OPTIMIZE THE DIGITAL MARKETING STRATEGY American Dream, is a retail and entertainment complex located in the Meadowlands Sports Complex in Rutherford, NJ. The mega-sized entertainment and retail complex opened only a few months prior to the start of COVID in the United States. Given their untimely launch and other negative press, they have been working hard to promote their 3-million square foot retail and entertainment establishment. The management team requested your recommendations on how to allocate their digital advertising budget across Social Media, Satellite Radio (such as SiriusXM), and Music Streaming Services (such as Spotify). American Dream's digital marketing budget for next quarter is set at $875,000. The marketing agency has provided the following information about the industry exposure effectiveness rating per ad, the estimate of the number of potential new customers reached per ad, and the cost for each ad. MEDIA Social Media Satellite Radio Music Streaming Services Effectiveness Metric per Ad New Customers per Ad Cost per Ad 100 14000 $19,000 10000 $13,000 4500 $4,000 30 15 The effectiveness metric scores the value of the ad to existing customers and potential new customers. The score is based on qualitative measures such as image satisfaction, message recall, and visual and audio appeal. More expensive Social Media ads will have higher effectiveness scores along with greater potential for reaching new customers. While the effectiveness metric is a great means to compare campaigns, the score itself is only applicable to the first few advertisements in each medium. For example, Social Media has an effectiveness metric of 100 and a reach to 14,000 new customers per ad. These scores are only reliable for the first 14 Social Media ads. After 14 ads, the benefit declines. For purposes of analysis, you can assume that the effectiveness metric for Social Media drops to 65 and the potential new customers reached drops to 5000 per Social Media ad beyond the first 14. For Satellite Radio ads, the effectiveness metric is only reliable for a maximum of 20 ads. After the 20 ads, the effectiveness metric declines to 20 and the number of new customers reached declines to 3200 per ad. Similarly, for Music Streaming Services ads, the effectiveness metric is only reliable for a maximum of 27 ads; the effectiveness metric declines to 8 and the potential number of new customers reached declines to 1000 per ad. American Dream's management team accepted maximizing the total effectiveness metric, across all media, as the objective of this digital advertising campaign; however, they are insisting that the total of all ads purchased must reach at least 500,000 new customers. American Dream's management team also insist on the following guidelines: Use at least three times as many Streaming Music ads as Satellite Radio ads./nUse no more than 20 Social Media advertisements. The Social Media budget should be at least $260,000 ⚫ The Satellite Radio budget is restricted to a maximum of $450,000 ⚫ The Music Streaming Services budget is to be at least $135,000 Use optimization techniques to provide a recommendation on how to best allocate the $875,000 advertising budget across these three digital marketing options. Develop a linear programming model that can be used to optimize the advertising budget allocation. (HINT: you should define two variables for each media option (eg. S₁ = number of Social Media advertisements with rating of 100 and 14000 new customers and S2 = number of Social Media advertisements with rating of 65 and 5000 new customers, and so on). Enter the problem into Excel and use Solver to solve for the optimal solution. In addition to the Excel file, also prepare an executive summary managerial report. The Executive Summary should be approximately 1 to 2 pages (plus Excel file) and include the following sections: 1. (10 points) Case Synopsis (include a brief summary of the case and the business issue(s) being studied) 2. (20 points) Methodology (including a discussion of what information was provided and how you used this information to analyze the problem) organize the available data and type out your full mathematical programming model including defining your decision variables. 3. (50 points) Findings and Conclusions (include summary of analysis results) Based on your analysis, what is your (complete) optimal marketing recommendation? Provide a table showing the recommended number of Social Media, Satellite Radio, and Music Streaming Services Ads and the budget allocation for each medium. Show the total effectiveness metric and indicate the total number of potential new customers reached. Also address the following THREE questions: a. How would the total effectiveness metric score change if $50,000 LESS were available in the advertising budget? b. American Dream believes that they have some negotiating power and can secure Satellite Radio ads for just $12,000 each. (Assume total budget available is the original $875,000.) How does this effect the allocation of advertisement methods and the total effectiveness metric score? c. Instead of focusing on the total effectiveness metric score, American Dream asked how the recommendation would change if the objective of the advertising campaign was to maximize the number of potential new customers reached. Develop the media schedule under this objective. Show the total effectiveness metric score and indicate the total number of potential new customers reached. (Assume total budget available is the original $875,000.) 4. (20 points) Recommendations. What other factors need to be considered in making the recommendations? Do you agree with the decisions from your quantitative analysis? Why or why not? Using both of these recommendations you made in the findings and conclusions section/nand your own management perspective (other issues to consider), what is your recommendation for American Dream's digital marketing campaign? You should also do some outside research on Digital Marketing campaigns and/or base your opinion on your knowledge and/or experience with Digital Marketing (be sure to site any outside sources used).

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