Too often smart people get caught up in the details of the past and forget how quickly the future is moving…
I read another article about marketing mix modeling today and the commentary from the usual market research wonks. I laughed. I scowled. I shook my head. I wouldn’t have laughed but for the 356% growth MMA has experienced from this type of analysis in the past 6 years and more importantly, the over $10 billion in incremental revenue our clients have attributed to the work we’ve done with them during the same period. Their numbers. Not ours. Their references. Not ours. When I thought about that I smiled.
Yet the drumbeat from the market research wonks goes on. And on. And on. The wonks hold conferences and pontificate. Oh how they pontificate. They ramble on about ‘the death of marketing mix’. They pound the doomsday drums around data and methodologies. They try to build bigger, louder drums. “Marketing mix is too slow.” “Marketing mix is too pricy.” “Marketing mix is too hard to ever get right because the data is so bad.”
This type of analytics, when done right, produces measureable value – Big Time
Last year five of our larger clients produced over $1,100,000,000 in incremental revenue on slightly better than $15,000,000 in investment. Their numbers – not ours. That’s better than a 70 to 1 return on their investment — arguably the, or one of the single best investments they made across all aspects of their businesses last year. Not surprisingly each renewed and have integrated the approach and solutions as an integral part of their business planning processes. And it probably won’t come as a shock that they decided it was worth further investment. As a whole they grew 45% with us over last year. And why not? It’s fun making money! And that’s exactly what they are doing.
Marketing Mix Modeling has Evolved and will Continue to Evolve – Enter Commercial Effectiveness
The wonks aren’t completely wrong in their diatribes. But instead of being a part of the solution they chose to continue to focus on the problem. Things have changed when it comes to measuring marketing effectiveness. Things had to change because marketing has become ever so entwined in so many other investment channels. So, it shouldn’t come as any surprise that the $1,100,000,000 in incremental revenue wasn’t derived from what is sometimes termed the “old-school” marketing mix, often linked to that which is regularly conducted in CPG– it couldn’t be. Measurement in silos produces bad numbers and similarly bad investment decisions. Not because the math is wrong but because so many things (and not just marketing things) work together. More so now than ever, marketing is part of an overall commercial investment program and needs to be measured in the context of overall commercial investment effectiveness. Same with digital by the way – I dare you to measure it in a silo on its own… actually, don’t. If you chose to omit and misattribute the upstream marketing awareness channels that direct consumers to digital programming you will actually not only lose customers but negatively impact on your brands. But that’s a topic for another discussion.
Don’t blame the data… it’s there, you just have to know how to get and harmonize it
And… it wasn’t business as usual with regard to data. Yes – data is hard – but this is also the 21st Century. If you look around you’ll notice there has been a proliferation of “big data” driven companies. They are processing not megabytes and gigabytes of data but terabytes and even petabytes of it. What companies need to mine its value are experienced partners who regular thrive working on identifying data needs, finding the data, collecting and harmonizing it at the most granular levels available. You’ve got to expect “bad data” and be prepared to deal with it – because there’s a lot of it.
There are two problems with “big data” as it relates to analytics today. First – most analytic companies don’t have either the storage or processing capacity to handle the vast amounts of continuous data coming from dozens and dozens of streams necessary to properly evaluate the overall viability of marketing within the context of the holistic commercial investment strategy. And inversely with “big data” companies most of them don’t have the expertise in aligning data to support analytics nor the analytic capabilities focused on solving the marketing mix (or what we call commercial effectiveness) opportunity. But both problems are solvable.
Winning in this space means dealing in hard numbers supported by measureable facts. It also means evolving to a marketplace that needs predictive analytics in real-time supporting holistic measurement and investment decision-making. And you can win. Our clients are winning every day with commercial and marketing investment solutions. Just ask them.