Disrupting market research and test marketing, Thinkvine thinks it has a better idea that will cost marketers and brand managers a lot less. They have developed software that can simulate how consumers will react to new and existing products utilizing a variety of media.
Roy Weissman interviews Mark Battaglia about Thinkvine’s marketing mix optimization software that is changing market research forever.
According to Mark: “The best way to think of our software is if you’ve ever played the game Sim City or Oregon Trail or one of those other simulation games. We have a population of people that in terms of their demographics and in terms of how they respond to media works just like America assuming this is an American project. We can do it in any country. That population of America is just waiting for the marketer to say I’m going to market to this group in a certain way and then I’m going to see what they buy as a result of the marketing and where they buy it”.
You can listen to the interview as well as read it below:
Roy: My name is Roy Weissman from MediaJobs.com and today we’re taking with Mark Battaglia, the CEO of Think Vine. ThinkVine’s marketing mix optimization software provides B to C marketers with the right answers right now to achieve the maximum return on their marketing spend. Welcome, Mark. How are you today?
Mark: I’m doing well, Roy. Thank you.
Roy: Can you give us a sense of why this business was started, what the opportunity is, the foundation? Why you guys are here.
Mark: The business was started really as a software company about four years ago. It sprang out of a consulting company that was founded by a guy named Damon Ragusa and Damon worked with large B to C marketers in a variety of industries doing all sorts of market research. He did marketing mix. He did pricing studies. He did product optimization, just a variety of work. While he was doing that work, he realized that the way people had been doing marketing mix optimization was getting out of sync with the market place. The market was becoming so much more diverse.
Consumers were exposed to many different types of ads. They had many different ways where they could buy that they couldn’t buy 10 years ago or 20 years ago. He really said I’m doing this work but I’m not using the best method anymore so he decided to look into other fields and especially into the hard sciences and he brought techniques that had been popular in the hard sciences over to marketing and he built them into software. That was real change in the way that it had been done, still solving the same problem but doing a much better job of solving it.
Roy: Exactly what does, can you give the audience a sense, be a little more just basic for the average audience. Exactly why am I hiring Thinkvine? What is Thinkvine going to do for me?
Mark: If you’re a CMO or a brand manager or possibly even on an inside team at a large B to C marketer, you have questions like how much budget do I need to make my objectives this year; how should I spend that budget; how much should be in print; how much should be in digital; how much should be in billboards; all those other different marketing options that you have. You have questions about how can I best reach a certain group that I’m targeting. Let’s say it’s people of a certain age and a certain gender.
Maybe they have a certain amount of wealth, a peer financial company. Thinkvine is really about using data and objective math to be able to say here’s the best answer to those questions and that way you can spend your money or spend your marketing budget in the way that’s most likely to give you the highest return.
Roy: In essence you’re doing marketing research using your database without having to go out into the market to get immediate results?
Mark: Both marketing research and research on what hasn’t worked for the company. We’re looking at a variety of types of data. It is a big data to use the buzz word play in the sense that we’re looking at data about consumers. We’re looking data about the categories that the company operates in and we’re looking at the company’s own data about what they’ve in marketing and what their sales have been as a result. We’re bringing all those things together in an easy to use software package so that any marketer can play what if games whenever he or she wants to.
They can ask the questions that I just raised and go based on, for example, maybe a new campaign that our competitors are doing, how should I react to that based on the CFO just came down the hall and said sorry, I’m going to have to take some money away from you. What would you give up and still be effective? We’re really trying to bring a variety of data sources plus marketing science together and put those at the fingertips of every marketer.
Roy: What percentage of the data that you’re providing is not the companies own data?
Mark: Interesting question. I never thought about that in a percentage basis but in terms of families in data, we have a family of data that is about consumers so we typically get that from the census. Then we have a family of data that is about consumer behavior; how consumers respond to marketing, and we get that from a variety of really well respected third parties, people like Nielson and Arbitron and MBI and others that are able to tell us how much time do people spend on Facebook and how often do people see ads at digital sites and so forth.
Then the third set of data is really from the company which is about their category, their marketing, their sales historically so we can on one hand build a model of who consumers are and how they react to marketing and then secondly, build a model about how consumers historically have purchased within the category based on the marketing they see.
Roy: The algorithms and the formulas you’re using, these are based on … in other words, I’m company X, I’m Coca Cola and I want to introduce a juice. Instead of Coca Cola I want to do some purple juice, being a little silly for a second. I want to see how is my market going to respond to that. How is your software, how does it understand my market? Is that primarily from the information that I provide about the Nielson’s that we have and behavior of my market and then you go look at the demographics of my market and the behaviors and then couple it with the overall. Maybe Coca Cola is a bad example because everybody has Coca Cola. Take a brand that has a lot less market penetration. The behavior information, how was your software figuring this out?
Mark: The best way to think of our software is if you’ve ever played the game Sim City or Oregon Trail or one of those other simulation games. We have a population of people that in terms of their demographics and in terms of how they respond to media works just like America assuming this is an American project. We can do it in any country. That population of America is just waiting for the marketer to say I’m going to market to this group in a certain way and then I’m going to see what they buy as a result of the marketing and where they buy it.
The software is really about using the combination of data and a layer of marketing science that we’ve brought in and really making sure that the simulated people in the software react just like real people would in the real world. Going back to your example, the purple juice example, our focus would really be on how do you plan to promote purple juice and as a result of that promotion, who’s going to get exposed to the marketing you do and what are they likely to do as a result of that exposure.
Roy: Obviously you guys have been doing this for four years. Why do you believe this is such a great opportunity for a company versus just doing a test market or just analyzing their own data? What are you bringing to the pie for these organizations?
Mark: I think the best thing I would say about that is as marketers, people really want to have a plan and a strategy about what they’re going to and then they’re going to go out and execute that plan in the market place and see how it does and then adjust rapidly based on the results they see and how their competitors react and so forth. There’s an awful lot of money and an awful lot of time involved in a traditional roll out in the experiments that are implicit with that. What we’re hoping people do is to have really accurate forecasts about what’s likely to happen and as a result, they can pick the best path right from the beginning and have higher odds of success.
What makes us different than the traditional approach is the method that we’re using is very much forward looking. Traditional regression analysis only looks back but we’re looking ahead and saying how will people respond to your, given consumer behavior today, how will people respond to what you’re going to do and we’re able to give really granular results back to the marketers so they can look at it, for example, by target groups or by tactic and that ability to get detailed, actionable information through the software as well as a layer of consulting services we have on top of it really makes it possible for people to be very responsive and to be very successful as they roll out new products or they make other changes in their marketing plan. It’s really that what if capability so they can get good answers, they can confidently go to the CEO or the CFO and say if you can give me this much money to market this product, I can give you this much in sales in return.
Roy: Before your product, what did companies have to do to get this information?
Mark: The most commonly used method was regression analysis. There are all sorts of different types of regression but physically you would have either a consultant come in or you might have, if you’re lucky enough in some of the large companies, you might have had an insights team that did that. They would go back and look at the historical data and they would use regression to fit a line to that data and they would essentially extend that line forward and the thing when I talked about what Damon noticed when he was doing that type of work is there are really two things that caught his attention. First of all, because the market place is changing so rapidly, the future rarely looks like the past.
He was looking for a method that was more forward oriented. Then secondly, that’s really very math oriented approach, the regression. There are actually no consumers in there and since you as a marketer care about reaching target audiences, the ability to have consumers in your analysis and to get granular views of what’s happening by a consumer was really really valuable to marketers. When you combine those two things with a general trend in the marketing technology market is more and more things being automated.
We really think that Damon was able to a few years ago identify a sweet spot for making marketing planning and optimization more automated and more actionable and really we’ve been right in that spot from the beginning and we’re seeing really great pickup by the market place. We think that we are meeting a need that as more companies make the switch to more modern marketing methods.
Roy: Would you say a B to C company employing you guys are looking … obviously it sounds like they’re definitely getting a more sophisticated and hopefully more effective optimization planning strategy but would you say companies would be interested in your service primarily for that or primarily for cost savings or both? What do you think the key impetus or the key value proposition rather for Thinkvine is with an organization?
Mark: Optimization is really ongoing. The market doesn’t stand still. New products get introduced. Competitors have new campaigns. You have new campaigns. The business model that Thinkvine is working with customers on is we have a software as a service model with an ongoing subscription. As you get new results as data about consumer habits come into play, etc, all that new data is built in and in the ongoing subscription. We’re continually updating the market place and that way you’re able to make forecasts and do what if; what is the most current information. That’s a really big difference in ongoing optimization versus a project of a regression analysis. That’s one of the reasons companies are working with us is they know the market place is changing rapidly. They’re going to need to be responsive to those changes, trying to get ahead of those changes. They come to Thinkvine and say I can get granular actionable information that’s always current and that’s much more exciting than a really good project that’s put into a binder and sits on a shelf.
Roy: Effectively, you’re providing consistent, real time, updated data from the market as well as an individual company’s experiences with their products in the market into one database on an annual subscription basis so they can regularly go in and do what if scenarios to test where they’re going with things?
Mark: Yeah, that’s a really good summary. I think you got it.
Roy: I’m ready to buy, no. No one else is doing this?
Mark: We really are leaders in terms of the way the software is the heart of what we’re doing and the ability for people to really have the workflow of planning be supported in the software. There are a number of other companies that do traditional services approaches and some of those companies will supply what they call simulators or what they call dashboards that are related to the work that they do. That’s their way of trying to make it more of an ongoing value to the customer. We’re very software centric.
We still have services that help people use the software and interpret the results of the software, but we’re really trying to say the way the world is going, people want to be able to get that information really, really quickly. They want the depth every time because that’s the way they work as marketers. We’re really pushing the edge in terms of getting them the right answers, the depth that they need, and right now through the software.
Roy: At this point you’re saying there are no direct competitors with you guys?
Mark: There are definitely alternatives to what we do. People use, for example, in the consumer package good space, people can get regression based services from companies like Nielson and IRI as part of their data subscriptions. They’re side by side with their data subscription and then there are other companies outside of the CPG space who offer different sorts of software and services combinations.
We really feel like in terms of the methods that we’re using, the agent face modeling which is what the technique is called and the extent to which we’ve built up the software, we’re a leader among those groups and that’s been reflected by Forrester and other analysts who have said Thinkvine really has a disruptive method of approaching this. We’re not the only ones at this game but we’d like to think we’ve skated to where the puck is going to be in terms of the software and the granularity of information we give people.
Roy: Do you have a good case study or an example you can give us to give us a sense of how your software has been effective for organizations?
Mark: One example that I would mention just quickly is we worked with a large financial services company who was targeting a certain demographic not surprising those are right near retirement who had larger amounts of money because they wanted to work with those people and supply retirement services to them and they had done the marketing you might expect over the years; television ads, print ads, etc. What they saw is that the market place was, the customers they were interested were increasingly doing more and more online. The business question was should we be taking money out of television and print and moving it over to digital.
We worked the company for about six months and they went through a very vigorous analysis of what will it mean to us if we make a big shift from print and TV from traditional media to digital. The numbers looked great through our system and so the marketing team took that to the company’s management and the company’s management was nervous. They said we’ve been a very successful business; this is a scary change. They gave the marketers a six month go ahead and do what Thinkvine recommends for you to do and then we’ll see how it works. What we were able to do for them is we were able to achieve 10% higher acquisition in terms of the customers they wanted for a 12% lower cost.
They were very happy both in terms of the effectiveness and the efficiency of the change and so then they were granted the rest of the money and are moving ahead doing more digital in the future. That’s really an example. I think almost a perfect example of a company being able to look ahead to have confidence in making your change and then to see really good results.
Roy: Can you share with us any names of some major companies you’re working with currently?
Mark: I would prefer not to. We work with companies in consumer package goods in the beverage industry, in finance, consumer electronics, but most of the companies that we’re working with really consider what they’re doing with us as a competitive advantage and they prefer to be more secretive about what they’re doing so they can have that advantage for a little longer.
Roy: How many employees do you guys have now?
Mark: We have about 50 full time employees across offices in Chicago and Phoenix and Cincinnati is where the majority of our customer success staff is.
Roy: What kind of growth have you guys seen since you started this four years ago?
Mark: We’re growing really quickly particularly in the last year. We saw really good market acceptance and our new sales roughly doubled last year compared to the previous year and we’re hoping we can see that doubling again this year.
Roy: Can you give us a sense of any of the sales numbers?
Mark: We’re a private company so I think I’ll let you extrapolate from 50 people but can’t really give the numbers out yet.
Roy: Have you seen yourself out of the fortune 100 companies? Are you guys in high percentage of those or percentage, where do you see yourselves in that market?
Mark: If you look at the fortune 100 obviously some of those are business to business and some of those are business to consumer. Among the large business to consumer companies, we have today about 50 active market places. That gives you some sense of the number of companies we’re working with. Some companies have more than one market place with us. They’re using more than one brand but that might help you get in the ballpark.
Roy: Is it mostly where you’re doing domestic or do you have a lot of international business?
Mark: Most of our business today is domestic. We really didn’t start trying to get international business until late last year and we have some international business today and that’s really actually a very growing part of our business particularly as we … we have some work now in the far east and we’re starting to do work in Europe as well. That is definitely a growth area for us.
Roy: Your service is sold primarily on a subscription basis or do you just primarily sell it on a project basis?
Mark: It’s always a subscription basis and the software delivery is software as a service. There is a setup phase where customers send us their data and then we take that data and load it into the software and set up the market place. Once that’s set up, if you’re a customer, you can do those what ifs any web browser. You can access the software, get the results from anywhere on any device.
Roy: What would an average, someone coming to you, what is a customer spending to get into a subscription?
Mark: That varies by the complexity of the model but most of our customer work is in a six figure and up type assignments.
Roy: Do think that big data is the future of everything because ever corner you turn, I know in the digital world especially you have all these media industry companies, you guys are in the heat of the marketing environment. Data, data, data. Do you think that everything in the future is going to always be based on big data first?
Mark: I think there are two parts to big data. One is how do you turn that data into information and then how do you put that information to work to get results. I think that data is going to underlie more and more and more of marketing decisions. I do think people’s judgment, the ability to look outside of big data itself and look at the market place and especially the idea of bringing more variety of types of data into the mix. It’s not just about the volume and velocity of data. It’s about the types of data that you need to answer your specific question. That’s I think where things are going to be more exciting over the next few years.
It’s about the variety and it’s about the services that help you put the data to work. The first phase has really been about collecting and storing the big data. I think the action is going to shift now because companies have spent a lot of money on big data. Gardner says they’re going to spend $32 billion this year but they haven’t seen the bang for the buck yet. I think it’s the variety and the services that make the data happen, make the data valuable.
Roy: Given that you’re in a B to C environment, how important is the social media world to you guys for data? Twitter, Facebook. I know there are many companies that really spend a lot of time mining Twitter for real time feedback on information. Obviously Facebook with a billion users worldwide has enormous amount of behavioral data in every possible category you can imagine. Are you guys working with that data now? Do you envision working with it in the future? How much does that affect your business?
Mark: Social data is a great source of a volume of data and a velocity of data. It tends to be somewhat reactive meaning very few companies aren’t doing anything in terms of forecasting with that data that are really saying what’s happened, how do I respond to it. It’s a piece of the puzzle of what we do but when you look at the overall total of the strategic questions that marketers are asking, still the majority of the money is spent on other areas. It’s spent on television and print and online video and so forth. For us that’s an important part but equally as important people are, I guess the way I’d say it is almost everybody we work with is asking the question of how much should I shift.
They know that they want to spend more of their time and more of their attention on social media but they’re really trying to understand if I do that, what’s the return for me. Given the weight of budgets today, almost everybody sees incremental value in doing more on social and other sorts of digital media especially mobile. Thus far, it’s certainly not the preponderance. It’s most dollars are beings spend somewhere else.
Roy: What about social media as the source of information for your database? Not as much from should I advertise there but more so from obviously you’re building your database, census data, behavioral data. Social media would appear to be a really rich source of behavioral data. Have you been working with that? Do you envision yourself working with it more, less, not?
Mark: Yeah absolutely. Social is one of the consumer behavior types that we take into account and we do see because of the availability of data and because of the way that that data can be particularly predictive of behavior, we see social data and really digital data of all types as being something that we will be doing more and more with in the future. In fact we have some RND initiatives in progress now that relate to digital data that I think are going to be exciting next steps for us as a business heading into the end of this year and the beginning of next.
Roy: It sounds like you guys have built a very dynamic organization with a lot of value to companies today who need to try to figure out how should they spend their money especially given the complexities of the market. You made a great statement before when you talked about the past is almost, you didn’t say this but, it is a lot less relevant because the future is changing so quickly. A friend of mine said something about, he’s a science fiction freak. I said what happened to all the science fiction people? He said nobody pays attention to science fiction anymore because things are changing so fast, the reality is crazier than science fiction.
Your statement that the importance of what you’re doing is focused on the future more so than on the past I think is very significant. A lot of the work you’re doing, the optimization, it’s really almost we’re in a business today; I’m trying to predict the future with the future information. It’s a challenge but it sounds like you guys are doing a fantastic job. Is there anything I didn’t ask you that you wanted to mention that’s significant about what you guys are doing?
Mark: No I think you covered it all really well. I’m going to steal your line, that line of your friend about science fiction because that really is that marketers can’t change the past. They can only change the future. Really what we’re doing is we’re helping them more effectively use the data that’s come from the past to make better decisions about the future and to be able to justify to others or explain to others here’s what bang you got for your marketing buck. We think that’s going to be … that is an issue today. It’s going to continue to be an issue and we’re going to try and use the data and software and services in combination to help people get those answers really quickly and hopefully stay ahead of their competition. That’s what it’s all about for us.
Roy: Thank you so much for spending the time today, Mark, and sharing what you guys are doing at Thinkvine. How would somebody get in touch with you if they wanted to talk to you guys?
Mark: The easiest way is www.thinkvine.com or you can send an email directly to me. It’s email@example.com.
Roy: Fantastic. Thank you so much for spending the time today. I guess you’re going to be predicting more of the future. I’ll have to call you to find out what next interview I should do.
Mark: That sounds great, Roy. Thank you.
Roy: Thanks, Mark. You have a great day.