In today’s digital age, marketing has become more important than ever. With an emphasis on data and analytics, marketers and advertisers are realizing what customers are truly interested in and why. And yet with so much data, many organizations still struggle with converting that data into actionable insights. Certain solutions can be implemented in order to take the guesswork out of marketing in order to make better data-driven decisions.
That’s where Marketing Mix Modeling (MMM) comes into play. While every business is different, MMM is a tool that considers both controllable and uncontrollable variables to determine the best route for marketing budgets in order to maximize sales.
Marketing mix modeling can help resolve some of the challenges that marketers face each day, such as:
- Determining marketing effectiveness and return on investment (ROI)
- Establishing effective insights on future trends and variables
- Managing and allocating an effective budget
- Managing data quality from various channels, sources, and systems
Many Fortune 500 companies utilize marketing mix modeling solutions, such as P&G, AT&T, Kraft, Coca-Cola, and Pepsi. Yet, even smaller organizations have the opportunity to identify potential new areas of investment or even cut the budget in certain areas to maximize their marketing efforts. Here are three benefits of marketing mix modeling.
Evaluating Efforts and Effectiveness
Marketers should recognize the benefits of marketing mix modeling also provides an unspoken insight. These model solutions provide a detailed evaluation of the marketing efforts.
This means that organizations are able to identify key volume drivers, campaign effectiveness, and ROI. It’s no secret that marketing revolves around ensuring that these factors are identified and taken into account.
With a clear evaluation of current marketing efforts, organizations can then make better data-driven decisions that can have a huge impact on future campaigns and budgets.
Improve Planning Through Predictive Analytics
When considering the benefits of marketing mix modeling, predictive analytics is especially useful.
In today’s marketplace, marketing mix modeling is coupled with other tools, such as artificial intelligence (AI) and machine learning (ML). This marketing strategy provides a larger view into what the future of an organization’s marketing efforts looks like.
Remember that MMM takes into account many different variables. For instance, variables such as industry trends, seasonality, and the impact of advertising are considered.
Being able to predict the effectiveness of campaigns in the future based on MMM variables gives marketers a clearer view of what to anticipate and account for. Marketers can anticipate customer’s needs and desires to offer them more personalized campaigns.
Optimize Marketing Budgets
Most organizations have a budget in mind for their marketing and advertising (or should!) And as each marketer knows, it’s important to know how much is being spent on what campaign.
For example, if paid digital advertisements such as Google Ads lead to more conversions than TV advertisements, the budget should be shifted over to focus more on what is leading to more conversions.
One of the biggest benefits of marketing mix modeling is the ability to visualize budgets more effectively. With variables like past spending and business performance, you can see what has worked and what has not. As mentioned above, marketing teams can utilize marketing mix modeling to cut down on budget spending that isn’t working in order to move that to another campaign.
Data Quality is Critical to MMM Success
It’s important to understand that the quality of data gathered has a huge impact on marketing efforts. For instance, good quality data decreases risk and can result in better decision-making for budget spending.
Quality of data also impacts data analytics solutions. One of the biggest benefits of marketing mix modeling is a prediction of future marketing results. Yet if the data that is utilized in the model isn’t collated and analyzed properly, the model won’t be as effective.
With so many variables taken into consideration while creating the model, it is essential to ensure the quality of data is acceptable before jumping into marketing mix modeling solutions.
The Benefits of Marketing Mix Modeling for Your Organization
Each organization is different. However, there is no denying that the benefits of marketing mix modeling can be utilized for any organization. Essentially, there are three main benefits to MMM that can improve marketing effectiveness.
First, marketing mix modeling gives marketers a 360º view into their current marketing efforts. Even veterans of the industry can find that evaluation of their efforts is essential.
Next, artificial intelligence and machine learning are becoming increasingly important in MMM efforts for predictive analysis. Improving future marketing strategies allows organizations to prepare for multiple variables and address them with a plan ahead of time. That way, marketers are able to deliver the most optimal campaigns to customers, no matter the variable.
And last but not least, businesses can utilize the benefits of marketing mix modeling to optimize the allocation of marketing spend. Budget restrictions can prove to be quite the challenge, especially with a limited amount or a lack of quality conversions. MMM provides that top-down view of where money is actually spent, but also the results of that spending.
Additionally, MMM is constantly improving. With the quality of data analytics solutions and cloud-based migrations, data has become essential to organizations. With better data quality, marketing mix modeling also improves. Also, continued growth and utilization of AI and ML over the years have resulted in reduced cost, and now MMM is easier than ever to implement.
Optimize your path forward with the best marketing mix. At Pandera, we specialize in delivering data-driven solutions that help modernize and transform how our clients activate their data.
If your organization is interested in other benefits of marketing mix modeling and what Pandera can do for your company, please get in touch with us!