This article explores MMM, what it is, how it differs from other measurement and attribution models, and the value is can deliver for brands looking to improve marketing efficiencies.
According to Don Draper, advertising is based on one thing: happiness. That lesson still holds true even with the advent of addressable media, data science, adtech, martech, and now GenAI. We advertisers still strive to make our clients and their customers happy using advertising to inform, delight, entertain, and ultimately capture more market share. But this happiness is no longer led by martini-fueled lunches and swag; it’s based entirely off of data.
Data is a powerful asset enabling a customer-centric approach to delivering ads across multiple touchpoints. Data validates our decisions, discredits our hunches, and allows us to connect with the right customers, at the right time, in the most efficient way. In short, good, accurate data equals happy customers.
But herein lies the problem: the common, well-practiced methods of attribution and measurement are inherently flawed. Which ultimately leads to flawed data-driven decisions. Bad data equals bad outputs, and unhappy customers. So what is the solution? An accurate mathematical approach that leverages aggregated data to deliver incremental insights – known as Marketing Mix Modeling, MMM.
What is MMM?
Also referred to as Media Mix Modeling, MMM is a method of true attribution that measures sales contribution (or any KPI – brand, metric, profit etc.) against the four p’s of marketing: product, promotion, place, and price via an econometric model [an application of statistical methods to data in order to extract insights for better planning]. Within promotion, MMM optimizes the channels used to reach customers in context with economic, weather, and other external factors impacting sales.
MMM ensures privacy compliance and delivers insights to guide marketing mix decisions such as;
- Marketing Impact: How much incremental impact did my marketing have on sales?
- Channel Mix Recommendation: What channel should I invest my marketing budget to optimize sales performance?
How does MMM differ from other measurement and attribution models?
MMM is a mathematical approach to attributing business KPI such as sales against each marketing channel in context with economic and other non-marketing factors impacting business. MMM helps you determine which channel performs best based on its contribution to sales and its ROI. These insights inform the marketer to make the right decisions on channel mix to drive business, and not just reach goals.
Brands can use MMM to inform marketing decisions such as:
- How much more sales would an optimal media mix deliver vs current mix?
- How much impact does seasonality have on my business?
- What channel should I invest more to drive business growth?
- What would happen to my sales if I cut a certain channel?
Why should I invest in MMM?
Gaining a holistic view of your cross-channel performance has never been more important – and brands are beginning to realize this. In the US alone 60% of advertisers are currently using, or in the process of running a MMM campaign. Of the 40% not using MMMs, 58% are considering it in the future.
Take CarParts.com as an example.
CarParts.com wanted to establish the true marketing impact of their channels against core business KPIs, namely the value behind TikTok and what profitability it was driving in comparison to other core channels. Initially they weren’t seeing tangible benefits, and wanted to remove TikTok from their modeling mix. Incubeta was tasked with identifying the true value behind TikTok to support, or disprove their theory.
By running agile MMM, we discovered that TikTok had 43% higher ROI than all other channels on average with an 11.1 ROI to sales. In short, agile MMM had proved that TikTok deserved to stay on the plan.
“By accurately measuring the true marketing effectiveness of our channels, we’ve optimized our strategy and proven TikTok’s significant impact with an 11.1 ROI and a 43% higher ROI than other channels. This collaboration has provided invaluable insights, driving remarkable business growth on a new platform allowing us to engage an entirely new audience segment” – Christina Thelin, CMO at CarParts.com
Sure the success of the advertising industry still relies heavily on creatives, building the right copy, and fostering client-brand relations. But the real benefit is in coupling creative genius with econometrics.
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For more information, get in touch with our team of seasoned experts at Incubeta.