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.
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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.
“Gain Theory goes above and beyond simple MMM by providing business-level insights. They provide a comprehensive and rigorous framework for analyzing complex economic data and scenarios. This helps us to identify the key drivers of performance, optimize resource allocation, and forecast outcomes with confidence.”
Richard Thirsk Innovation and Insight Director, DFS
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How does MMM fit into a wider measurement strategy?
A best-in-class measurement strategy will not just rely on MMM alone. MMM is great at providing strategic insights about what is driving the performance of a KPI, but for a unified view of your investments we also recommend:
SensorTM: our award-winning attribution solution provides granular, near-time insights that are privacy compliant and enable optimization at the tactical level across a wide range of channels. Learn more.
Foresight: we have a range of tools that enable you to assess a range of uncertain future scenarios and plan for how you can meet your targets in these situations. Learn more.
Gain Theory’s unique approach to MMM
We prefer to use the term business driver modelling (BDM) because we know the capabilities of MMM stretch beyond marketing. For example, it can measure the impact of macroeconomic factors, competitor activities, and operational information, such as supply chain data.
We have 50 years’ experience of using BDM to solve a wide range of business challenges. So, whatever the industry and whatever the issue you are trying to solve, it is likely that we have already encountered it and provided a solution.
Our offering leverages ROVA, our advanced analytics platform, which utilizes the latest AI, machine learning and statistical modeling techniques to uncover insights.
What’s more, our global team is one of the most knowledgeable in the industry and provides high-touch consultancy to guide you throughout the entire process, from initial data sourcing to final decision-making.
Learn more about how we use high-touch consultancy and proprietary technology to accelerate growth.
