Marketing Mix Modeling Theory & Practice - Part 3

Core Objectives of an MMM Model - Estimation and Optimization

Measuring Marketing Success

MMM is all about measurement. By looking back at past campaigns, it helps us pinpoint what worked and what didn't. It’s akin to a post-game analysis; dissecting plays to understand which strategies led to a touchdown and which ones ended in a fumble. This is how we calculate the true ROI, or return on investment, which, let’s be honest, can be as complex as a Rubik's cube.

Predicting Future Performance

Once we've got measurement sorted, the next step is prediction. It's like looking into a crystal ball, but instead of vague prophecies, we're using hard data to foresee how our next campaign will perform. Will Google give us more bang for our buck, or is it time to dance with TikTok? MMM doesn't need to read the stars to predict the future; it uses solid, past data to make educated guesses.

The Art of Optimization

With predictions in hand, it's time to play the optimization game. Imagine you’re a coach deciding where to allocate your star players. If one channel is scoring high ROI consistently, that’s where you want your marketing dollars playing offense. It’s not just about picking the winning team though; we have to consider the law of diminishing returns and the synergy between channels.

The Bottom Line

So, MMM is our marketing MVP, tackling the toughest challenges in advertising by measuring, predicting, and optimizing our marketing efforts. It tells us where to place our bets and fold our cards in the high-stakes game of marketing. Ready to place your bets where the returns are best? That's what MMM is here to help with.


Challenges in MMM - Missing variables biases

Modeling seasonality in sales data.

The Seasonality Effect: Getting Your Marketing Model Right

Have you ever given your marketing a high five for a sales spike, only to realize it was just the holiday rush? That's where the importance of modeling seasonality in marketing comes in. It's like giving credit where credit's due and making sure your marketing isn't taking a bow for Mother Nature's work.

Why Seasonality Can't Take a Back Seat

Picture this: it's the festive season, and sales are soaring. You're pouring more into marketing because, well, 'tis the season. But if your model doesn't account for seasonality, you might end up thinking it's all your marketing's magic. The truth? Those sales might have spiked even without that extra ad spend. It's a classic case of mistaken identity, and your model's the detective getting it wrong.

Balancing the Marketing Scale

The trick is to hit that sweet spot—where you’re not underselling your marketing efforts or giving them too much credit. Think of it like seasoning a dish; too little and it's bland, too much and it's overwhelming. You want just the right amount to bring out the best flavor. In marketing, that flavor is the true impact of your efforts, and you want it just right.

Steering Clear of Bias

Inputs in your model are like ingredients in a recipe—pick the wrong ones, and the whole dish is off. If you’re not careful, biases sneak in, and suddenly, your output is serving you illusions rather than insights. It's all about being meticulous with what goes into your marketing mix, ensuring every variable is there for a reason.

The Takeaway

In the world of marketing analytics, recognizing the impact of seasonality is crucial. It's about understanding the full picture and giving credit to your marketing strategies for their genuine impact, not just the seasonal trends. Keep your models in check, and your marketing will be all the better for it.


Cascaded MMM - An approach to measuring long-term effects

Measuring long-term effects in marketing funnels

The Long Game in Media Mix Modeling

Building a brand is like nurturing a garden – it takes time, patience, and the right conditions to flourish. When it comes to media mix modeling (MMM), the challenge is capturing the effects of long-lasting media and sales efforts on brand growth. If you're relying on a single MMM to track from the initial ad exposure to the final purchase, you might miss out on the whole story.

Breaking Down the Customer Journey

The key is to not treat the customer journey as a sprint but as a marathon with different legs. Instead of one end-to-end model, consider breaking down the funnel into bite-sized pieces. It's like tracking an athlete’s performance across different stages of a race – each part tells you something valuable about their overall stamina and strategy.

From Awareness to Action

Start with brand awareness. Do you know what's lifting your brand's profile? What about engagement metrics like website interactions? By modeling these sections separately, you can get a clearer picture of what's happening at each stage. This approach is like having checkpoints in a race, allowing you to assess progress more frequently and adjust your strategy as needed.

Cascading to Success

Once you have these segmented insights, you can link them together in a cascaded model funnel. This helps to map out the delayed effects of your marketing efforts more accurately. Imagine linking chains together – each one represents a different stage of the customer's journey, and when connected, they form a complete picture.

Embracing Complexity

Building a MMM that captures the long-term effects is no walk in the park. It's a complex puzzle that requires a thoughtful approach. But by segmenting the customer journey and using a cascaded model, you can better measure and understand the enduring impact of your brand-building efforts.

The Bottom Line

In the end, the goal is to create a MMM that can go the distance, tracking the nuances of brand-building over time. By acknowledging the complexity and adopting a segmented approach, you stand a better chance of capturing those elusive long-term effects and nurturing your brand's growth to full bloom.