Braincell Internet Advertising

BrainCell Internet Advertising

1 BRIEF STATEMENT OF THE PROBLEM

BrainCell is positioned to sell cell phones, call plans, and mobile services to end-user customers using the Internet exclusively as its unique sales channel. Thus, we need to optimize the budget allocation of Internet Advertising across the 6 different countries in which it is going to be launched.

2 ANALYSIS AND RECOMMENDATIONS

Q1. Use Solver to make Internet advertising recommendations (Exhibits show the results):

Scenario a: Optimal budget and allocation with no constraints.

The total advertising budget has increased to 188% (almost double: 742.500  1.396.711), and the gross margins and net marginas have increased in a 58% and 33% respectively. These data is because without ceiling budget your budget is increased as well as the acquired customers. However, there is no proportional increased in the acquired customers (& markert share) and acquisition cost/customer, neither proportional decreased in the return of investment.

The most important is to assess whether it is worth increasing the total budget and the budget of each country according to the results obtained.

Moreover, there is a new distribution across countries, due to the different characteristics among them. According to Internet usage (highest in Germany and United Kingdom), cell phone penetration (United Kingdom and Italy), and national income market research (United Kingdom and France), some of these countries (Germany and Italy) appear much more attractive than others (Spain and Poland). United Kingdom has less internet advetising budget because English is the primary international language and the advertising is more expensive (fiercer online competition) and the transformation rate for clicks is lower (non-target users; i.e. US).

Scenario b: Optimal allocation, but top management will not allow an increase in the total advertising budget.

The new scenario gives us the optimal resource allocation maintaining the total advertising budget. This results in an increase in the total gross and net margin in a 6% and 11% respectively.

These data is because with a ceiling budget the new distribution of resources across countries has reduced the average acquisition cost/customer and increased the average return of investment and market size, explaining the total increase gross and net margin results.

Moreover, there is a new distribution across countries, due to the different characteristics among them (already explained). However, the ranking in resource allocation between countries still being the same. The budget of Spain and Poland has been decreased in order to increase the budget of Germany and Italy. The reasoning for this