The main use of Marketing Mix Modeling (MMM) is its ability to help brands reallocate budgets to the most effective areas of their media mix and reduce wasted ad spend.
The commonly used cases for MMM include (but are not limited to) the following:
Analyzing Media Channel Contributions and Evaluating Campaign Performance
MMM can show how different media channels contribute to marketing performance, offering insights into both their share of marketing-driven sales and their individual ROI. For example, you can understand if you get more leads from YouTube campaigns or from other platforms.
Optimizing Budgets by Media Channel and by Campaign
MMM can recommend optimal budget allocations across various media channels. For example, you can select optimization parameters and see the ideal budget distribution, expected ROI, and sales outcomes.
Testing Budget Allocation Scenarios
Budget planning involves testing different allocation scenarios. For example, a marketing team might need to justify additional budget to the CFO by demonstrating potential business benefits or to evaluate the impact of budget cuts. With MMM, you can test these scenarios by adjusting total media investments.
Managing Seasonal Budget Allocation
Understanding budget distribution over time is crucial due to seasonal business variations. MMM can help plan how budgets should be paced monthly, taking into account these seasonal effects.
Evaluating and Tracking Campaign Performance
MMM can evaluate campaign effectiveness by analyzing ROI, media investment, and media-driven sales. Additionally, it can track the performance of individual campaigns over time, providing actionable insights through summaries of recent campaigns.
Analyzing Media Channel Performance
Diving deeper, it’s useful to analyze media performance within specific campaigns. This can be done through detailed views, such as tables, that break down each media channel's contributions.
Tracking Key Performance Indicators (KPIs)
MMM allows companies to track overall performance indicators, such as ROI and marketing-driven sales over time. For instance, you may find out that you get a return of €3.39 for every €1 invested in marketing.
Assessing Marketing Incrementality
MMM helps companies understand the impact of their marketing efforts compared to their baseline performance and other factors. For example, you may find out that your company's base sales account for approximately 80%, discounts for 10%, and media efforts for the remaining 10%.
Multi-Brand or Multinational Budget Recommendations
For companies operating across multiple brands or countries, MMM can help determine optimal budget allocations as part of annual planning. This ensures that the most critical regions or brands receive appropriate investment.
If you have any questions about using MMM for your business, feel free to reach us via chat for a discussion.