Marketing Mix Modeling and Multi-Touch Attribution: Just One is Not Enough
For marketers and C-suite stakeholders looking to understand today’s key marketing analytics tools and where they intersect, MarketShare offers a simple primer on marketing mix modeling, multi-touch attribution, and how the two work together to help brands make more effective decisions. For more on the two analytics methods and how to maximize their effectiveness, download the longer MarketShare brief.
Marketing Mix Modeling: Analytics for Senior Decision Makers
CMOs and their lieutenants use marketing mix modeling (MMM) to understand how the current mix of marketing investments will impact sales over mid-to long term horizons, and to see how changes to their marketing portfolio could impact efficiency and growth. Specifically, MMM ask whether current marketing investments will hit annual targets; and how to allocate marketing resources to maximize sales or returns over a mid- to long-term horizon.
To achieve these insights, marketing mix modeling might answer such questions as:
- What is the 6-24 month impact of the current marketing investment portfolio?
- How would changes to the portfolio change the overall impact of marketing?
- How could a given marketing plan influence brand equity?
- How does advertising for one brand impact sales on other brands in the same product line?
- How do non-media “levers” like sponsorships, events, and pricing influence sales?
- What is the influence of factors outside the brand’s control, like the state of the economy, gas prices, and the weather?
Marketing mix modeling works by looking at statistical relationships between the factors that influence sales, and the actual outcomes they drive. At its best, MMM is also able use those insights to predict what should happen if a marketer changes any of the investments in the marketing portfolio.
Multi-Touch Attribution: Guide to Marketing Execution
Of course, strategy alone won’t drive sales: the right execution is critical. To implement strategies effectively—across campaigns, placements and creative—brands need tactical insight on how to best put strategies into effect. For this, marketers look to marketing attribution, which examines how specific consumer engagements impact sales— to help marketers optimize interactions along the customer journey.
Questions that attribution can help answer include:
- How does ROI vary by campaign, ad placement, or type of addressable media?
- Which are the brand’s most effective marketing placements, at any given time?
- What is the incremental value of additional online impressions or clicks?
- How does a customer’s purchase history or target segment affect the impact of marketing?
- How effective is a given ad creative?
- What is the optimal network, spot length, daypart or pod level for a TV ad?
Because attribution provides answers to very granular questions, it relies on equally granular data from directly observable sources—such as CRM data, anonymous cookie data, or first-party site metrics.
Based on the answer to these and related questions, attribution helps marketing teams guide short-term media buying and creative decisions. It can also guide automated, programmatically-based advertising as well.
Complimentary Analytics: Marketing Mix and Attribution Together
While both MMM and attribution are highly powerful tools, neither can answer the full range of marketers’ critical questions alone.
Multi-touch attribution leverages granular data to deliver powerful, specific insights into the effectiveness of marketing tactics. However, it is not designed to guide decisions around areas such as long-range planning, the impact of marketing across a family of brands, and the influence of non-marketing factors—all of which lack a clear “dotted line” of data connecting marketing influences with outcomes. These areas call for marketing mix modeling, which relies heavily on analyzing correlations between multiple factors.
At the same time, marketing mix modeling works at a 10,000-foot level that’s far removed from the granular analysis needed to guide effective marketing execution. Only attribution will provide marketers with the “deep dive” to guide specific tactics.
To both guide long-range strategies and to execute them to best effect, brands need to use marketing mix modeling and attribution in tandem.
To learn more about marketing mix modeling and multi-touch attribution work together, download the complete brief now.