Why should you combine Media Metrics with MMM insights?

The quest for ROI insights

Are you a Lord of the Rings fan? Well, in any case we are! In the saga, there are ancient stones called “Palantir”, which enable the users of the stone to see anywahere in the world. You touch the stone, close your eyes, and you can roam the surrounding environment and observe its events. It’s like a crystal ball that shows you EVERYTHING (with some limitations).

We noticed some time ago that combining Marketing Mix Modeling and Media Metrics together brings marketing professionals similar super powers! Our CEO immediately branded it internally as the Palantir of marketing.

What do we mean by this? Let’s dive into it!

MMM’s super power, and limitations

One of the main objectives of Marketing Mix Modeling is to estimate how much incremental sales marketing is driving overall, and what is the sales contribution of each medium. This means that MMM is great answering the “what”-question: What is the ROI of a marketing channel or campaign? Since MMM also estimates response curves for each marketing activitiy, MMM is also great at answering “what if”-questions: If I change my spend by $500k, what will happen to my marketing-driven sales?

This information makes MMM an important tool for every marketer who is interested in maximizing the ROI of their marketing spend. However, there’s a limitation in MMM. MMM is not always great at answering the “why”-question: Why did the ROI of a marketing activity suddenly increase/decrease? Here’s where Media Metrics can help!

What are Media Metrics?

Media metrics are ad platform -reported data which can be used to complement MMM results. Media metrics can be organized into a 4-step funnel, as illustrated in the image below.

Steps in the funnel are:

• Impressions: The number of times your ad is displayed.
• Clicks: The number of times users click on your ad to go to your website.
• Conversions: The number of purchases made.
• Conversion Value: The total monetary value generated from conversions.

At each stage of the funnel, you can analyze the performance ratios from one step to another, as illustrated in the image below. This analysis reveals if there has been sudden changes in how people have converted from one step to the next.

Key performance ratios are:

• Click-Through Rate (CTR): Calculated as Clicks / Impressions. CTR measures how effectively your ad is driving people to your website.
• Conversion Rate: Calculated as Conversions / Clicks. This metric shows how well the people ending up on your website are converting to buying customers.
• Average Order Value (AOV): Calculated as Conversion Value / Conversions, AOV helps you understand how much each customers is purchasing your products on average.

It is also possible to analyse cost efficiency metrics, if each funnel step is divided with the spend in the marketing activity, as illustrated in the image below.

Cost efficiency metrics are:

• Cost Per Mille (CPM): Calculated as Spend / 1,000 Impressions
• Cost Per Click (CPC): Calculated as Spend / Clicks.
• Cost Per Conversion: Calculated as Spend / Conversions.
• Return On Ad Spend (ROAS): Calculated as Spend / Conversion Value.

How can Media Metrics help you?

If the ROI of a marketing activity has changed, you can analyse if the ROI increase or decrease can be explained by changes in any of the Media Metrics described above.

For example let's say there's a noticeable ROI increase in your PMAX campaigns. When you analyze Media Metrics, you might discover that this boost is due to a +15% improvement in average order value (AOV). This means that each conversion is generating more revenue, which directly impacts your overall ROI. Increase in AOV might indicate that you have been able to get higher value customers to your website, or it could mean that you have done changes to your website recently that are now driving increases in AOV. These second order questions are of course interesting avenues to analyse even further!

Similarly, if your Bing Shopping campaigns are showing higher ROI, a closer look could reveal a +20% improvement in conversion rate. This indicates that a larger proportion of clicks are converting into actual purchases, enhancing the efficiency of your ad spend.

As an additional example, a +10% CPC improvement for Facebook campaigns might be driving their ROI increase. To investigate this further, you could check if you have adjusted your creatives recently. E.g., did you find a better call-to-action or image?

Media Metrics in an MMM dashboard

In the Sellforte MMM dashboard you can see all of this in detail. For example, if you notice an increase in your PMAX ROI, you can check each stage of the funnel in order to understand what caused this change. Looking at these metrics (E.g. conversion rate, click-through rate, average order value etc.)

Conclusion & Key takeaways

Incorporating media metrics into your MMM dashboard provides a richer, more nuanced understanding of your marketing performance. When you analyze the funnel stages, performance ratios, and cost metrics, you can uncover the "why" behind your ROI and make informed decisions to optimize your campaigns. With Sellforte, you have the capability to delve into every aspect of your marketing efforts, from impressions to conversions, and understand what drives changes in ROI. This holistic approach ensures that you not only see the end result but also comprehend the journey.

• Comprehensive Analysis: Our product enables you to analyze every aspect of your marketing performance, from impressions to conversion value, providing a complete and detailed view.
• Actionable Insights: Identify specific drivers behind ROI changes by examining metrics like average order value, conversion rates, and cost-per-view, allowing for informed and targeted optimizations.
• Holistic Understanding: The combination of MMM and media metrics offers a deep, comprehensive insight into your marketing performance, empowering you to make data-driven decisions and continuously improve your campaigns.

Curious to learn more? Book a demo.