What is the Value of Marketing Mix Modeling to Planning? Part 2: Monthly and Campaign Budget Optimization

February 28, 2024 | Eeva Karhu, Carmen Bozga

What is the Value of Marketing Mix Modeling to Planning? Part 2: Monthly and Campaign Budget Optimization

Following our deep dive into annual marketing budget optimization with Marketing Mix Modeling (MMM) in the first part of this series, we now turn our focus towards the granularity of monthly and campaign budget planning. This approach empowers agencies and their clients to fine-tune their marketing strategies in real-time, ensuring that every dollar spent is optimized for maximum impact.

The Flexibility of MMM in Budget Optimization

MMM offers unparalleled flexibility in budget planning, allowing for adjustments that can significantly enhance marketing efficiency and effectiveness:

  • Monthly Budget Optimization: Beyond annual planning, MMM enables marketers to adjust their strategies monthly or even weekly. This means that insights from recent market trends, consumer behavior changes, and past campaign performances can inform the allocation of the next month's budget, ensuring that marketing efforts are always aligned with the latest data.
  • Campaign-Specific Budget Planning: Each media campaign has its unique goals and ad platform specific targets. MMM allows for the optimization of budgets on a per-campaign and per-ad platform basis on a weekly level, ensuring that investments are allocated in a way that maximizes the potential and reaches the set targets. A possibility to optimize budget allocation during a campaign enables agencies to react early enough with possible adjustments to campaign level budgets.

Example: Optimizing the length of an Easter campaign. The results for a 2 week campaign are predicted sales increase by +320K€.

Delving Deeper into Optimization Strategies

With MMM, agencies can offer their clients a comprehensive toolbox for strategic budget allocation:

  • Reaching Sales Targets with Precision: MMM predicts how additional marketing investment impact sales. This predictive capability ensures that budget increases are made with a clear understanding of the expected outcomes, enabling a strategic approach to hitting sales goals.
  • Strategic Budget Distribution Across Planned Campaigns: By analyzing historical data and market trends, MMM helps determine the optimal allocation of marketing funds across various planned campaigns. This ensures that each campaign is adequately funded to achieve its specific objectives without overspending. In practice, this involves a strategic split between brand-focused and tactical campaigns, emphasizing the importance of timing in budget allocation to maximize impact.
  • Weekly Budget Allocation: The ability to allocate investments on a weekly basis allows for even more refined budget management. MMM can guide weekly spending decisions based on the most current data, enabling marketers to react swiftly to market changes and monitor closely weekly level performance on ad platform level. This also enables agencies to plan the length of specific campaigns, what would be the optimal length of a campaign.
  • Continuous vs. Burst Campaigns: MMM also aids in deciding how much budget should be allocated to continuous versus burst campaigns in total and on ad platform level. This analysis can significantly impact the effectiveness of marketing efforts by ensuring that the timing and intensity of campaigns are aligned with consumer behavior and market trends.

The Strategic Advantage of MMM

Implementing MMM for monthly and campaign budget planning offers a strategic advantage by allowing for a more agile and dynamic approach to marketing investment. This methodology not only enhances the ability to meet and exceed sales targets but also ensures that marketing budgets are invested in the most effective manner possible. Agencies that utilize MMM can offer their clients a data-driven pathway to success, navigating the complexities of the marketing landscape with precision and confidence.

Moreover, opting for a SaaS-based MMM solution offers the advantage of continuous, real-time insights, allowing agencies and their clients to fine-tune their marketing strategies with an unprecedented level of detail. This continuous approach to MMM enables a daily level of granularity in decision-making, empowering marketers to swiftly adjust to market dynamics, optimize spend across campaigns, and allocate budgets with precision on a day-to-day basis. This agility is especially beneficial in today's fast-paced market, where the ability to respond to consumer behavior and competitive movements quickly can significantly enhance the effectiveness and ROI of marketing investments.

Conclusion: Navigating the Future with Data-Driven Insights

As we continue to navigate the ever-evolving marketing landscape, the importance of a flexible, informed approach to budget planning cannot be overstated. MMM offers the insights and flexibility needed to optimize marketing budgets at every level. From adjusting monthly allocations to fine-tuning campaign budgets, MMM provides the tools necessary to ensure that every marketing decision is backed by data-driven insights.

In the final installment of this series, we will explore the long-term strategic benefits of MMM, focusing on continuous tactical budget optimization with MMM. Stay tuned!

Curious to learn more? Book a demo.

Agency Marketing Mix Modeling

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