The $6MM Difference: Turning Data into Dollars for Fitness Marketing Success
Discover how Aimpoint Digital, in partnership with a leading fitness club chain, developed a media mix modeling (MMM) framework that transformed digital media marketing from a black box to a competitive advantage.
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The Challenge
The client, a large health and fitness company, manages over 50 gyms across the US. The marketing team is responsible for setting budgets for digital media advertising, but was unable to determine the efficacy of impressions on their broader business performance. A Media Mix Model (MMM) was needed to measure return on ad spend (ROAS) and provide recommendations on how spend should be allocated.
Our Approach
Aimpoint Digital developed a Bayesian Causal MMM that uses the inferred lifetime value (LTV) of new customers to estimate the ROAS of each channel given channel adstock (the typical lag between a customer seeing an advertisement and subscribing), saturation (when each channel will see diminishing returns on investment and by how much), and other factors. Additionally, an optimization routine was implemented to enable the marketing team to allocate spend effectively and maximize total LTV.
Results
Every new member added creates an additional stream of cashflow that bolsters a gym’s bottom line. Our solution adds $6MM a year in customer lifetime value (CLV) from new joiners by targeting advertising spend where it matters the most.
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Not only can our client use their model to infer what channels should receive the largest marketing budget, but they can also find out at what point spending in those channels will see diminishing returns, how long it will take to turn an impression to a conversion, and how much other factors like promotions, club counts, and seasonality impact new signups.
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Our client can now leverage the MMM with an integrated spend optimization tool to forecast the effects of different channel allocation and promotion scenarios, improving strategic planning and decision-making processes.
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Key Takeaways
Digital marketing does not have to be a black box. Before our client had access to a MMM, they invested approximately 25% of their marketing budget into a channel without knowing if it produced any returns on investment. Now, they have a tool that can accurately quantify the returns for each digital media channel and set an optimal budget to the nearest cent.
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