Why these 3 Marketing Mix Modeling Myths are wrong?

Marketing Mix Modeling has advanced significantly over the last years. But many still have outdated beliefs about MMM, based on what MMM was 5-10 years ago. In this article and in our recent social media commentary (such as this post ), we want to update general understanding about MMMs.

Nowadays, MMM is faster, more detailed and more useful than ever, even for companies with smaller budgets or those using fewer advertising platforms. In this blog post, we want to address the top 3 myths about MMM and update you on its current capabilities. Let's clear up some common misunderstandings and show how MMM can be a powerful tool in today's marketing landscape.

Myth 1: “MMM only provides high-level insights”

In the past, MMM was mainly used for broad comparisons of media ROI. For example MMM was used to analyze the effectiveness of TV versus Facebook advertising. It was usually seen as a tool for high-level annual budget planning, mainly due to the cost and effort needed to implement an MMM project. Therefore, it was a once a year project rather than a continuous marketing measurement solution.

Today, MMMs can provide much deeper insights into media effectiveness. Here’s two examples:

Omnichannel retailers can optimize media cross-channel campaigns (Brand campaign, Summer campaign, Back-to-school campaign, Black Friday campaign etc.). Modern MMM solutions provide you with granular campaign-level insights which enables you to:

• Compare campaigns against each other (e.g. Summer campaign vs Back-to-school campaign)
• Compare media effectiveness from one campaign to another (e.g. TV in Brand campaign vs. Black Friday campaign)
• Optimize budget allocation across campaigns, and media within campaigns

Performance marketing teams can track ROI of ad platform-level campaigns. In addition to tracking ROI of Facebook, performance marketing teams can use MMM to understand the ROI of prospecting campaigns vs retargeting campaign, or even the ROI of a specific prospecting campaign.

These detailed analyses make MMM not only relevant but crucial in tactical decision-making. Omnichannel retailers can now use MMM in campaign planning, and ongoing tracking of their campaign ROI. Performance marketing teams can use MMM to review digital media performance on a daily and weekly basis, and continuously reallocate budget to the activities which are delivering best returns.

Myth 2: “MMM is laborious to maintain”

Previously, Marketing Mix Modeling was done in projects. First there was months of data collection and cleaning, and then custom modeling work followed. Because it was done once a year, every MMM update was essentially a new project. Anyone who was part of this effort, got an impression that MMM is really laborious and difficult.

Luckily for all of us, things have changed. Today, data connectors have made it fast and easy to onboard and maintain MMM. Here’s how modern MMM solutions simplify the process:

1. Digital Media Data: Data connections are automated directly to ad platforms (e.g., Facebook Ads, Google Ads) meaning that all you need to do is authenticate the connection between the MMM solution and the ad platform. With this, you don't have to manually collect data from your online ad campaigns—it's all done for you.
2. Sales/Conversion Data: Similarly to digital media data, data connections are automated to sources of sales data, such as e-commerce platforms (e.g. Shopify, WooCommerce), or analytics tools like Google Analytics 4 (GA4). Sales data could also be in customer’s data warehouse - connection to that can be similarly automated. This automation makes sure that sales and conversion data are continuously updated without manual input.
3. Offline Media Data: Even data from offline marketing (TV, print, radio..) can be automated. If the offline data is in a data warehouse, data connection is automated to that source. If not, offline data can be connected using standard data templates that have a clear person in charge of them.

These developments make it possible to get continuous updates from MMM with little effort, so that marketing teams can focus on optimizing their activities.

Myth 3: “MMM doesn't make sense if you have less than 5M USD/EUR annual marketing spend and only 1-2 ad platforms in use”

There is a belief that MMM is only for big advertisers with full range of media in use. This used to be true - but not anymore. While MMM is still not for every single company, MMM is now accessible and beneficial for more and more companies. We have customers with less than 1M EUR/USD annual marketing spend getting lots of value from MMM.

The main reason for increased accessibility is that the business case for MMM makes sense in more situations:

1. Companies get more value from MMM today, as the insights are more granular. Marketing teams can make more decisions with for optimizing their activities, and thus drive more sales and profits. For example, MMM has only recently become relevant for performance marketing via ad platform -level campaign ROI tracking. This means that even if you only have one ad platform, e.g., Facebook Ads, in use, it might still make sense to use MMM, since you can optimize within the Facebook.
2. Cost of using MMM has come down. Data automation mentioned earlier in this article means that there’s less need for “internal resources” from companies. At the same time, advancements in data processing and modeling automation has brought costs of MMM solutions down

However, we always recommend to calculate the business case of MMM for your company. Here’s a guide for calculating the business case: Link

Conclusion

Marketing Mix Modeling (MMM) has changed a lot over the years and it has become easier to use and helpful for more types of businesses. Here's why it's time to update the outdated ideas about MMM and start using its new tools and capabilities:

• More Accessible: MMM isn't just for big companies anymore. Thanks to new technologies, even small businesses can use it to understand and improve their marketing.
• Better decisions with more granular insights: With modern MMM, you can see exactly which parts of your marketing are working well and which aren't. This means you can spend your money more wisely and get better results.
• Easier to Use: Modern MMM tools come with user-friendly interfaces and automated features, making it simple for anyone to analyze and optimize their marketing mix without needing advanced technical skills.

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