Part 2: Why to use MMM
What are the use cases of benefits of Marketing Mix Modeling
Why to use MMM
Lesson 2.1 - Use cases of MMM
In this lesson (6:34)
- Using MMM to get the big picture in marketing effectiveness
- Recognizing bigger trends
- Allocating the budget based on MMM results
Get the Big Picture
Today, marketers have to manage a plethora of different channels and campaigns, which tend to overlap each other. At the same time marketing data is becoming more and more fragmented, which means the scope of the results and reports the marketers get is typically quite narrow.
Granular insights are basically good IF they are accompanied by comparable metrics so that you can compare if an ROI of 3 is good, average or below average.
As MMM collects and models all marketing and business data in one place, it provides the ability to take a step back and look at where the money is going, what is it doing there, and how these results compare against each other.
Defining bigger trends with MMM
Looking at things on a broader scope over a longer time span unlocks another use case: In addition to knowing what happened, you start to also understand why something is happening.
Let’s say that a report from your previous marketing campaign tells you the ROMI for Channel 1 was 3 and the ROMI for Facebook was 5.
Both are decent numbers, but your boss wants to increase the marketing-driven business impact for the next quarter. Should you:
- Pull investments from Channel 1 to Facebook
- Pull investments from Facebook to Channel 1
- Keep everything as is
- It depends
(Answer coming up later on in this lesson)
Making data-driven decisions in marketing
The third and probably the most important use case of MMM is to understand where the effectiveness is going to be tomorrow.
Coming back to our previous example and our answer to the question, we’re going to interpret the current situation and predict what the marketing effectiveness will be tomorrow.
The MMM results build a case for pulling investments from Facebook to Channel 1 for three reasons, even though the ROMI was better for Facebook than it is for Channel 1:
- We know that increasing investments in Facebook decreases its ROMI
- We interpret that Channel 1 has an indirect effect on baseline growth
- We extrapolate that the ROMI for Channel 1 will keep on growing over time
And so our answer would be B.
Ready for the next lesson?