Key points:
1. Market mix modelling (MMM) becomes useful not just for the CMO, but also the CFO and the board as it evaluates all drivers of sales including COVID, economy, pricing, seasonality, etc. as well as media.
2. Contemporary MMM has come along way from the old annual updates taking months to bear results - these days you can use automation + machine learning and be up and running with a pilot within 4 weeks, and monthly updates that take a few days.
3. Visualisations have also become much better - reporting dashboards updated in the cloud, online accessible forward facing planning and optimisation tools.
4. The rise of in-housing of MMM in global enterprise clients.Social media, content, influencer marketing, TV, radio, print, events and more. These days, us marketers are lucky to have such a vast array of options at our fingertips, each channel offering a unique set of opportunities to connect with consumers. With that infinite universe, however, comes a need to evaluate the effectiveness of each advertising channel in achieving our goals, so that we can optimize otherwise endless spending.
Media mix modeling is what most industry professionals call this marketing analytics technique, but I find that market mix modeling is far more descriptive as a term. If we’re doing our jobs right, we don’t just consider media, we’re constantly looking at an entire market—its seasonalities, pricing, promotions and more. And because we work within a landscape that’s dynamic and uncertain, we need a type of model that takes these variables into account.
These days, inflationary pressures, stock issues, and changing media costs certainly aren’t making our jobs any easier. But the ability to have a robust forecast of performance enables us to think on our feet and react accordingly—as long as we’re working with modern market mix modeling. Now, you may be wondering what are the markers of a modern marketing mix, and what are the go-to-market attributes of brands that are progressive in their marketing mix. I’m glad you asked. Here’s the answer.
Be aligned with business outcomes and changing market conditions.
One key aspect of a modern marketing mix is the possibility to be adaptive to the desired business outcome. Imagine, for example, the board comes to you with the pressing need to generate sales in the short term. The mix needs to be flexible enough to deliver those short-term results, but it can’t neglect long-term growth in the name of focusing on the now.
The key is to be agile and plan for the moment. By that, I mean thinking in terms of broader categories, rather than focusing on specific tactics like linear, CTV or social. Optimizing fluidly across “video,” for example, businesses can adapt and deliver objectives while not harming long-term growth. It’s a more flexible approach that helps you make data-driven decisions based on current performance, market conditions and consumer behavior.
Value quick measurement.
You can be perfectly aligned with the ideal business outcomes and the changing market conditions, but none of that serves a purpose if you can’t measure channels and use this evidence to define what works best for your brand. Thanks to new automation and technology solutions, it’s easier than ever to measure more quickly and more frequently—and then act on it.
A modern model is built on automation and technology solutions that can streamline your marketing efforts and provide speedy insights into your campaigns’ performance. Only then you will be able to do scenario planning, assess the economic risk and forecast different outcomes in changing market conditions. In other words, get more profit out of your marketing budget.
Avoid outdated rules.
Speaking of marketing budgets, there’s been much ink spilled about the ideal brand split, with many taking the Binet/Field 60:40 rule out of context and using that as a hard and fast split. If you’re not familiar with it, this split suggests you should spend 60% of your budget on brand building and 40% on performance-driven tactics. Actually, this is an average of the study Binet and Field conducted (which aligns with our own benchmarks pre-Covid-19), but if you dig deeper into their work, you’ll see they recommend flexing this by category, position in the market, etc. What we have measured is that after Covid there has been a shift in consumer behavior and the optimal mix has seen an increase in performance-driven tactics.
Instead of going with the aggregate 60:40 rule, take the time to consider the unique market position, sector and audience of your brand (as Binet and Field suggest). All of these factors will significantly impact the brand split. For some, it will be 90:10. For others, 50:50.
Similarly, outdated tactics have got you following arbitrary distinctions between digital and traditional marketing. In today’s world, 80% of all buying can be digitalized in some form or the other, and the lines between traditional and digital marketing have blurred. Therefore, it is essential to focus on what works best for the brand, regardless of whether it’s a traditional billboard or a social media ad.
Engage with finance teams.
In times of contracting markets and increasing costs, P&Ls are doomed to be reviewed and scrutinized more frequently. With marketing budgets often seen as “easy” to reduce, it becomes vital to ensure every investment is justified, evaluated and optimized. To do this, you need to make sure finance teams are key stakeholders in the marketing process. Build confidence in the value marketing can deliver, not only in the long term but in the immediate future too.
In doing this, quick measurement will come in handy. Suppose this evidence is collected in days instead of months. In that case, you can use it to determine where to allocate budgets, what works best and how to act on it—all with impeccable fluidity, allowing you to deploy new tactics, content and channels in the blink of an eye. And if you do need to cut budget, at least you can count on these tools to indicate where it’ll have the least impact.
Just like making the wrong decisions off an outdated model could lose you a significant portion of your media revenue, applying a modern market mix can pay off big time. Set your business up for success by ensuring a fluid process where you can allocate budgets, target audiences, and select channels with agility—measuring their effectiveness in days rather than months, and making adjustments as needed. And don't forget: engagement and socialization of results and actions across the organization, particularly with Finance, is critical for ongoing success.