How would it be if we were to tell you with near-certainty how much money to invest in every marketing action? This, in turn, will help your business determine the optimal degree of investment in each marketing channel.
What is every Chief Marketing Officer’s (CMO) dream? He/she would love to have an unlimited budget for marketing. But if wishes were horses, well…..
In reality, every CMO has a limited budget, which they are then supposedly required to use judiciously across their chosen marketing channels.
In retail, for example, only about 10 percent of revenue is used for marketing.
We at Express Analytics believe that a limited budget should not limit the knowledge on how best to allocate this money.
Calculated planning through Marketing Mix Modeling (MMM) can help marketers overcome budget blues by finding the most-effective mix of marketing variables to get the best return on investment (ROI).
A simplified explanation is that marketing mix models take an analytical approach, utilizing historical sales data and company data to find out the impact of marketing activities on sales.
The MMM model uses statistical and analytical tools to quantify the impact of past marketing decisions and predict future outcomes. The idea is to use the models to optimize the marketing mix and get the best out of your limited marketing budget.
Sell More for Less with Marketing Mix Modeling
For optimization, you need to first find out the saturation point of your preferred marketing channels. That is a must to optimize your media spend across channels for maximum ROI using the marketing mix model (MMM).
For this, we use your enterprise data and variables to develop an algorithm-based model to forecast your sales.
Our predictive modeling allows for maximizing sales for a laid-out budget. All of which will ultimately guide the marketer in you on how to precisely budget for all your marketing channels, enabling you to sell more with less.
Effectively Reduce Cost Per Acquisition
CPA is a marketing metric that measures the total cost of a customer’s actions leading to a conversion. Conversion could mean one or all of the following: a click, a sign-up, a sale, or a download.
Obviously, the lower your CPA, the better use of your marketing budget. Our regression models help you cut down your CPA by as much as 30 percent by identifying more effective channels and re-routing budgets to them.
Our Marketing Mix Models (MMM) Come With That Extra Zing
Who does not love extras? Express Analytics’ use of the latest ridge-regression and evolutionary algorithms gives our Marketing Mix Models that extra edge.
At its core, the models use the regression method to study the effect of one or more independent variables, such as price or advertising cost, on a dependent variable like sales.
The analysis is then used to extract key information to help your marketing efforts. These could be used to simulate marketing scenarios using what-if analysis, for example.
Our MMM models help your marketing teams hit the bull’s eye by maximizing the accuracy of the marketing spend. Marketing managers can use this report to reallocate their marketing budgets. They can see the impact on sales within a few weeks.
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How We Apply The Results of the MMM Analysis
The marketing mix model is used to scientifically understand the impact of marketing campaigns and the contribution of each element to the overall plan. What gets measured gets managed, after all.
Here’s how we use the outcomes specifically:
- Budget optimization
- Increase the effectiveness of ad campaigns
- Zeroing in on product cost
- Finding out the best distribution model to deliver the product
- To help with better sales trend forecasting
If you have complete information on the spending of every marketing activity, that will help you calculate the ROI. Based on that, a marketer can determine the most and least effective marketing measures.
What is the Marketing Mix Modeling (MMM) Example?
Here’s an example: A footwear brand marketer wants to understand the contribution of each media channel to his company’s sales.
MMM can be used to run a test on various points in time, using historic sales data and advertising spend for each channel gathered over several years.
To sum it up, marketing drives sales, so if you can optimize your marketing efforts using Marketing Mix Modeling, it’s bound to have a positive impact on your sales by increasing ROI.