due diligence case study

How a leading retailer unlocked $30M+ in additional profit with their performance marketing

How to use performance marketing as a profitability driver in your portfolio companies

Get your free pre-assessment to find out how much growth you can unlock

Table of Contents

Share this case study

The Challenge

With $950 million in annual sales, a global luxury multi-brand retailer and its private equity investor faced severe challenges. Obstacles included unpredictable inventory from supply chain disruption, consumer volatility due to interest rates and inflation, and expectations of a global recession. These macroeconomic factors helped widen their annual EBITDA loss significantly.

To thrive, leadership knew it needed to change its performance marketing approach. They understood that the acquisition of new, loyal and profitable customers is critical to their EBITDA growth and that a purely revenue-based optimization will not give them an edge in a competitive environment. However, they were uncertain how much actual profit they can unlock and what this means over the long run. The retailer engaged Crealytics to find out how much potential was hidden in their performance marketing activity and how a profitability- and customer-centric approach would impact their bottom-line.

Steps to Unlock Profitability

Crealytics kicked off its three-week Performance Marketing Due Diligence project which encompasses three main steps:

Face Reality

This phase uncovers the client’s true performance marketing return on investment (ROI). The analysis breaks down the profitability of paid media channels looking at factors including incrementality, eCommerce (contribution) margins, and CLV.

Unlock Potential

Phase two determines how much additional ROI the retailer can unlock with:
  • Data activation: Activating returns, margins, and new customer information.
  • Operational improvements: Changing its paid media approach, including bid management and audience structure.
  • Budget reallocation: Shifting ad budgets across paid media channels and geographic markets.

Propose Actions

Crealytics delivers an actionable plan to implement the uncovered improvements. The action plan includes both “quick wins” as well as strategic recommendations to set up a profitable paid media program over the long-run.

Key Findings

The Due Diligence found that the client’s paid media investment was unprofitable when looking at the first order. Over a two-year period, their investment of around $90 million only yielded a $10.5 million profit. The analysis found that with advanced performance marketing techniques, the retailer could unlock an additional $30.9 million in profit during this time period, an extra booster to their ambitious turnaround plan. 

Crealytics broke down their potential in three growth levers:
  • First-party data activation: The retailer could increase their two year profit by 89% to around $19.8 million by activating product margins, return rates, customer information, and incorporating incrementality benchmarks
  • Operational improvements: With operational channel improvements across Paid Search, Paid Social, and Display the client could boost two year profit by another 42% to $28.2 million
  • Budget reallocation: Re-allocating budgets could increase the two year profit by another 47% to $41.4 million

Business Impact

The retailer was able to increase their two-year paid media profit from its current $10.5 million to more than $40 million with Crealytics’ recommendations. The three-week Due Diligence project provided much needed transparency on how the retailer could create value in their performance marketing.
Particularly, it provided clear benefits to the following stakeholders:
  • Senior leadership team of the retailer: These C-level executives understood the profit contribution of their paid media investment and how much EBITDA growth to expect when using advanced performance marketing techniques such as first-party data activation.
  • Private equity investor: The investor and its operating team understood the effectiveness of the performance marketing in their portfolio company and how they can drive sustainable bottom-line impact.
The retailer walked away with a prioritized action plan to improve their paid media activity. Together with the client, Crealytics delivered an actionable roadmap from short-term “quick wins” to strategic changes the retailer had to make to succeed in a cookieless and AI-based world.

How to Get Started

We’d like to make sure the Due Diligence gets you impactful results. During our pre-assessment, our Marketing Analytics team will give you an estimate on the growth potential you can expect.

Pre-assessment

Free
Scope:

Initial review of profit uplift potential in performance marketing

PDF output document which gives broad indication of optimization potential

30-min call with our Marketing Analytics team

Due Diligence

$25k
Scope:

Full analysis on cross-channel performance marketing profitability and profit uplift potential

Recommendations presented to leadership and marketing teams

Profitability analysis performed by the Crealytics Marketing Analytics team

Detailed operational channel audits (Paid Search, Paid Social, Display) performed by Crealytics channel experts

Dedicated Crealytics project lead

More information available upon request

How much potential can you unlock?

© 2023 Crealytics Inc., All rights reserved.