Is Marketing Mix Modeling Good for the Industry, or Bad? - Bill Harvey

Get ready for this question to become a theme running through the trades and consumer press over the next few years It will take a while to percolate up to the C Suite but it is today an unavoidable question There is a mountain of evidence on both sides The technique of marketing mix modeling has become so pervasive over the past two decades that every BTC company worth its salt is using MMM to make the biggest decisions it makes every year on the demand sideWith this much importance to the bottom line and shareholder value MMM cannot help but slip into the spotlight nowIts detractors level any number of objections at MMMamp183 The analyst has too much subjective control over the resultsamp183 Stimuli media etc that vary the most geographically are easier to credit with the sales results than geoflat mediaamp183 A huge proportion of the variance is left unexplainedamp183 A GRP is a GRP regardless of the strength of the creativeamp183 The lens bias in favor of price promotion which is easily readable versus advertising whose effects need to be tickled out causing shifts to promotion even though marginal incremental advertising has twice the profitability rate of incremental promotion per IRIamp821240 of cases profitable vs 20amp183 It doesnamp8217t tell you how to get more ROI out of a medium it just tells you that your current use of that medium gets a certain ROIamp8212aiding allocation decisions across media types but not aiding the best use of each media typeamp183 MMM takes too long to get resultsamp8212by that time too late to do anything about it for that campaign and the next tens to hundreds of millions more dollars somewhat misspentamp183 The EBITDAs of companies do not seem to reflect whether they use MMM or not whether they make allocation changes based on MMM or not whether MMM is showing ROIs going up or notIts supporters generally defend MMM by showing that alternative equations are even worseFind a good seat to watch the coming battleamp8212it will not only be interesting and visceral the industry will emerge on the other end with improved tools better understanding internal communication channels somewhat opened up though not enough and generally healthier financial growth Bill Harvey has spent over 35 years leading the way in the area of media research with special emphasis on the New Media As the 24 yearold strategy head of the American Research Bureau now Arbitron he invented the Area of Dominant Influence or ADI an audiencebased definition of television markets that Nielsen emulated as the DMA and which was called by Sales ampamp Marketing Magazine quotthe most widely used marketing tool in the world todayquot Bill can be contacted at billtraglobalcomRead all Billamp8217s MediaBizBloggers commentaries at In Terms of ROICheck us out on Facebook at MediaBizBloggerscomFollow our Twitter updates MediaBizBlogger The opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaBizBloggerscom management or associated bloggers MediaBizBloggers is an open thought leadership platform and readers may share their comments and opinions in response to all commentaries amp160

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Is Marketing Mix Modeling Good for the Industry, or Bad? - Bill Harvey

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Is Marketing Mix Modeling Good for the Industry, or Bad? - Bill Harvey

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