Why many organizations abandon building an internal MMM solution
Having worked in the field of marketing mix modeling (MMM) for nearly five years, I have engaged with hundreds of advertisers and developed numerous models for clients across various industries. Despite our proven success, we frequently encounter discussions with data science teams directed by their leadership to build internal MMM solutions. Based on my experience, I have yet to see an organization successfully build and maintain an effective MMM internally. While this is not impossible, I have never witnessed such a case.
Here are the top 5 reasons why building MMM in-house is challenging—and often impractical.
1. Cost and Resource Allocation
Internal MMM
Effectively maintaining an MMM demands substantial resource bandwidth. As such, building MMM in-house requires a sizable investment in a team of highly skilled data scientists, analysts, and possibly software engineers. A small, fully functional internal data science team can cost upward of $500,000 annually. For the model to be effective, the team must continuously monitor and update it, research and integrate new data sources, and adapt to evolving market dynamics. This involves ongoing investment in both personnel and technology to ensure that the model remains accurate and relevant. It is rare to find a team solely dedicated to building an internal model. More often than not, that is just one of many projects they handle, meaning it’s not considered a priority and destined for delays in development and loss of momentum.
Another critical issue is key person risk. Internal models tend to be built by a small group of data scientists. Should one or more of these individuals leave, the organization loses a significant amount of knowledge that is particularly hard and expensive to replace. I have seen cases where key person dependency has led to the model’s becoming obsolete when that person leaves the organization.
SaaS MMM
In contrast, an MMM SaaS provider is a fraction of the cost of an internal team. Moreover, a good SaaS provider mitigates key person risk by offering robust support infrastructure. They provide a market-ready product, ensuring that you do not face delays or loss of momentum. This allows your marketing team to stay focused on core activities without being bogged down by the complexities of model maintenance and development.
2. Time to Market
Internal MMM
In today’s competitive market, with evolving data privacy policies and marketing signal loss, speed is critical. Building MMM in-house is a time-consuming process involving data collection & cleaning and model development, testing & validation. In my experience, I have yet to see an internal model developed in under a year. Often, teams spend an entire year building it, only to find that it does not work as expected—losing valuable time without achieving any useful results.
SaaS MMM
A good MMM SaaS provider can have your model ready in approximately one to two months, enabling you to obtain outputs much faster than an internal team could achieve. These providers have established processes and frameworks that accelerate the deployment of MMM solutions, allowing you to make timely and informed decisions. By leveraging a SaaS provider, you can avoid lengthy development cycles and see actionable insights much faster, giving your company a competitive edge.
3. Model Refresh and Maintenance
Internal MMM
Maintaining an MMM internally requires a robust technical infrastructure for frequent model refreshes. For a model to be useful, it must be maintained and refreshed regularly to suit the marketing team’s operational workflow. Unfortunately, many internal models are refreshed only once a quarter or even twice a year—insufficient for performance marketing teams that need timely insights for fast-paced decision-making processes.
SaaS MMM
Third-party MMM providers typically offer automated data integration and weekly refresh capabilities, allowing models to be updated in near real-time. This ensures agility in making informed marketing decisions that maximize ROI. These providers maintain the infrastructure required to keep models up to date, ensuring that the insights provided are always relevant and actionable. By outsourcing to an MMM SaaS provider, your marketing team gains access to the most current data, enabling swift responses to market changes.
4. Actionable Output
Internal MMM
The primary objective of MMM is to provide marketing teams with actionable insights to improve business outcomes. Internal models often produce highly technical outputs that require interpretation by data scientists, creating bottlenecks in the decision-making process. This can delay the implementation of marketing strategies and reduce overall effectiveness of the insights provided. Additionally, the output metrics and KPIs may not be actionable by the marketing team should the model and data scientists not fully understand market nuances. For example, the model might suggest increasing ad spend on Apple Search Ads when the marketing team has already reached maximum spend limits on that platform.
SaaS MMM
Third-party MMM providers specialize in delivering user-friendly dashboards and reports. These outputs are designed to be easily interpretable by marketing professionals, enabling them to implement data-driven strategies quickly without constantly relying on data scientists. This ensures that insights are immediately actionable, enhancing the marketing team’s ability to respond to changing market conditions. By using a SaaS provider, you gain access to intuitive tools that present complex data in a clear, actionable format, facilitating informed decisions and effective marketing strategies.
5. Experience and Expertise
Internal MMM
When building an MMM model internally, you are limited by your team’s expertise. This narrow focus can lead to mistakes and a slower learning curve. Digital performance marketing has many nuances. Multiple media sources and ad networks behave differently for many reasons, including commercial models, buying mechanisms, formats, and audiences. Internal data science teams may lack the domain expertise to recognize these complexities, thereby limiting their models’ effectiveness. The trial-and-error approach required to build a robust internal MMM can be costly and time-consuming. Internal teams frequently lack access to the same level of data and insights third-party providers can leverage, further reducing the impact and scope of their models.
SaaS MMM
In contrast, third-party MMM providers have extensive experience working with diverse clients across different industries. Their teams are vastly more experienced in the digital performance marketing domain, having worked with hundreds of clients and accumulated years of experience understanding market nuances. This breadth of knowledge enables them to refine their models continually and incorporate best practices. By leveraging this experience, you benefit from a sophisticated and reliable model, reducing the risk of errors and enhancing the overall effectiveness of your marketing strategies. A SaaS provider’s deep understanding of various media sources, ad networks, and market dynamics ensures that your model is fine-tuned to deliver optimal performance and the most actionable insights.
Why AIM Is the Smartest Choice for Your Marketing Mix Modeling Needs
Choosing the right MMM solution is critical for your business’s success. AIM (Always-On Incremental Measurement) is a next-generation MMM tool designed to address all the challenges of building and maintaining an internal model while providing unparalleled benefits in cost, efficiency, and expertise. Here’s why AIM stands out as the ideal choice for your business:
- Cost and Resource Efficiency: AIM is a fraction of the cost of building an internal team. It provides a market-ready, off-the-shelf MMM product, allowing your marketing team to focus on core activities.
- Rapid Time to Market: AIM can have your model ready in one to two months, much faster than an internal team. Our processes and frameworks ensure timely, informed decisions.
- Real-Time Data and Model Refresh: AIM provides automated data integration and weekly refresh capabilities, keeping your model up to date with the latest market data.
- Actionable Insights Designed for Performance Marketing: AIM’s dashboards and reports are user-friendly and tailored for performance marketing, making insights immediately actionable.
- Unmatched Expertise and Support: AIM’s team of over 200 marketing experts deeply understands the digital marketing domain, ensuring that your model is fine-tuned for optimal performance.
- Test Before You Commit: AIM enables you to test the effectiveness of MMM for your business quickly, enabling informed decisions about future investments.
In Summary
Investing in AIM’s marketing mix modeling service is the smartest choice for businesses considering MMM at any level. Our platform offers a cost-effective, time-efficient, and highly actionable solution that leverages the extensive expertise of our team. Get started with AIM to harness the power of MMM quickly and effectively, and make data-driven marketing decisions that propel your business forward.
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