Effectiveness of advertising campaigns at Nile Systems

November 1st 2014. Koothrapalli Tirupathi Venkata Sathya Sai Panduranga Srinivasa Raju has
just been sacked as CEO of Nile Systems. Along with him the head of marketing Mihir Saxena has
also been asked to leave the company.
While the company has been doing well and growing consistently, the board felt that Raju did not
have a good hand over the companys expenses. The board especially felt that the company was
spending much more than required on advertising campaigns. The board also felt that Raju and
Saxena were involved a little too cosily with advertising agency JW Haddock. About a year back,
there had been a recommendation to switch advertising agencies but Raju and Saxena had
ignored that recommendation and stuck to Haddock.
Following Rajus sacking, Aswath Venkataraman has been appointed as CEO of Nile Systems.
Venkataraman is also from an FMCG background and has several years of experience of
marketing, branding and selling detergent powder on behalf of a large company. However, the
board believes that his experience what is required to steer Nile following Rajus dismissal.
Raju and Saxena were firm believers in localised marketing planning, and thus each of Niles four
offices ran their own advertising campaigns (all of them were implemented via Haddock, however).
The company did not advertise on television, but instead used a combination of advertisements in
local and hyperlocal newspapers, radio spots and leaflets inserted into newspapers. Campaigns
across the above three channels (papers, radio, leaflets) were tightly integrated and there was a
well-defined formula that the company used in order to coordinate across the three channels.
While most advertising campaigns run by Nile Systems were similar, they varied in the intensity.
Some campaigns were low-key, involving advertising in low-key newspapers and the odd radio
spot. Others had a much higher budget, involving advertisements in local editions of national
newspapers along with a large number of spots on radio. One of the reasons given by the board
during the sacking of Raju and Saxena was that there had been too many large budget campaigns.
Each advertising campaign lasted for the duration of a month, and it can be assumed that the
impact of the campaign was limited to sales in that particular month. The advertising agencys
commissions for a campaign were determined by sales during that month, resulting in front loading
of campaigns towards the beginning of the month. Thus, the spillover effect of a campaign into
the following months sales can be assumed to be minimal.
Venkataraman has been given fairly aggressive growth targets for 2015, and is hence loathe to
move away from using advertising campaigns. However, he believes that using smart analysis of
previous advertising campaigns, it is possible to boost sales using a lower advertising budget.
So, as he sits down to craft his advertising campaign for 2015, he wants to analyse how the past
advertising campaigns performed (incredibly, Raju and Saxena never attempted one such
analysis). Ventakaraman seeks to analyse what kind of campaigns worked best, what kind of
impact each kind of campaign had, and how much money needs to be spent in order to maximise
the return on campaign investment. He would also like to draw up a plan as to when he is going to
advertise in 2015. However, he is not in favour of creating new methods of reaching out to
customers and would like to stick to the existing campaign methods - a combination of newspaper
ads, radio spots and leaflets in the proportion determined by the existing formula.