Why treating MMM as just another data science project can lead you astray?

April 04, 2024 | Lauri Potka, Carmen Bozga

Why treating MMM as a just another data science project can lead you astray?

Marketing Mix Models (MMM) helps marketing teams understand marketing’s incrementality and evaluate effectiveness of marketing activities across media and campaigns. It enables marketing teams to allocate their marketing budget to the highest ROI activities, which ultimately should lead to more sales and profits for the company.

MMM is based on complex data science methods, which can lead companies astray in their first steps towards implementing MMM. With increased availability of open-source MMM libraries, such as Meridian and Robyn , it’s more tempting than ever to just “plug in your data and see what comes out”. However, starting your MMM journey with the mindset that it's just another data science project can be a slippery slope, potentially causing you to waste your team’s resources and time.

Where can things go wrong?

You haven’t checked the value of MMM to your company with a business case.

The reason for implementing MMM is to drive more sales and profits through better allocation of marketing budget across different campaigns, different channels, different geographies, different brands and so on. However, not all companies have sufficient marketing spend, or sufficient marketing complexity to get enough benefits from MMM to justify the cost. You should evaluate how much incremental sales and profit MMM is excepted to bring and how that compares to the investment of doing MMM. If the expected additional sales and profit from MMM are small compared to the investment, you should spend your time on higher value projects.

However, should the business case reveal that MMM could significantly enhance the sales and profit of your company then you should commit to go all-in. Implementing MMM cannot be treated with half measures or as an experimental side project. It demands a holistic commitment from the organization, not just financial investment but also the right blend of skills, technology, and executive support. To achieve this you need seamless integration into your business strategy and decision-making processes, supported by a culture that values data-driven insights. This is the kind of initiative that, when executed with dedication and precision, it doesn’t just add value; it reshapes the competitive landscape, setting your company apart as a leader in marketing intelligence.

You must be asking yourself, how do I build a business case for MMM? We actually have the entire roadmap for you here .

You don't have the buy-in from the sponsor.

Getting some type of Marketing Mix Model up and running is very easy with the tools available today. Building a Marketing Mix Model that a CMO approves for use in major budget reallocations is hard. It’s important to understand that the budget reallocation decisions made based on MMM can lead to people getting promoted and celebrated, or to people getting laid off. Therefore, implementing a MMM solution comes with a lot of responsibility. The accuracy, reliability, and insights provided by the MMM are crucial because they directly impact the company's financial health and the careers of those involved. Hence, while the technical aspect of setting up an MMM might be straightforward thanks to modern tools, the challenge lies in ensuring its outputs are robust enough to guide high-stakes decisions.

You don't have the buy-in from the users of MMM.

It is important to consider the end users of the solution: the marketing team. Who will use the MMM? They must be involved from the start because, if they are not, you might be ending up with something that will not be used by anyone.

The goal is not to impress with the complexity or the novelty of your MMM solution but to create something that the marketing team will actually use, something that makes their jobs easier and more productive. Engaging with them from the beginning, understanding their needs, their challenges, and what they hope to achieve with MMM, makes sure that the final product is not just a showcase of technical knowledge but an indispensable tool. You can find out more about how MMM helps marketing teams here .

What should you do instead?

Evaluate the value of MMM to your company with a business case. As we mentioned previously, building a business case is crucial before even starting to think about your MMM implementation. Evaluate the value of MMM to your company with a business case. Is it worth it?

Define the use-cases in which your company would get value from MMM. This involves a detailed assessment of your marketing strategy, including the channels you use, the allocation of your budget across these channels, and how these elements vary across different campaigns and time periods. For example, your marketing approach for key sales periods such as Black Friday might be completely different from your strategy for summer campaigns, not just in terms of creative content but also in how you allocate your budget to various marketing channels. If your marketing strategy includes different strategies for different campaigns or seasonal activities, your MMM solution should be capable of handling these nuances. It also means being able to adjust your marketing budget recommendations based on the unique context of each campaign, making sure that you are investing in the most effective channels at the right time.

✅ After you have the business case in place and the use-cases defined, get management approval to start a proper project for adopting MMM.

Curious to learn more? Book a demo.

Marketing Mix Modeling

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