Marketers are striving to link the actual changes in sales and market share with their cross channel marketing activity. The marketing function has always been under the scanner in terms of budget planning, fund allocation, effectiveness of marketing campaigns and its return on investment (ROI). They are often asked to substantiate their decisions with quantifiable evidence. This mounting pressure on the marketing function has coerced them into exploring newer methods such as marketing mix modeling (MMM) and attribution. These are highly sophisticated performance measurement models that help in analyzing marketing activities.
Marketing mix modeling helps the marketers estimate the impact of the marketing mix components (the 4Ps: Product, Price, Promotion and Place) and forecast demand for planning purposes. It leverages historical data to measure the actual sales for every dollar spent on marketing activities. Marketing mix modeling also helps in simulating the impact of advertising and judge the potential impact of alternative plans, optimize strategies and choose the medium for effective results. While attribution is all about leveraging various statistical approaches to apportion credit to mediums across channels that ultimately result in desired customer action i.e. sales and conversion. Theoretically both sound similar, but in practice they are two sides of the same coin varying in terms of approach, channel type, data availability and time frame.
All You Need to Know About Marketing Mix Modeling
Marketing mix modeling is a macro-level top-down approach that analyzes historical data on individual activities in order to assist the management in taking strategic decisions regarding budget planning, spend allocation and performance metrics. Marketing mix modeling is primary used in measuring the performance of offline channels, however this is gradually changing with the shift towards digital mode of marketing. It makes use of the marketing and sales information, revenue data and cost data along with the external variables such as elasticity, trends and profit margin. The strength of marketing mix modeling is its ability to analyze a wide range of factors that are not under the marketers control. It is effective for push marketing campaigns over a short period of time and assists in quantifying the financial value of the marketing campaign.
Attribution Modeling, what is it?
Attribution modeling is nothing but attributing or acknowledging those mediums that drive a desired customer action i.e. online sales or other forms of digital conversion. It is a micro level bottom-down approach that leverages real time user level data to analyze each touchpoint on the path to conversion and measures the value of individual marketing tactics. Contrary to marketing mix modeling, the primary application of attribution is considered to be in online channels and has evolved from last click attribution. This technique, in particular, is useful for pull marketing campaigns and enables marketing professionals to alter campaigns and shift budget as the campaign progresses.
Marketing Mix Modeling, Attribution or Both?
There exist differences in the two methods but that doesn’t mean the organization needs to pick a side from either of the two. Marketing function can opt for a combination of both depending on the type of organization and marketing campaigns. It combines the top down approach with a bottom up approach to yield results that perform well irrespective of the channel medium. An organization can enjoy the best of both worlds by leveraging the high quality output of marketing mix modeling as well as the granular detailed insights of attribution thereby assisting marketing professionals to measure the cross channel impact and increment of marketing efforts.
At Quantzig, we help organizations by providing granular insights from a wide range of customized solutions such as marketing mix modeling, campaign analytics and attribution modeling among others. These solutions help drive marketing ROI and measure the effectiveness of marketing campaigns.
To know more about marketing analytics and its impact on the organization’s revenue