Marketing Analytics Question (Please explain your answer)

Question

Alexander Graham Crackers is studying the impact of a social media campaign for their Smorgasbords product line. Without social media, their sales in May were 120,000 boxes. With social media, sales in June rose to 160,000 boxes. Historically, May represents 10% of their annual sales and June represents 12%.

What is the lift for their social media campaign?

11%

33%

111%

133%

Answer 1

In order to calculate the impact of the social media campaign in June, we'll first need a good estimate of what June sales would be without the campaign. We are told that June sales are typically 12% of annual sales, but we aren't given the annual sales figure. Fortunately, we are told that May sales were 120,000 units and May sales are usually 10% of annual sales. From there, we can derive expected annual sales with just a bit of algebra: 120,000 = .1x, where x = expected annual sales. Solve for x.

Once we have the annual sales figure, we can compute that June's sales would be 12% of that figure (.12x) if nothing were to change from May. However, there was a change: the social media campaign. With the social media campaign, June sales were 160,000 units.

Next, we must determine how many extra sales there were in June beyond what we would have expected without the campaign:

With campaign, June sales = 160,000

Without campaign, June sales = .12x

Incremental sales = 160,000 - .12x

To compute the lift, divide the incremental sales (160,000 - .12x) by the expected sales (.12x).

As a marketing professional, your next step might be to consider whether the profit margin on the incremental sales exceeds the cost of the campaign.

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