Understanding the Future of Marketing with Media Mix Modeling

In today’s rapidly changing marketing landscape, it’s crucial for brands and marketers to stay ahead of the curve—adapting to new methodologies for better results. One methodology gaining increasing attention is media mix modeling (MMM). In this blog post, we dive into the concept of media mix modeling, its importance in understanding marketing impact, and how it can revolutionize your marketing strategies.

Always-On Incremental Measurement (AIM) by Kochava partnered with M&C Saatchi Performance in London for a collaborative rooftop chat to discuss media mix modeling. Speakers included Dane Buchanan, Chief Data & Analytics Officer, and Lavinea Morris, Managing Director EMEA, from M&C Saatchi Performance, and Gary Danks, General Manager of AIM by Kochava.

Want to watch the whole session? Check out the full video here.

Introduction to Media Mix Modeling

Media mix modeling, also known as marketing mix modeling or econometrics, is a method of advanced marketing measurement that uses statistical modeling to correlate marketing investment with sales output. Unlike touch attribution, which measures the last touchpoint before conversion, MMM provides a holistic view of media performance over time. It analyzes the incremental impact of media on various key performance indicators (KPIs) such as sales, web visits, or app installs. By understanding the relationship between marketing investments and business outcomes, MMM enables marketers to optimize their media plans, allocate budgets effectively, and maximize return on investment (ROI).

Rationale Behind Media Mix Modeling

One significant factor driving the growing interest in media mix modeling is the evolving landscape of privacy policies, such as those related to iOS. With stricter regulations and limited access to certain data points, marketers face challenges in accurately measuring the effectiveness of their marketing efforts. The privacy policy changes restrict the feedback marketers and brands receive from their marketing investments. However, as Danks explains, these changes can be seen as an opportunity. By forcing marketers to adopt more advanced systems, privacy policy changes push them toward solutions like MMM, which provide better results regardless of privacy restrictions.

Benefits of Media Mix Modeling

Media mix modeling offers a multitude of benefits for marketers striving to improve their marketing strategies and business outcomes. Let’s explore some of the key advantages highlighted by Danks during the discussion.

Improved Performance and Efficiency

The primary benefit of media mix modeling is the ability to improve performance and efficiency. By understanding the impact of different media channels, marketers can make data-driven decisions to optimize their media investments. Identifying the channels that drive the highest ROI enables marketers to allocate their budgets more effectively, resulting in increased sales for the same amount of spend. MMM allows brands to maximize the return on their marketing investments and make the most out of their resources.

Holistic View of the Marketing Mix

Media mix modeling provides a comprehensive and holistic view of the marketing mix. It enables marketers to analyze the impact of both offline and online media channels, allowing for better coordination among different marketing strategies. By considering the synergies and interactions between channels, brands can develop a cohesive and integrated marketing plan that delivers consistent messaging and optimal results.

Granular Insights and Accurate Forecasts

Through media mix modeling, marketers can gain granular insights into their marketing performance. This methodology empowers brands to understand and leverage seasonality trends, cost curves, and external signals like national holidays. By incorporating these factors into the model, MMM provides accurate forecasts and enables marketers to anticipate and plan for fluctuations in demand that may go unnoticed in a touch attribution mindset alone.

Collaboration and Cultural Change

Media mix modeling encourages collaboration between brand and marketing teams. By providing valuable insights and a common language for decision-making, MMM fosters alignment across the organization. It breaks down silos and allows different teams to work together toward common goals. Implementing MMM often requires a cultural change within the organization, and partnering with a third-party provider can facilitate the transition by bringing in external expertise, best practices, and fresh perspectives.

Implementing Media Mix Modeling

While media mix modeling offers promising opportunities, it’s essential to understand the implementation process thoroughly. The following chat between Danks and Buchanan provides valuable insights into the key steps for success in MMM:

Gather the Necessary Data and Get the Data Right: The foundation of media mix modeling lies in the availability of relevant and accurate data. Collecting data on conversion funnels, media costs, and other key metrics is crucial for creating a robust model. As accurate data is the backbone of MMM, ensure that your data collection processes are aligned with industry standards and continually analyze and refine your data sources for improved accuracy.

Train the Model with a Service Provider: Working with a specialized service provider is highly recommended. They can assist in training the model, refining the inputs, and validating the results. Collaborating with experts ensures that the model is accurate and aligns with industry best practices.

Engage Stakeholders and Challenge Assumptions: Successful media mix modeling requires active participation from stakeholders across the organization. Challenge assumptions, encourage open discussions, and leverage the expertise of various teams to create a comprehensive and reliable model.

Partner for Speed and Efficiency: The implementation of media mix modeling doesn’t have to be a long and complex process. By partnering with a specialized team, brands can streamline the modeling process, accelerate implementation, and gain valuable and actionable insights within a matter of weeks.

Debunking Common Myths

To fully grasp the potential of media mix modeling, it’s crucial to debunk some common myths surrounding this methodology. Buchanan from M&C Saatchi Performance tackled several such myths:

Media mix modeling is not a panacea. While it provides valuable insights into the marketing mix, it should be used in conjunction with touch attribution and modeling, allowing marketers to understand the full customer journey.

Building a media mix model is neither difficult nor time-consuming. With the right partner and access to the necessary data, brands can start implementing media mix modeling and reaping the benefits in relatively little time.

Self-serve tools may not be effective without the right skill set and experience. Partnering with a specialized team ensures that the complex modeling process is handled by experts who can provide valuable insights and recommendations.

Conclusion

As the marketing landscape continues to evolve, it is vital for brands and marketers to leverage advanced measurement methodologies such as media mix modeling. This powerful tool provides a holistic view of marketing performance, enables brands to optimize their media investments, and enhances business outcomes. By understanding the impact of media channels, marketers can make data-driven decisions, allocate budgets effectively, and achieve improved performance and efficiency. Don’t wait for the window of opportunity to close; embrace MMM and unlock the potential for success in your marketing initiatives.

Interested in learning more about media mix modeling and its implementation? Contact our specialized team today and embark on an exciting journey toward better marketing results.