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What Is the Media Mix in Marketing?
Media mix is the combination of all communication channels an organization uses to get its brand message and marketing efforts across to potential customers. The media mix may combine traditional advertising channels, like print, broadcast and TV, social media, and online advertising. Companies talk about the marketing mix when planning their campaign goals and it is an essential part of their marketing strategy.
What Is Media Mix Optimization?
Organizations optimize their media mix in order to gain insights into what they need to target their audience effectively. Not all companies can optimize their media mix because it is more suitable for online marketing. It requires looking into the analytics and ROI of different marketing strategies.
This is where media mix modeling comes to help.
What is a Media Mix Modeling study?
Is a marketing analysis technique that measures what is the impact of a campaign and determines how each part of the marketing mix contributes (or not) to its success. The results of a media mix modeling study can give you insights that you can use to improve a campaign. Let’s summarize this with a definition:
Media Mix Modeling is a top-down approach that uses tools and advanced analytics to evaluate how media and marketing activities, pricing, seasonality, and variable factors impact sales and ROI. It provides a measure of how activities contribute to the company’s ROI.
Marketing analysts use data science techniques such as multi-linear regression to determine the effectiveness of each marketing input in terms of ROI. The goal is to identify which marketing efforts have higher ROI and are thus more impactful.
MMM model example (Image source)
How does MMM work?
Media mix modeling analyzes collected and processed data from the channels that form the marketing mix. Some solutions enable marketers to factor in traditional channels, promotions, seasonality, and other variables.
The modeling collects data from disparate sources, which then applies advanced statistical analysis to, and enables to get insights into how effective is the current campaign. MMM leverages metrics and variables like sales, ratings, or online analytics, allowing analysts to have a broader picture of the impact of the campaign in the marketplace in a measurable way.
MMM analyzes linear and non-linear variables. This means there are variables that a direct relationship with sales can measure. The more you increase the input, the more sales grow. But other variables, like broadcasting, are more difficult to track. If a marketer would do that manually, it would be extremely difficult. MMM technology enables marketers to use artificial intelligence and advanced analytics to find out a quantifiable impact of each marketing effort, regardless of the channel.
The goal of a media mix modeling study is to give a measure of the impact of each marketing activity on each channel. It works by quantifying the effect of advertising, pricing, PR, and sponsorships.
The term was coined in a paper by the Harvard Business Review, and the technique has been around for a few years. Thanks to the advance in statistical methods and artificial intelligence, media mix modeling can be done now in a simpler way.
The factors that may affect the marketing mix can be categorized as:
Incremental drivers: this refers to business outcomes generated by marketing activities like print ads, digital spending, price discounts, social outreach.
Base drivers: this refers to outcomes achieved without any advertisements, usually due to brand equity. These outcomes usually don’t change unless there is an economic or environmental change.
Other drivers: related components of baseline factors, measured over a period of time.
Example of a media mix modeling diagram (Image source)
How to Use Media Mix Modeling?
Media modeling gives marketers the opportunity to support their decisions with data, creating a data-driven approach that is more accurate and actually can save money and effort.
Research from a Forrester study, “The Current State of Marketing Measurement and Optimization”, shows that 71% of marketers are impaired by inefficient measurement methods and tools. Here is how to make the most of your media mix modeling:
1. Collect data at the personal level
At this moment, when third-party cookies are about to become a thing of the past, marketers everywhere are trying to collect the information they need. Personal level data allows you to have an accurate picture of how customers relate to the media mix you chose.
Person-level data means you assign data from sources to an individual consumer with the goal to answer business questions and pinpoint interactions at the user level. [CLICK TO TWEET]
In the Forester report mentioned above, 99% of marketers not currently using person-level data would like to use this approach today. This granular approach allows you to conduct analysis at the user level instead of using the already aggregated data.
2. Check the type of data
Media modeling works better if you are working with digital channels than for traditional marketing methods. It is more difficult to measure the results of a newspaper ad or a radio broadcast. Achieving the right marketing mix, with a greater investment in online marketing channels (including mobile) can give you a more accurate picture. This is also consistent with trends towards online and mobile content consumption by users. By migrating campaigns to online channels, you can measure ROI more accurately and have better insights for decision-making.
3. Choose a platform that’s right for your organization
Using analytics software gives you an advantage. You can analyze the media mix by using platforms that collect user interaction data and provide tracking reports. The best approach is to choose a platform that gives you complete visibility of all the channels you are implementing. A software that can provide accurate and timely reports is also a must. You need to know how your channels are performing individually and as a part of your marketing campaign.
4. Analyze the data
Before getting into the analysis, you need to choose what metrics you want to measure for each channel. The wrong metrics can give you a completely different picture that is not akin to reality. Choose the metric you want to measure according to the goal you want from that channel or activity. For instance, email marketing newsletters can be measured by click-through rate more effectively than by measuring opening rates.
Once you chose the metrics and got the data, it is time to analyze and understand the reports. It is important to know what the data is telling you to use it to your advantage. Following the example of the email newsletters, if you see a high CTR from them, it is a sign that you should use this strategy for the next campaign for that audience.
Try to find the “high-performers” and the “low-performers” too. Knowing where your strengths and weaknesses in the campaign will help you adjust and improve it for next time.
5. Keep in mind social sentiment and brand perception
The success of a marketing campaign is not only measured in terms of conversions or clicks. Understanding how your potential audience perceives your brand can provide context and help you interpret the data better. Factor consumer opinion in your media mix model. How do you do it?
Conduct social media and search for sentiment analysis. Take note of what people are saying about your brand, the positive and the negative. You can use that information to create a survey and prove your findings by rating your company. Specifically, asking how likely they would recommend your business to a friend and what type of marketing content would they like to see more. This will give you an idea of where to focus your marketing efforts next.
How Do You Know The Media Mix is Right for Your Brand?
How do you determine the right media mix for your campaign? Let’s look at some of the factors you should consider when choosing your media mix.
Using multiple marketing channels to promote products and engage your users is a popular approach. However, randomly choosing as many channels as possible is not only ineffective but also can lose you a lot of money. Choosing the right mix is essential to achieve a successful campaign.
How do you start? By knowing and understanding your target audience. After all, your goal is to engage them. There are two key steps in choosing the right mix for your marketing strategy:
Define your target audience
This is the foremost step because without understanding your audience you are in the dark. Start by mapping basic demographic data: Location, gender, income, age, education level. Then you can further dig into finding interests, platforms they visit. How do you do it?
- Check at your competitors: you can gain a lot of information about your potential customers by checking your competitor’s campaigns and social media sites.
- Search in social media groups of interest: your customer talks about products related to yours on social media and review sites. Take a look at what they are saying, where they are located, and such.
You should know who the potential customers are for your product or service. A good rule of thumb is to create buyer personas to have a detailed idea of who is your ideal customer.
Collect and use reliable data
Gather data on your target audience according to what you know about your audience. For instance, organic research, competitor audits, sentiment analysis. Check data from media viewing research sites too to have a broad picture. The right data can provide the insight you need to choose the market mix that works.
Related content: What is Media Buying and the Best Templates to Download
Media mix modeling vs attribution modeling
Modern marketing is based on hard data, especially digital marketing. One of the questions prevalent in marketing departments is where the marketing budget goes. Attributing where the money was spent to lead generation and marketing goals is one of the key objectives of every marketer. Despite ongoing efforts and data-driven analysis, it is a challenge to attribute accurately. Marketers diverge if attribution modeling or media mix modeling is the best measurement model to use. Let’s examine each one.
What is the Attribution Model?
Attribution Modeling is a bottom-up approach used for measuring marketing efficacy. This method analyses and identifies the value of each marketing initiative by looking at the actions users take before converting.
Attribution modeling focuses on the outcomes of the marketing efforts as measurements, online sales, advertising, and similar conversion efforts.
There are five types of attribution models:
- Last interaction
This involves attributing the credit of the conversion to the last lead a user interacted with. This method is used by default in many marketing teams. For example, if a user finds your site by a Google Ad, but makes the purchase finally from a Twitter ad, the ad gets 100% credit for that sale.
- First Interaction
This involves assigning credit to the first introduction of the user to the business. In the above example, the Google ad would get credit instead of the Twitter ad.
- Last non-direct click
This model also attributes all credit to a single interaction. The basis of this approach is that the last action is triggered by the last non-direct click because it is when the user is exposed to your marketing efforts.
- Linear attribution
This model divides the attribution equally among all user interactions before conversion. That means ⅓ would go to the Google ad, ⅓ to your website, and ⅓ to the Twitter ad. The problem with this model is that it doesn’t account for the level of influence of each interaction.
- Time decay attribution
An evolution of the linear attribution model takes into account when each interaction takes place and gives more importance to the interactions that happen close to the time of purchase. This would give the Twitter ad more value than the other interactions.
- Position-based attribution
This model also splits the difference when allocating conversion credit. It gives 40% to the first interaction, 40% to the last, and 20% to divide among all the other interactions.
The difference with Media Mix Modeling
Media mix modeling uses a regression analysis evaluating the impact of multiple variables on a single variable like sales figures. It calculates the relationship between the independent variables and the dependent variable.
Attribution modeling could have worked in the past for simple marketing strategies with few channels. However, this proves difficult for the complex and distributed strategies of today’s marketing. Media Mix Modeling can account for a wide range of data from diverse sources.
Pros and Cons of conducting a MMM
Implementing a media mix modeling can be more effective:
- There is enough data to estimate parameters in the model.
- There is a range of variability in the advertising levels and control variables.
- The model inputs vary independently.
- The model accounts for the drivers that may impact ROI.
- The model captures the relationship between variables.
There are challenges from issues that may affect the reliability of results from MMM.
So, what are the pros and cons of using marketing mix modeling?
Limitations of Marketing Mix Modeling
Marketers need to take into account several elements across their ecosystem, which may include:
- Person-level, behavioral data
- The impact brand authority has on the marketing spend
- What are the key times to send marketing messages
- What’s the proper attribution on individual media effectiveness
Taking into account all these metrics may have caused issues of the reliability of the media mix modeling. Marketing mix modeling technologies enable marketers to unify the measurement.
Advantages of Marketing Mix Modeling
While MMM cannot identify individual opportunities to optimize their campaign optimization. It gives the starting point for high-level marketing budget planning, providing a holistic approach to general market trends, giving marketers a full-circle view into their prospective markets.
Common myths about MMM
Like many analytic solutions has become very popular, but does it live up to all the hype? Here are a few misconceptions people have around media mix modeling:
- Media mix models are obscure: since there are datasets and advanced analytics involved in media mix modeling, these methods are considered lacking in transparency. This raises the question of how do you know if the model is accurate if you cannot see it all? The right approach is implementing a transparent approach, determining deliverables, outlines, milestones, and reports.
- MMM doesn’t provide real-time data: the truth is that MMM is based on historical data. However, modern media mix models can provide near real-time marketing insights, that can evaluate new campaigns, and assess the effectiveness of a running campaign.
- Is biased to offline/online channels: media mix strategies may focus more on offline channels. But modern media mix models consider all channels, digital and offline. Media marketing models are adapted to take into account each channel and its importance as a factor.
How do you measure MMM?
Media mix modeling is measured by using regression analysis, specifically multi-linear regression. The model uses dependent and independent variables to identify a relation between them.
Analysts form an equation between the dependent and independent variables. Depending on the relation between the variables the equation can be linear or nonlinear. Here’s an example of an equation of multi-linear regression where each beta shows that an increase affects the total increase of sales.
Example of a sales equation (Image source)
MMM helps marketers in optimizing future spending and maximizing the effectiveness of the marketing campaign.
Media Mix Modeling Ratio
Besides complex equations, the MMM ratio consists of three key components:
- What marketing channels are you using?
- How much money are you spending on each channel?
- What were previous campaign results and insights?
The answer to these three questions may determine what is the rate of effectiveness of your marketing efforts.
Common use cases for using MMM
Media mix modeling or as is also known as marketing mix modeling can be used to measure and optimize your marketing channels in terms of ROI. Here are some use cases you can apply this technique to:
Budget setting and optimization: Large companies with geographically distributed campaigns across multiple media channels can benefit from the scalability of media mix modeling. Media mix modeling leverages automation to perform large-scale marketing effectiveness.
Media measurement: You can measure the impact of different types of media campaigns, paid, owned, and earned. You can use media mix modeling to measure the customer journey in its path to purchase. The insights you get can be used to optimize your spending and actions across those channels.
Measuring sales drivers: Marketing mix modeling can be used to find what are the factors driving sales, so you can invest more in the winning strategy.
The History of MMM
Marketers started to use Media (or Marketing) Mix Modeling in the golden age of advertising, around 1960-1970 when marketing was much simpler than today. One of the early users of media modeling was Kraft Foods when they launched Jell-O.
Traditional MMM allowed Kraft to see how sales would be affected according to different levels of advertisement and geographical location. For instance, how would sales increase by running campaigns in 10 cities instead of four?.
Nowadays, with the application of artificial intelligence data analysis to media mix modeling, analysts can get insights practically in real-time as campaigns are running.
What to look for in MMM tools
To implement an effective media mix modeling you need marketing performance tools that give you the insights you need. Here’s what you need to know when looking for a solution:
- Balancing long and short-term growth: most of your efforts should be focused on long-term growth but don’t overlook short-term goals. The Institute of Practitioners in Advertising suggests a ratio of 60/40 long and short-term marketing activities. Your marketing performance tool needs to analyze how both campaigns will grow your business.
- Collects and measures data from disparate sources: this is one of the basic features of a marketing performance tool. To be effective at media mix modeling you need a tool that can collect, process, and analyze data from digital and traditional media. Since most of these data sources have their own analytics, you need an orchestration platform that can ingest the data from these sources and give you the insights you need.
- Takes into account external variables: political, economical, and social changes can affect marketing efforts. A good tool needs to recognize disrupting variables and assess how they would impact your long-term campaigns.
- Consider the customer journey: a media mix modeling needs to account for the interactions along a customer journey. Your tools should be able to tell you what is the impact of each step, considering customer purchase patterns and predicting consumer trends.
FAQs About MMM
How do you do a market mix model?
Base variables or incremental variables are taken into account, quantifying them and breaking down business metrics to find out how marketing and promotion activities contribute to ROI.
What type of Modelling method is critical for marketing mix evaluation?
Marketing Mix analysis is typically done using linear regression. Other effects as non-linear and lagged are included to have a broader approach.
What is market mix Modelling?
Market Mix Modeling is a technique that helps to quantify several marketing inputs on sales or market share.
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