12 Best Practices for a Successful Marketing Mix Modeling Investment
By Brian Lange, SVP Analytic Consulting, Ipsos MMA
In today’s increasingly complex and faster-moving marketing environment, understanding the true impact of your marketing efforts and investments is more critical than ever. This is where successful Marketing Mix Modeling (MMM) comes in. MMM is a powerful analytical approach that helps companies allocate their marketing budget more effectively and optimize their Marketing Return on Investment (MROI) as well as sales results by measuring, evaluating and calculating the incremental value of the performance of different marketing activities.
Marketing Mix Modeling can be invaluable in driving incremental sales, stronger brand equity and improving MROI. However, important steps are needed to produce successful outcomes. Achieving winning outcomes are grounded in following a set of best practices during the implementation process. This blog will share twelve essential practices to help you get the most incremental value from your Marketing Mix Modeling investment.
1. Define & Customize Clear Business Objectives for Your Brand
The Right Approach:
The foundation of a successful MMM initiative starts with defining clear business objectives. Before diving into data collection or model-building, you need to align your MMM efforts with specific business goals and objectives—whether that’s increasing revenue, enhancing brand awareness, or understanding the drivers behind specific marketing channels.
The key is to identify well-defined business questions such as, “Which channels contribute the most to revenue growth?” or “What is the impact of TV advertising on our overall sales?” “How will we measure incrementality and how will we use it to drive adoption and usage across the organization?” Identifying the right stakeholders across the organization, including finance, sales, operations, agencies and key vendor partners, will help you establish the various layers of analysis needed to support these objectives.
The Wrong Approach:
The wrong approach treats MMM as just another out-of-the-box tool within the marketing organization, without a clear purpose or alignment across agency teams or the organization. When stakeholders view MMM as merely a tool to measure Marketing ROI, they risk missing out on the broader, more comprehensive business insights MMM can offer. They also often fail to establish important proof and validation metrics in terms of achieving measurable incremental gains in sales and brand equity.
2. Ensure Quality Data Collection, Validation & Automation
The Right Approach:
Data quality is core to any effective marketing mix modeling implementation as it not only influences what can be measured with confidence, but also is fundamental to model accuracy. To unlock the full potential of MMM, ensure that you’re gathering accurate, comprehensive data at the most granular level possible, ranging from sales, operations and media spend to external factors (like economic and seasonal trends, weather conditions, etc.) Establish robust data governance processes to maintain high data integrity and prioritize frequent validation to avoid errors and misinterpretations.
The Wrong Approach:
The wrong approach relies on inconsistent or incomplete data. The phrase “garbage in, garbage out” is applicable here. Without a solid data foundation, even the most sophisticated models will produce unreliable insights. Additionally, it’s crucial to ensure key stakeholders believe in the completeness and accuracy of the data—otherwise, you might hear the dreaded “I don’t believe that data” when you present the results.
3. Build Sustainable Data Processes
The Right Approach:
Implementing sustainable and repeatable data processes is an important component to maintaining the integrity and relevance of a successful marketing mix modeling investment. The most successful marketing mix models are backed by routinized, automated data collection, QA procedures and delivery processes, reducing the risk of errors and ensuring timely updates.
Effective data management processes are core to increasing the delivery speed of the insights. When working with third-party data providers and agency partners, you should collaborate with them to establish a streamlined process that is easily repeatable as new data becomes available.
The Wrong Approach:
On the flip side, relying on manual processes is a recipe for inefficiency, slowness and inconsistency. The more manual touchpoints involved, the higher the likelihood of discrepancies, making it difficult to trust or validate the model’s output. Operating as such makes it exceedingly difficult to work effectively at the speed-of-the-business that is required.
4. Define the Right Frequency and Cadence
The Right Approach:
Historically companies conducted MMM once a year, serving as a retrospective look at performance. However, with advancements in technology and data accessibility, you can now leverage MMM results more frequently, with leading organizations tracking attribution daily, weekly, or monthly and MMM—monthly or quarterly. This speed to insights enables marketing, finance, and their agencies to identify how marketing activities and trends are performing vs. their short and long-term financial objectives at the speed of business allowing for timely course corrections and strategic adjustments.
The Wrong Approach:
Using an annual time frame only reduces the granularity of insights and minimizes your ability to use MMM as a strategic tool throughout the year. Treating MMM as an annual report card misses the opportunity to understand throughout the year how your marketing is directly impacting upon brands minimizing the ability to drive more frequent decision-making and proactively adjusting to market changes as they happen.
5. Include a Diverse Set of Marketing, Promotional & Operations Drivers
The Right Approach:
An effective marketing mix model should account for all relevant marketing drivers, not just paid media (media mix). This means including offline activities such as store events, public relations efforts, influencer activities and sponsorships, in addition to online channels. A holistic approach captures the “complementary impact” and synergies/halo effects of different drivers and provides a more holistic view of your marketing effectiveness.
The Wrong Approach:
Limiting the model to only media variables offers a narrow view that may lead to omitted variable bias and misleading conclusions. Omnichannel data is essential for understanding the true impact of your marketing mix.
6. Understand External Factors
The Right Approach:
External factors such as economic, environmental and social conditions, politics, competitive actions, and seasonality can have a material influence on marketing performance. Including these factors in your model helps ensure more accurate attributions and reliable predictions. For example, home improvement retailers must consider interest rates and employment trends to accurately gauge marketing impact.
The Wrong Approach:
Ignoring all the factors beyond marketing tactics will skew results and lead to incomplete or inaccurate insights, making it difficult to identify the real drivers of performance.
7. Prioritize Granular Data
The Right Approach:
Granular-level data enables you to build an insights tower from the ground up, breaking down performance by campaigns, audiences, markets, customer segments, product categories, sales channels, or other key dimensions. With this level of detail, you can make precise recommendations and address different business needs across the organization and customer base. Looking at data through different lenses—such as new vs. existing customers, customer deciles/segment or in-store vs. e-commerce performance—helps to uncover nuanced insights.
The Wrong Approach:
A general approach that doesn’t consider these dimensions may overlook critical insights and fail to resonate with different stakeholders as well as glaze over specific opportunities and targeting strategies by customer segment.
8. Use MMM Results to Guide Future Investment Scenarios
The Right Approach:
Today’s successful marketing mix modeling programs are forward-looking, enabling companies to anticipate how to make better future investments that produce measurable sales and brand growth. Frequently refreshing your data allows you to visualize and respond to changing market conditions and capitalize on emerging opportunities. With this level of data accessibility, you can see what’s coming and use the results to guide future investment choices and adjust your strategy in real-time rather than relying on a backward-looking perspective.
The Wrong Approach:
The wrong approach would be to treat MMM as a static, once-a-year report card that looks only at past performance. This limits its effectiveness as a real-time decision-making tool and minimizes the value that can be derived from a market mix model investment.
9. Collaborate with Cross-Functional Stakeholders
The Right Approach:
Successful MMM implementation involves collaboration across internal and external teams, including finance, marketing, and sales, to create the most synergistic, impactful, efficient and effective campaigns. The more cross-functional your approach, the better the chances of securing buy-in that will produce optimal results that can be actioned and measured. MMM is not a one-size-fits-all solution, so you need to understand which parts of the organization are interested in specific results to tailor the analysis accordingly.
The Wrong Approach:
Attempting a one-size-fits-all approach will fail to resonate and may prevent meaningful adoption across the enterprise.
10. Test and Validate the Model Continuously
The Right Approach:
Validating incrementality is critical to adoption. Running test scenarios and validating results against actual outcomes is essential for ensuring the model’s predictions are accurate and actionable. Leverage the model to predict outcomes during in-market activities and refine it to improve accuracy.
The Wrong Approach:
Failing to test and validate can result in mistrust of the model and resistance to applying its recommendations.
11. Look Backwards, Then Optimize for the Future
The Right Approach:
The real value of successful marketing mix modeling lies not just in understanding past performance, but in optimizing for the future. Focus on translating model findings into executable actions that can drive business decisions that produce specific actions – as in revenue and brand equity, rather than viewing the analysis as a theoretical exercise that is overly focused on MROI. Use MMM as a decision-support tool that demystifies marketing’s impact on the business and supports future strategies.
The Wrong Approach:
Only looking backwards and not using insights to track true incrementality or for future planning significantly diminishes the value of your MMM investment.
12. Find a Thought Leading Partner
The Right Approach:
An objective marketing mix modeling solution partner whose only stake in the game lies in identifying the holistic mix of activities that will growth sales and strengthens your brand is critical to producing optimal results. Look for partners who come highly recommended by other company marketing, finance and analytic executives whose companies have benefited financially from working together with them.
Those consultative vendors should have deep industry knowledge and a track record of success in improving sales and brand results. Strong consultative partners bring relevant benchmarks, real-world case studies, and the ability to translate results into stakeholders at all levels within your organization.
The Wrong Approach:
Without external consultancy support, it’s easy to miss opportunities for improvement and growth that a seasoned partner could identify. MMM, on its own, is not just about the data, models, platforms or SaaS solutions. Many brands and companies have failed and lost out on business impact because they subscribed to a platform that did not offer any true ‘know-how’ or ‘how-to’ when it comes to understanding, translating, synthesizing, and embedding results and insights into the fabric of their organization. Successful MMM is more about ‘how’ to activate, evaluate, validate and optimize results into measurable financial results than it is about the outputs themselves.
Turn Your Marketing Data into a Powerful Tool for Success
These twelve best practices are important for achieving a successful marketing mix modeling investment. By focusing on clear objectives, ensuring high-quality data, and embracing a collaborative, future-focused approach from which real, incremental value can be measured and derived, you’ll be well-positioned to unlock the full value of your marketing mix modeling efforts.
If you’re considering an MMM investment or looking to refine your current approach, now is the time to explore your options with a trusted partner. Reach out to us to learn how you can turn your marketing data into a powerful tool for growth and success.
