What do we mean by marketing mix modeling?
Marketing mix modeling (MMM) is a statistical technique used to measure the past performance of a KPI, typically sales. It uses econometrics to uncover which factors have driven this performance and the relationship between them, so you can improve strategic decision-making with data-informed insights.
As the name suggests, MMM is most often used to understand how marketing has impacted the KPI being measured. It can measure the relative impact of advertising campaigns on sales, for example, which is why MMM is often referred to as media mix modeling. Other marketing factors it can measure include price, product launches, and promotions.
Three key benefits of MMM
Holistic view
MMM can assess a wide range of factors in one modeling framework and provide a single view of the impacts of these factors on your chosen KPI. This efficient approach avoids the need for multiple separate tools.
Short- and long-term impacts
MMM can determine the role of a range of business drivers over multiple horizons. This enables marketers to make more informed decisions that account for how and when a marketing activity’s impact on a KPI will be felt.
Incrementality
MMM measures how much growth occurred as a result of an investment that has been made (eg, campaign, channel, tactic) as opposed to what that growth can be attributed to. This gives marketers the confidence to budget more accurately.
