Media Mix Modeling: Static vs. Dynamic

Media Mix modeling involving a lot of data collection and then a lot more number crunching and then comes the actionable insights based on the data.
Let's step back for a minute and think through this in some more detail. The data used to build these models goes as far back as 5 years (if you are using quarterly sales data) or at the very least 1 year (if you are lucky enough to get weekly sales data). So, let's assume on average 2-3 years of data is needed to build a media mix model.

Now, if you were to make decisions based on data which is 2-3 years old, are those assumptions still valid? The data that you are using is frozen in time 2 years ago. Just think through how much has the marketplace evolved since then? There are probably 2 new competitors in the arena and 1 of the big competitors has completely changed their marketing strategy. So, how actionable are the insights which would be derived based on this data? Probably not a whole not.

Thus, the amount of time and effort spend in create media mix models in probably not worth it.

There are some other options of using studies with Dynamic Logic or ComScore which might be able to provide similar insights and represent close to real time marketplace arena.

Why & How Measure?

The first thought to everyone's mind is why do we need to measure? Well, so I guess a very simple answer is that - you measure so that you know what you got out of your marketing campaign or marketing dollars. If you are a brand manager, you need to justify that spend. If one spends $1 MM what do you get out of it?

You cannot quantify everything in terms of ROI i.e. how much revenue did we generate by spending $X. There are many other ways to measure marketing:

1. Brand - How many more people know about my brand i.e. did the awareness of my brand increase? One can measure this by conducting surveys for example using Dynamic Logic.
2. Increasing visits to your website is an indicator that your marketing dollars are paying off.
3. Increased unique visitors, time spend on the website are some other metrics which can be used

Many a times as an advertiser, one needs to justify why does he/she needs that $10MM budget. OR what we also call as Business case.

Sometimes one needs justify in terms on "$" value that spending $10MM would help the business's bottom line by $20MM. Based on each business model, there are different ways how this can be done.

The simplest and easiest way is to use a ROI model i.e. Revenue/Spend to get the amount of revenue generated per $1 spent in marketing.

If ROI is not the measure, which is actually not possible in a lot of cases where there is no e-commerce platform, there need to be other ways to create business models. For example: If there is a action that an advertiser wants the consumers to take - it would be a good idea to attribute a "$" value to that action. This action could be "find a store" or "contact us". So, if you know that for every find a store, a consumer would make a $100 purchase, you can attribute revenue to each "find a store" and thus be able to work on your business case.