If you are not, you could be throwing large portions of your marketing investments away, in fact you probably are wasting considerable effort and resources, that could be working hard for you.
A typical marketing effort uses multiple channels in a mix, online, print, TV, etc.. if this is you, then you really should be modeling the performance of each channel and how they relate to each other. And crucially, how they contribute to your overall goals and KPI’s, be they sales or branding.
Why Every Marketer Should Consider Marketing Mix Modeling?
The marketing activities you employ are complex and expensive by their very nature, as they use multiple channels to reach customers. But how do you know what the return on marketing euros is from each channel? Is investment on TV the same value as investment on Print? Where are the customers you want to reach, do they respond to the channels, media and techniques you use? How does seasonality change the effectiveness of each channel?
By answering questions like these you can explain past performance with great certainty, understanding which messages and elements of the marketing mix made the biggest impact. And with the right amount of data, the right quality of data and the right methods you can have a look into the future, to plan how you should be spending your marketing euros in future campaigns to get the best bang for your buck.
You want to maximize your ROMI, you want to show your bosses that you have the best information at your fingertips, and that you are getting the best results based on, cold hard facts.
How Is Marketing Mix Modeling actually done?
As an analytical and statistical process, modeling is based on data, your data from your campaigns. Each factor of your marketing efforts produces a stream of outbound and inbound data, marketing spend and product sales data, loyalty data and in some cases external or open data. The external data can be in the form of third party enrichments such as demographic and behavioral research, or simply weather data.
Consider that, most of the data that is used in MMM (Marketing Mix Modeling) is your asset in the first place, so you can start to improve your performance using a resource that you already own. This is a sensible use of your assets, that you have already invested considerable time and money in.
At Annalect we take those data and combine them with external data to produce a breakdown and detailed decomposition explanation of how each element in the marketing mix contributed to your goals. We deliver a detailed report and description of what happened and how you should act in the future. We identify the portion of sales that is your base, and then define all other elements that are produced by your marketing mix, building up to total sales. See the graph below.
Typical Marketing/Sales Decomposition
You can choose to perform modeling on any frequency that suits your business process, it could be twice a year for broad branding campaign efforts, or it could be monthly for more granular updated to FMCG & Travel industry marketing, where the cycles can be much faster and more complex than other industries.
What Are the Benefits of Data-Driven Marketing?
The improvements to your actions can be considerable, and depend on your starting point. Typically clients can enjoy an 18% increased effectiveness in media spend. These are major benefits to your marketing efforts, and all from the analysis of existing assets.
Our service also delivers a set of recommendations on how to act in future campaigns, and how to allocate marketing resources, by type, channel and season. This acts as a solid roadmap for your strategic and tactical actions in the near horizon.
Contact us and together we can scope a modeling service that is tailored to your needs and KPI’s, together we can make you a Data Driven Marketer!
For further reading please see our research on the state of data driven marketing in Finland.
*This blog post originally appeared on OMD Finland’s blog.