Marketing Mix Modeling 101
Marketing mix modeling (MMM) is a relatively new concept that combines a variety of marketing channels with large data sets of historical performance data. This combination helps channel marketers find the most efficient "mix" of channels and budgets to drive the biggest impact in sales.
If performed effectively, MMM can provide marketers with insights into where and how to assign marketing dollars. These data-based insights have driven an entire industry of measurement software applications, new tools and instruments to help marketers make better decisions.
However, marketing executives are quick to remind us that at the end of the day, it's a human--not the model--who's making the decisions.
Is This Right For You?
Marketing experts from the biggest brands in the world weighed in on MMM strategies at a recent Advertising Research Foundation Industry Leader Forum. Based on discussion and reaction from attendees, the majority of the executives at the forum feel that measurement keeps advertisers up at night.
While MMM might not help you sleep at night, it can help you develop decision-making intuition. Charles McLeish, Marketing Director at Lego, echoed this sentiment by saying that when dealing with models, marketers should "use mixed models to build intuition and make marketers stronger."
Building intuition was a central theme among experts at the forum. Most executives felt that modeling exists to allow marketers to make more informed decisions, rather than to allow the models make the decisions. "Trust your intuition and feel free to ignore the results," McLeish added. Patrick McGraw, director of consumer and market knowledge at Procter & Gamble, took a hard stance with making decisions on models: "If you ever say "well, the model said..." then, you're fired!"
This sentiment among the marketing leaders at the forum made it clear that executives want their staff to use these models and measurement instruments as references rather than a guiding light. Decision-making from MMM is a delicate balance, relying on people-driven actions.
After attending the Advertising Research Foundation Industry Leader Forum, it was clear that marketers must make sure that data modeling and intuition are both considered when making decisions. And while MMM can give your brand direction, relying solely on intuition or a marketing model can strip you of the critical information you need when explaining your decision-making process to executives.