Gary Danks, General Manager for AIM at Kochava Inc, explains the benefits of the marketing mix modelling approach.
The landscape of marketing measurement is undergoing a transformative shift. Marketing Mix Modelling (MMM), a proven methodology that has grown increasingly sophisticated due to technological advances, is set to take centre stage over the longstanding dominance of Touch Attribution. This transition is fuelled by the fact that evolving privacy policies make touch attribution less reliable and the capabilities of next-generation MMM tools continue to grow stronger. The industry is witnessing a pivotal moment that will redefine campaign analysis and marketing investment strategy.
Marketing Mix Modelling
At its core, MMM is a statistical analysis technique that identifies the impact of multiple variables on sales. It considers numerous factors, including offline and online advertising and external influences like seasonality and weather. MMM operates on the principle that a brand’s sales funnel is influenced by a combination of these factors. This differs from touch attribution, which attributes sales to individual touchpoints, often giving 100% of the credit to the last touchpoint. For example, consider a consumer goods company. The company may invest in various marketing strategies, including a television campaign, social media, search, incentivised promotions and in-store promotions. Using MMM, the company can analyse the sales data and truly understand the influence of each of these marketing channels on the overall sales performance.
The MMM analysis could reveal that some of the company’s online activities had less impact on sales while offline advertising played a greater role than previously assumed. By analysing all these factors together, MMM models provide highly informative insights into the most effective marketing strategies. This then helps the company to decide how to allocate its marketing budget for optimal results.
Touch Attribution
Touch Attribution, on the other hand, focuses on attributing sales to the final touchpoint in a customer’s journey, assuming that this is the sole incentive behind a sales conversion. For instance, if a customer sees a TV ad twice, then searches for the brand online and buys the product, Touch Attribution will attribute the entire sale to search. While Touch Attribution provides marketers with uncomplicated reporting, it oversimplifies the complex interactions that drive consumer behaviour, often overattributing to the last touch point. Today’s customers often go through various stages before a conversion. These interactions, even if they don’t directly lead to a sale, can be instrumental in building brand awareness and trust, which ultimately influence the final purchase decision. Relying solely on Touch Attribution can lead to an insufficient understanding of the customer journey. Recognising these limitations is essential for marketers to make well-informed marketing decisions.
The Evolution of MMM
Historically, the analytical process underlying MMM was tedious and time-consuming, demanding a data science team to scrutinise marketing campaign data over many months.
Fortunately, the narrative has dramatically changed, with technological advancements pushing MMM into the forefront of marketing measurement methods. The next generation of MMM addresses previous obstacles, reshaping how campaigns, budgets, and the holistic customer journey are evaluated across diverse media platforms. Rather than singling out a solitary touchpoint, MMM now grasps the intricacies of multiple touchpoints and their collective effect on sale outcomes. Today’s next-generation MMM tools operate on a dynamic, continuous basis, updating models every 24 hours. This transformation equips marketers with real-time suggestions for optimising marketing investment on different platforms.
Navigating the Transition
The legacy of Touch Attribution may cause marketers to hesitate before embracing the potential of MMM. Nevertheless, the convergence of technology and methodology offers a compelling argument for this transition. Removing previous barriers allows marketers to examine campaigns, make data-driven decisions, and develop strategies based on seeing the whole picture.
While Touch Attribution has left a lasting impression on the marketing landscape, MMM emerges as the clear path forward. The rapidity of change within the marketing realm means that choosing MMM is not just beneficial, it’s essential for staying ahead of the curve. As marketers step into this new era, equipped with real-time data and comprehensive insights, the future of marketing data is brighter than ever. The transition may require time as marketers learn a new skill, but it’s a decision that will undoubtedly redefine the trajectory of their business.
