All marketers want to know what is driving their sales, what their ROI looks like, and how they can optimize marketing investments. Marketing mix modeling (MMM) is possibly the most accurate way to directly compare marketing investments and gain meaningful insights on their performance.
Marketers today can rely heavily on MMM to navigate the new world of data privacy. Today’s media landscape makes it a challenge to predict marketing performance, but MMM offers the solution.
Here’s why marketers should look towards MMM to achieve better insights to make data-based decisions.
Why MMM is More Important Than Ever
Tracking marketing analytics has been seriously impacted by new privacy changes around iOS and cookie tracking. Both of these changes put marketers at a disadvantage when it comes to accessing customer data. Luckily, MMM can be used to combat this loss of data.
Apple’s Privacy Features
Part of Apple's iOS 14 and iPadOS 14 updates include a range of new privacy features. The aim of these features is to let users make more informed decisions about their data.
The updates offer users more privacy and data protection. Apple’s app tracking transparency update requires apps to get permission from users before they can track their data across apps and websites owned by other companies. With this update, users can make changes to their data and see which apps are requesting permission to track their data.
This gives users more control and privacy over their data.
Third-party tracking cookies are going away by the end of 2022. This will have an enormous effect on tracking consumers and understanding their behavior. Once third-party cookies are phased out, Google won’t be putting new user-level identifiers in place. Instead, marketers will need to replace third-party cookies with first-party data.
In this new privacy-focused world, businesses may struggle to effectively reach potential customers and generate a decent ROI on marketing efforts. The good news is that MMM can be used as a solution to the problems associated with the iOS 14 update and Google's cookie tracking update.
Opportunities of MMM
With increased privacy, MMM offers various opportunities to help businesses enhance their marketing investments. Here are three broad areas that MMM can deliver these opportunities.
With the right MMM approach, businesses can access superior data. Better data refers to more accurate and more granular data.
We can’t rely on third-party data sources to learn about customers, but we can use MMM to gain meaningful insights. MMM models allow businesses to understand exactly how customers are behaving in relation to their different marketing efforts, and what factors are driving sales.
MMM data can include response data, media metrics, marketing metrics, and various control factors. The data used to fit MMM is generally historical weekly or monthly aggregated national data. Geo-level and even store-level data can also be used.
By using a model with a strong data and reporting format, businesses have the opportunity to gain far better data insights around their customers.
MMM today offers opportunities for better models to be applied. Regression model forms are widely used in MMM. These models have a major impact on the reliability of MMM.
There are various model approaches that can be applied in MMM. Different options offer different data insights and achieve different outcomes. By using different data and controlling different variables in the models, businesses can gain the exact insights that they’re looking for.
The right model type can be used to navigate this new world of privacy more easily.
Model Evaluation Through Simulations
Marketers can also evaluate the performance of different types of models under different scenarios to help them achieve accurate insights. Simulation provides more control over conditions in the marketing environment. This also gives you a more convenient environment for virtual experiments.
With this simulation, you can gain insights into the marketing environment and see how well different models capture different aspects of it. This helps marketers gain better insights and truths around marketing performance.
Use MMM for More Transparency
MMM is one of the best ways for marketers to gain more transparency over their efforts and investments. And while looking at MMM as a single source of truth is not always the case, you can control different models and run MMM tests to help you gain more accurate perspectives from the model.
The right MMM solution will help marketers achieve a better Return On Investment (ROI), a greater Return On Ad Spend (ROAS), and make more strategic measurement-based decisions.
With the right MMM solution, marketers can access granular data, optimize models according to their business context, and enhance transparency with tests and controls. By enhancing the model with the right approach, marketers can use MMM to overcome privacy and data issues in today’s challenging digital environment.
In today’s world, it’s more important than ever to find ways to predict and accelerate marketing efforts and investments. MMM allows us to calculate and understand the relationships between marketing investments and business performance. This can all be followed in real-time to help marketers see the full picture.
This enables businesses to optimize their marketing spend, make more strategic decisions, and achieve a stronger ROI.