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What is Media Mix Modeling?
Media Mix Modeling or Marketing Mix Modeling (or in short: MMM) is a statistical method to estimate the impact of various marketing tactics on sales in order to forecast and come up with a better marketing strategy to reach incremental lift.
The 3 stages of Media Mix Modeling:
- The collection of any relevant factors that may have influence over sales
- Analysis of the data, using all factors
- Quantifying the weight for each factor to create a model to predict marketing results for future strategy
The method was developed in econometrics for the consumer packaged goods industry and has become common with brand cross platform Advertisers in the last years.
Media Mix Models require historical data to have any helpful outputs. Often, the data needs to include external influencing factors such as competitors activity, product launches, financial events, weather and any major event that may have influenced the performance of a product (i.e. during an Olympics year, more people buy sport goods).
Due to these requirements - Media Mix Models work best for refining a strategy, expecting influencing factors such as changes in the media mix and/or external factors to help understand what would be the best media mix to market a product over time.
Media Mix does not work well for new product launches, as without historical data - there are simply too many unknown variables.