If you are not, you could be throwing your marketing investments away, in fact you probably are wasting a lot of effort and resources, that could be working hard for you. Read on.
A typical marketing effort uses multiple channels in a mix, online, print, TV, etc.. if this is you, then you really should be modeling the performance of each channel and how they relate to each other. And crucially, how they contribute to your overall goals and KPI’s, be they sales or branding.
Why is this a good thing?
The marketing campaigns you launch are complex and expensive by their very nature, as they use multiple channels to reach customers. But how do you know what the return on marketing investment is from each channel? Is a euro spent on TV the same value as a euro spent on Print? Where are the customers you want to reach, do they respond to the channels, media and techniques you use? How does seasonality change the effectiveness of each channel?
By answering questions like these you can explain past performance with great detail, understanding which campaigns and elements of the marketing mix made the biggest splash. And with the right amount of data, the right quality of data and the right methods you can have a look into the future, to plan how you should be spending your marketing euros in future campaigns to get the best bang for your buck
You want to maximize your ROMI, you want to show your stakeholders that you have the best information at your fingertips, and that you are getting the best results based on, cold hard facts.
How do you do it?
As an analytical and statistical process, modeling is based on data, your data from your campaigns. Each aspect of your marketing efforts produces a stream of outbound and sometimes inbound data, marketing spend and product sales data, loyalty data and in some cases external data. The external data can be in the form of third party enrichments such as demographic and behavioral research, or simply weather data.
Consider that, most of the data that is used in MMM (Marketing Mix Modeling) is yours in the first place, so you can start to improve your performance using a resource that you already own. This is a sensible use of your assets, that you have already invested considerable time and money in.
At OMD we take those data and combine them with external data to produce a breakdown and detailed decomposition of how each element in the marketing mix contributed to your goals. We deliver a detailed description of what happened and how you should act in the future. We identify the portion of sales that is your base, and then define all other elements that are produced by your marketing mix, building up to total sales. See the graph below.
Typical Marketing/Sales Decomposition
You can choose to perform modeling on any frequency that suits your business cycle, it could be twice a year for broad branding campaign efforts, or it could be monthly for more granular updated to FMCG & Travel industry marketing, where the cycles can be much faster and more complex than other industries.
What are the gains?
The improvements to your actions can be considerable, and depend on your starting point. Typically clients can enjoy an 18% increase in ROMI. These are considerable benefits to your marketing efforts from existing assets.
Our service also delivers a set of recommendations on how to act in future campaigns, and how to allocate marketing resources, by type, channel and season. This acts as a solid roadmap for your planning and tactical actions in the near horizon.
Contact us and together we can scope a modeling service that is tailored to your needs and KPI’s, together we can make you a Super Star Marketer!
For further reading please see our research on the state of data driven marketing in Finland.