When we talk with advertisers, we often hear that CMOs do not have the full picture of the effectiveness of their marketing efforts. In a time where we can measure everything, this shouldn’t have to be the case! In practice, marketers mainly have insight into short-term metrics, but insufficient insight into (medium-)long-term growth. In other words: they know there is a sales uplift, during an impactful campaign (or promotion). But what this campaign (or promotion) does for the brand and sales during the rest of the year turns out to be a black box. In addition to this, short-term insights of attribution models are becoming less and less reliable due to the elimination of cookies. We can't help but conclude that we need to move on to more scientific underpinnings of modern marketing strategy.
Marketing Mix Modelling (MMM) is currently experiencing a remarkable revival among our clients for good reasons. Although this form of econometric modelling has been around for several decades, its relevancy today is stronger than ever. More and more advertisers are considering MMM as a method to map the impact of their marketing efforts.
What is Marketing Mix Modelling and why is it important?
MMM offers a holistic approach to measuring marketing impact that goes beyond digital attribution. It includes a comprehensive set of statistical methods that marketers use to measure the impact of their investments on key business KPIs, such as sales or leads. In addition, it is also possible to include long-term effects, i.e. the effect of marketing investments on the brand.
A key advantage of MMM over attribution is its ability to evaluate the impact of both online and offline media. However, it is not just about media; MMM also includes external factors such as seasonality, weather and the effects of pricing and promotional activities, giving marketers more control over their pricing policies and promotional strategies. Moreover, MMM is able to accurately reflect the direct impact and incrementality (ROI) of media spend on KPIs such as sales and brand awareness. Using these models, strategists and marketers can optimize their media plans to maximize desired KPIs across the whole marketing funnel.
Of course, some drawbacks may make marketers reluctant to use MMM. One well-known disadvantage is the reputation of MMM projects because of their cost and scale. Setting up an MMM model can require significant investments in time and money. Collecting and processing data used to be time-consuming, causing marketers to wait a long time for results. In a dynamic market where real-time insights are crucial, MMM did not always meet the need to have quick results. Nevertheless, because of technological developments such as AI and automation MMM models can now be delivered in near real-time. Moreover, today we have access to more detailed data, which means MMM is increasingly being used for tactical decision-making, a role previously fulfilled by attribution.
Outsourcing MMM or in-house?
When selecting a suitable Marketing Mix Modelling solution, there are several considerations to take into account. Most important here is to think carefully about how MMM can be integrated into the organization’s processes and planning:
- How much support is needed in implementing both the technical side and using the results for business planning?
- Are there employees who need to be trained internally?
- Who has the required expertise?
- Is it feasible to develop it internally or might it be better to collaborate with an external party?
- How will you use the outcomes? Only strategically? Or is the desire also to be able to manage tactical media planning?
MMM at dentsu
Dentsu’s Communication Attribution Solution (CAS) combines the strengths of traditional marketing mix models (MMMs) and digital attribution to deliver comprehensive and detailed near real-time attribution and optimisation of media spend. CAS goes beyond conventional digital attribution by integrating and optimising both online and offline channels, both paid and owned channels, throughout the whole marketing funnel, while also providing a breakdown of all channels into more specific dimensions. By prioritising marketing KPI’s such as Awareness, Consideration (branding) and Sales (performance), CAS enables ROI-focused media plans that covers the full funnel and even considers variables like publisher and time slot.
With the optimisation dashboard and scenario planner, we are able to answer budget questions, such as:
- How much budget is needed to achieve specific sales goals? Or to maintain consistent brand awareness levels?
- How much sales can be achieved with the current media budget, and how would this number change with a 10% increase in budget?
- What is the contribution of owned channels vs paid channels on sales?
- How do changes to the media mix or detailed plan impact sales or brand awareness?
By leveraging the insights and capabilities of CAS, dentsu can make evidence-based decisions for their clients that enhance effectiveness and efficiency in achieving goals. Additionally, this empowers the marketing department to demonstrate to the CFO that marketing is an investment for business growth rather than just an expense.
Image: Examples CAS
Take advantage of our expertise and contact us for tailored advice! Whether you choose to outsource Marketing Mix Modelling (MMM) to an external party or develop in-house expertise.