by Michael Wolfe
One of the core focal points of our company and this website is marketing-mix modeling. We contend that marketing-mix modeling is the “gold-standard of marketing ROI measurement” because it has the capability to measure all marketing programs at one time. As powerful as this seems, there appears to be more excitement among marketers toward managing the business with metrics, KPI’s and marketing dashboards. This clearly seems sexier because it is more like Captain Midnight manipulating his rocket controls to guide his rocket ship to earth. Seriously, even the best Key Performance Indicators are only indirect indicators of marketing and brand health. Measures like brand awareness, preference and purchase intent, while important, are imperfect predictors of real sales and customer acquisition. Still, it seems many executives prefer the popular but imperfect measures over direct and precise measures of marketing ROI. Perhaps marketing mix modeling suffers from its own awareness problem or maybe executives simply do not understand it? Perhaps this is what R.E.D. Woolsey meant when he said: “People would rather live with a problem they cannot solve than accept a solution they cannot understand”? Send me a note on your thoughts.
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This was a great post. It’s interesting to see the effectiveness of marketing measured using advanced metrics and integrated and intuitive ways of displaying them.
There is apparently a lot to realize about this. I feel you made some good points in features also.
This is a true problem of awareness and transparency. My company just started to think about media/marketing mix modeling and there is not an established standard in digital marketing world. I found your post insightful.
I would love to talk to you about media-mix modeling and your specific business needs. Feel free to email me at mjw@bottomlineanalytics.com for a no-obligation chat.
I would love to talk to you about media-mix modeling and your specific business needs. Feel free to email me at mjw@bottomlineanalytics.com for a no-obligation chat.
Interesting article. KPIs and dashboards are surely not the way forward – they are surely simplistic as you claim. Econometrics certainly has a lot of value but I have seen much disparity in how models are received and used by clients. For some they are the ‘bible’; for some they are useless; for others they are half-trusted and half-used. I think perhaps they are oversold as being a magic bullet – although your techniques do look to be unusual and interesting! If it were as simple as a formula, we could just set all the marketing levels to deliver x sales and all go home!
One other important area of measurement these days is single source data. This gives us a view of exposed vs control groups and hence a clear and unarguable view of marketing impact. This is closer to a typical scientific randomized, double-blind type approach and thus can make a strong case for being the gold standard. But, I suspect you will argue, it doesn’t cover all channels. And you’re right. Although now the ability to look at TV and digital simultaneously is emerging.
Anyway, very interesting post. I’ll be back!
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