By Riddhi Dasgupta, Data Science and Research Director at Reprise
Digital media has revolutionised the way humans communicate with each other and with brands. Brands don’t only communicate through traditional media newspaper ads, television ads, radio ads or billboards but also through digital marketing channels such as YouTube, Meta, TikTok and Snapchat. Audiences want to personally interact with brands in real-time and to feel a human connection with the brand itself. Today consumers are much more informed and are more likely to research before making a buying decision. Social media is one such cost-effective way to educate consumers and attract attention. Hence brands today use multiple marketing channels to reach their audience, making it even more challenging to measure the individual impact that marketing has on sales.
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Media Mixed Modelling (MMM) paves a comprehensive and statistical way of assessing the impact that a media channel has on business outcomes. As competition continues to increase, brands need to understand what drives sales and market share to remain competitive. MMM provides us with the impact of competitors and the magnitude by which they impact the business. Economic challenges can put pressure on marketing to improve ROI by creating a need for brands to be more cost-effective and efficient in their marketing efforts.
MMM provides marketing teams with recommendations on how they can optimise allocation across media channels. It is compelling marketers to shift towards a more holistic, cross-channel approach to customer engagement and measurement. This means without the reliance on third-party cookies to track user behaviour across different websites and devices, businesses can rely on MMMs to create more personalised, relevant experiences for customers.
MEDIA MIX MODELING (MMM): SOLUS & INTERACTIVE EFFECT
One of the most interesting aspects of performing MMM studies is, that it not only segregates the impact of media channel individually (called main/solus effects) but it is also capable of identifying the synergistic (interactive effects) impact between two or more media channels.
Let’s look at the first component of MMM, which is termed as the ‘main effect’.
Main/solus effect: The main effect in MMM refers to the standalone impact of various media channels on the overall performance of a product or brand. Let’s say we are trying to determine the effect of media on the sales of a new product. After implementing an MMM, we might find that for every $1 spent on social media advertising, sales increase by $5. This means the main effect or standalone effect of social media is positive and significant.
The second component of MMM is ‘interaction effect’ or sometimes also referred to as ‘synergistic effect’.
Synergistic effect: reSynergistic effect refers to the combined effect of two or more media channels on sales. This means that when different media platforms are used together in a marketing campaign, they can amplify each other’s impact and produce better results than they would individually. If the synergy is positive, then the joint effect of the media channels is leading to additional sales. It is suggested that both type of ads should be run simultaneously to get higher returns.
Here are some examples of how different media channels can have synergistic effect in MMM.
TV and social media: A company runs a TV advertising campaign to promote a new product and launches a social media campaign with the same message. The MMM shows that the combined effect of TV and social media is greater than the sum of its individual effects, as the TV ad generates greater interest and awareness while the social media campaign allows for more engagement and interaction.
Search and display ads: A company runs a search advertising campaign to capture high-intent users who are actively searching for a product and runs a display advertising campaign to build brand awareness and capture users who are not yet actively looking for a purchase. The MMM shows that the combined effect of search and display builds brand recognition and captures users who may convert later.
NEED OF CROSS-CHANNEL MARKETING IN THIS CONNECTED WORLD
Increasing engagement: Consumers today are more connected than ever through social media and interacting online through voice technology. Using multiple channels, you can reach consumers at different times of the day and at different points of the purchasing cycle.
Driving loyalty: As customers engage with a brand on a more regular basis, the chances of them becoming and ultimately staying loyal to that brand also increases. This is largely due to the consistency in messaging – one of the main features of cross-channel targeting.
Uniform treatment: A cross-channel approach ensures that customers will have the same experience across the board. In turn, this is likely to increase satisfaction and lead to repeat interactions and engagement.
Vitality of MMM: MMM studies are vital for brands in today’s world because they provide a 360-degree understanding of the impact of different marketing strategies on sales. By analysing a range of variables such as price, promotion, advertisements and distribution, MMMs can help brands make data-driven decisions about where to invest their marketing resources to maximise ROI because decoding the true impact is key to unlocking efficiencies and exponential growth.