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Q:  Marketing Optimization - Passing Fad or Proven ROI?
 
In the scientific community, optimization is defined as a mathematical methodology that allocates finite resources across multiple competitive, conflicting, and overlapping initiatives, each with unique constraints, to achieve an overall objective. Applied to the marketing world, Optimization is a mathematical methodology that allocates finite marketing resources across multiple channels, business constraints and marketing scenarios in order to target the right customer with the right product through the right channel at the right time - all while maximizing the customer's financial return to the business. This concept - maximizing the customer's financial return to the business - is the crucial difference between optimization and other traditional marketing technologies and tools. Marketing Optimization always, by definition, maximizes the profitability or level of sales for your entire portfolio of offers.
 
Optimization technology has been previously applied to other industries, such as Manufacturing, Financial Investment, and Airlines. In fact, optimization, in the form of yield management, transformed the airline industry, as attested to by R.L. Crandall, CEO of American Airlines:
 
"Yield management (optimization) is the single most important technical development in transportation management since we entered the era of airline deregulation in 1979...We estimate that yield management has generated $1.4 billion in the last three years alone and we expect yield management to generate at least $500 million annually for the foreseeable future."
 
Since the scope of the marketing problem is so large and complex, the technology did not exist until now. Although the application of optimization to the marketing world is a new concept, the impact it is having is clear and immediate. The technology has already been adopted by industry leaders such as AOL, AT&T, MCI, and Capital One, and it has gained additional validation by being incorporated into the solutions of leading CRM and campaign management suites from vendors such as NCR, Prime Response, and Xchange. Andersen Consulting has made the software the key component of the Customer Insight discipline within their Customer Relationship Management consulting practice.