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What is Media Mix Modeling ?
A Guide to MMM
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
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Learning from History
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.
(Coke Zero launch shows that even a company with such a well documented advertising history had to turn back to testing and analysis to get the new product into it’s consumers hands: https://www.ashokcharan.com/Marketing-Analytics/~aw-coca-cola-zero.php)
B2B2C brands (i.e. consumer goods, retail, consumer electronics) often must rely on Media Mix Modeling to analyze the effectiveness and impact of their paid marketing activities.
Attempts to use a simple version of Media Mix Modeling are tested regularly by Advertising being turned off completely , allowing Advertisers to analyze sales activities with no Advertising in place - however, switching off all Advertising is extremely hurtful to most Advertisers as while doing so - competition may consume market share, thus, hurting long term brand equity for an Advertiser experimenting with turning off the lights across all marketing activities.
INCRMNTAL provides an incrementality measurement platform, helping both brand and performance marketers unlock the value of their marketing spend. Our platform is not a replacement to media mix modeling, but works adjacently to it.
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.
Marketers in sectors where B2C is a small part of sales usually do not have enough insights into consumer behavior, therefore, must rely on a more strategic approach to their ad spend to increase sales. Car manufacturers, Sport goods, consumer electronics, packaged goods, drinks and so on are just a few examples.