Why is Media Mix Modeling Cool Again?

What is Media Mix Modeling
Media Mix Modeling (MMM) is a statistical analysis used by marketers to measure the impact of marketing across different channels (the marketing mix) on sales, with the goal of understanding how each channel contributes to achieving a brand’s KPIs. MMM became widely used in the 1980s with advertisers like P&G and GE (both heavy spenders on TV) using computers and large datasets to understand which marketing tactics were most effective in driving sales and to help forecast how additional marketing investments could prop up the bottom line. Although it was a valuable tool, it fell out of favor because MMM struggled to keep up with the rise of digital marketing, particularly as search, social and online retail started to grow, given the velocity of those channels. Separately, the industry moved to more precise attribution modeling.

Taking Marketing’s Measurements
Since the beginning of advertising on TV and radio, marketers have wondered what is the effectiveness of each channel on their marketing plan. Today, measuring that impact has become increasingly complex due to optionality. 55% of US SMB marketers are buying across 3+ marketing channels, which fragments spending and makes accurate measurement difficult. Cookie deprecation is another consideration, given that 65% of people are concerned about privacy due to excessive cookie usage, which severely limits traditional multi-touch attribution methods that rely on cookies. Fragmentation and cookie loss, alongside tightening consumer privacy laws, makes user-level data tracking and attribution increasingly difficult.

Traditional metrics like click through rates and impressions, or reach and frequency, only offer a partial understanding of the effectiveness of your buys. Coupled with user-level tracking privacy restrictions, these granular attribution methods are becoming less viable. In retail media, multiple touchpoints influence consumer decisions and attributing sales solely to digital would overlook the influence of other important branding channels. Retail media encompasses everything from on-site activations to sponsored product listings, display ads, CTV and targeted emails - making it challenging to assess each channel’s contribution accurately. Plus, consumers buy online and offline seamlessly - making sophisticated measurement techniques necessary to account for all media buys, across different channels and their ultimate impact on sales.

Programmatic + MMM = A Perfect Measurement Fit
While MMM and programmatic media operate at different levels of granularity and focus on distinct aspects of marketing measurement, they can be integrated to enhance overall effectiveness, especially if you also buy retail media networks. MMM is great at providing a holistic view of marketing effectiveness across all channels, including traditional and digital media. By integrating programmatic media data into MMM analyses, advertisers can gain incredible insights into the contribution of programmatic advertising to overall sales performance, since MMM considers the synergy between different channels and provides a holistic view of campaign performance. MMM offers a comprehensive, strategic view on the synergies between different tactics and across fragmented marketing channels - signaling a shift towards a more organized, macro-level perspective critical for more performant planning, execution and measurement of campaigns.

The advantages of MMM's strategic perspective:

Comprehensive Privacy-Safe Measurement: MMM provides a holistic view of traditional, programmatic and retail media performance to identify the incremental contribution of each marketing tactic. This allows for better optimization, refining targeting strategies or evaluating the long-term impact of dollars invested with actionable insights to drive ROI. Nearly 75% of CMOs prioritize immediate commercial growth, focusing on data-driven marketing campaigns that leverage technology, including predictive analytics, to forecast trends and optimize strategies for revenue enhancement(Source:thecmo.com)

Granular Analysis: Allows retail media investments to be seen through the lens of products sold, geos, stores and demographics who purchase your products. The granularity assists in allowing for targeted delivery of ads and optimizations, even creative messaging, to specific audiences.

Forecasting and Planning: Analyze historical trends and MMM can forecast future sales performance under a variety of scenarios, empowering brands to make informed decisions with real-time trends.

Neutrality:Unlike single touch attribution models, MMM does not have an inherent bias - it provides a level assessment of each marketing touchpoint’s contribution, ensuring fair allocation of credit across all channels, including RMNs. As data privacy and fragmentation escalate, an advanced AI/ML-powered MMM approach will provide a future-proof, robust path to strategic measurement and investment allocation.

MMM is one of those trends that deserves a resurgence, unlike some of those fashion trends from the 90s! Over time, MMM can also capture brand equity and customer loyalty metrics to analyze the long term effects of marketing investments. In this era of fragmentation and retail media solutions, effective attribution is paramount for driving growth and staying ahead of the competition. By embracing MMM, brands can unlock actionable insights, optimize and achieve a deeper understanding of their customers’ journey. Now this is a trend I can endorse!

This article was co-written by: Oscar Rondon, Senior Vice President US Products Partnerships, MiQ & Nishant Kakar, VP Product, US, MiQ.

Posted at MediaVillage through the Thought Leadership self-publishing platform.

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The opinions expressed here are the author's views and do not necessarily represent the views of MediaVillage.org/MyersBizNet.