Senior Vice President of Client Engagement at Data Poem with expertise in ROI measurement and AI-driven solutions
Marketing Mix Models (MMM) are helpful but often overlook interaction effects between channels. For example, cutting TV spend might unexpectedly lower search ROI because MMM saturation curves don't capture how TV ads drive search interest. Recognizing these limitations is essential for accurate forecasting and informed marketing decisions.
𝗗𝗼 𝗬𝗼𝘂𝗿 𝗠𝗠𝗠 𝗦𝗮𝘁𝘂𝗿𝗮𝘁𝗶𝗼𝗻 𝗖𝘂𝗿𝘃𝗲𝘀 𝗙𝗮𝗹𝘀𝗲𝗹𝘆 𝗦𝘂𝗴𝗴𝗲𝘀𝘁 𝗖𝗼𝗻𝘀𝘁𝗮𝗻𝘁 𝗦𝗲𝗮𝗿𝗰𝗵 𝗥𝗢𝗜 𝗪𝗵𝗲𝗻 𝗧𝗩 𝗦𝗽𝗲𝗻𝗱 𝗗𝗿𝗼𝗽𝘀? Marketing Mix Models (MMM) are invaluable tools, but their saturation curves may fall short when it comes to accurate long-term forecasting. A critical limitation often overlooked is the lack of interaction effects between channels. Consider this scenario: Your brand's MMM shows search advertising approaching saturation, suggesting limited room for growth. Based on this curve, you expect search performance to remain constant even as you cut TV spend to save costs. However, you're surprised to see search ROI decline significantly in the following quarter. This example highlights how traditional MMM saturation curves often fail to capture crucial cross-channel interactions. In reality, TV advertising might be driving search interest, and reducing TV spend could impact search effectiveness - a dynamic not reflected in isolated channel curves. While MMM saturation curves provide valuable insights, recognizing their limitations is crucial for more nuanced and accurate forecasting, especially when making significant changes to your marketing mix. 𝗛𝗼𝘄 𝗵𝗮𝘃𝗲 𝘆𝗼𝘂 𝗮𝗰𝗰𝗼𝘂𝗻𝘁𝗲𝗱 𝗳𝗼𝗿 𝗰𝗿𝗼𝘀𝘀-𝗰𝗵𝗮𝗻𝗻𝗲𝗹 𝗶𝗻𝘁𝗲𝗿𝗮𝗰𝘁𝗶𝗼𝗻𝘀 𝗶𝗻 𝘆𝗼𝘂𝗿 𝗺𝗮𝗿𝗸𝗲𝘁𝗶𝗻𝗴 𝗽𝗲𝗿𝗳𝗼𝗿𝗺𝗮𝗻𝗰𝗲 𝗽𝗿𝗲𝗱𝗶𝗰𝘁𝗶𝗼𝗻𝘀? #MMM #saturationcurves #crosschannelinteractions #marketingmixmodel #roi #forecastiong #roianalysis #CrossChannelAttribution #MarketingInsights #AttributionModel #MarketingEffectiveness #traditionalmmm
AI and Data Science Leader. Public speaker and potentially your future colleague :-)
5moThat can certainly be the case with siloed saturation curves, always adding custom interaction terms is a good practice lack of these interaction terms I think is one of the main problems that out of the box solutions have...