Budget Optimization Leads to eCommerce Growth For Sennheiser

Overview

Sennheiser is an audio company specializing in the design and production of a wide range of high-fidelity products, including microphones, headphones, telephone accessories and aviation headsets for personal, professional and business applications. The Pro Audio Group chose AdVenture Media to lead and execute advertising for their Pro Audio eCommerce website.

Goals

The client is interested in growing its eCommerce channel. Historically, the majority of the revenue came from third party retailers. However, from 2019 onwards, Sennheiser’s eCommerce website saw healthy growth YoY and the client wants to maintain this trajectory.

Challenges

The Account Management team and the client wanted to know how best to allocate budgets across their portfolio of products for the remainder of the
year. The client advertises on both Facebook and Google Ads to drive product sales on their eCommerce website. With what we know on a product level – conversion rates, units sold, CPCs – is there a way to better allocate budgets across Google Ads and Facebook?

Strategy

Data Analysis

The client provided us product-level data going back to 2019. This product-level data set has data points that include price per unit, units sold and conversion rate, to name a few. The client also provided their annual budget. How shall we best optimize this budget across their product portfolio by months? After reviewing the data with the Account Management team, the statistical method employed was linear programming. Linear programming is a mathematical model that is suited for resource-constrained problems. It works best when the goal is to find an optimal solution with a given set of constraints such as a fixed budget.

First, we reviewed and identified growth trends by product. We identified two trends. On an annual basis, the majority of the products sold grew YoY. For some products, they sell better in certain months. With this, we now know the maximum number of product units we can sell and which months these products convert better. After cleaning up the data set, we joined it with CPC data pulled from Google’s Keyword Planner and ingested our budget figures. With the complete data set and the model constructed, we ran the analysis. It provided us with product-level budget allocation broken out by months.

Results

The collaboration between the Account Management team, Analytics & Market Research team, and the client allowed us to gain access to raw data, analyze it and provide guidance to the Account Managers on how best to allocate the client’s budget to maximize revenue for the remainder of the year. With a more precise budget allocation model, Sennheiser Pro Audio Group is poised to grow its eCommerce channel.