Marketing mix modeling (MMM) is here to stay for good. With privacy changes occurring globally, and third-party cookies on browsers, which were used to measure conversion, being phased out, businesses are turning to MMM for privacy-safe ways to measure ROI. A tried-and-true method, it assesses the impact of marketing without relying on personal information.
However, not all MMMs are equal. Using the wrong model for your business can lead to biased decisions that undermine your ROI.
In fact, new research by Hakuhodo DY Group and dentsu respectively, in collaboration with Google, finds that the use of MMM which doesn’t align with one’s business operations can cause as high as a 10X margin of error on calculations of customer conversion due to media investment.
For example, one study assumed that only brand advertising and performance campaigns affected the results of an online-offline business. Based on this, simulated data was generated and a simple marketing mix model, which disregarded any synergy between brand advertising and search marketing, was applied. As a result, the estimated brand advertising effectiveness was between 3X and 10X lower than the true value.
To help you identify a model that’ll let you make accurate marketing investment decisions and grow your bottom line, we pull back the curtain on MMM here to help you get the most out of it.
Your MMM is biased if it doesn’t mirror all your marketing activities and how your business actually operates.
Additionally, people may be mistaken about the capability of MMM. While it is a powerful tool, it is not a one-size-fits-all measurement solution. It should be part of your full stack of measurement solutions and used together with granular attribution solutions like Google Analytics 4 to evaluate your marketing investment accurately.
If you need help with the evaluation, you can always tap external experts who are familiar with MMM. Google is working with advertising companies and industry stakeholders to develop MMM data that is granular and accurate, and to come up with methodology innovations that contribute to MMM best practices. We also provide bespoke MMM-based consultations to help businesses make better decisions about their marketing investments.
MMM is a powerful tool. And when used correctly, it can help you measure, analyze, and improve your marketing performance to achieve your business goals.
Contributor: Masaki Yoshida, Video Solutions Expert