, the relationship between sales uplift and offer wasn’t well understood. Nor was it understood if the cost of the offer outweighed the increased media efficiencies driven by having an offer in market.
What we did
Magic developed a hypothesis that an offer had a considerably lower effective CPA vs. running media; and that smaller discounts had a proportionally larger impact than larger discounts. To quantify this Magic ran a series of models to determine the specific effective CPA of various offers and compared this to the modelled cost of acquisition via media alone.
Outcome
The findings were that both hypotheses were true and the client increased the frequency of sales but reduced the overall discount level of each.
Resulting in effective CPA falling 30% PoP
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Business leverages mathematical models
