Marketing Mix Modeling

The core benefit of Marketing Mix Modeling is its ability to help brands and advertisers understand their marketing efforts individually and use those insights to optimize their budget across marketing channels. By understanding your marketing campaigns both holistically and by measuring ad performance individually, you can uncover which channels are driving growth and plan accordingly. Consumer data and channel performance continue to become more and more complex with changes to privacy regulations, fragmented customer journeys, and siloed data. Having a way to accurately understand the impact of individual marketing decisions is paramount to driving incremental ROI.

Marketing Mix Modeling is only effective when brands are enabled to activate insights they garner from their data. Moreover, marketing mix modeling is not always the right solution for every brand. We’ve created guides on how to get the most from MMM, but put simply, MMM is recommended for brands that have goals centered on long-term and ongoing campaign optimization. Aside from that, it is also important to understand the methodology. Circana’s Marketing Mix Modeling uses data at an individual store level, providing a higher level of granularity and accuracy. Other models use DMA (Designated Market Areas), which rely on defined geographic regions. This broader approach to data can lead to a decrease in the accuracy of your insights and the effectiveness of your corresponding strategies. In our comparative analysis, we found consistent evidence that DMA-level modeling led to decreased accuracy in forecasting.

The key to using Marketing Mix Modeling effectively is to understand your business objectives, ensure that you can accurately measure individual marketing efforts separately, and that you use a robust system that can accurately analyze granular data without sacrificing speed. Here at Circana, our solutions are designed to identify the insights that will help you drive ROI for your brand and accomplish your specific business goals, while also helping you communicate your data-backed strategies. We’ve created a valuable guide for getting started with Marketing Mix Modeling.

Incremental ROI aims at understanding the specific impact individual marketing efforts and channels have had on your campaign’s ROI. As a formula, it can be calculated as such: (Incremental Revenue Attributed to Marketing Strategy - Cost of Marketing Strategy) / Cost of Marketing Strategy. Of course, this can only be calculated if you can accurately define the incremental revenue for your specific marketing strategies. This requires brands to intentionally collect and analyze their data so they can effectively attribute revenue to specific channels. Marketing Mix Modeling helps organize these data signals so you can calculate incremental ROI and know what is driving growth for your business.