Marketing Mix Modeling (MMM)

introduction marketing mix modeling (mmm) is a statistical approach used to measure the impact of various marketing activities, like digital ads, influencer campaigns, email, tv, or even promotions, on business outcomes, such as sales or conversions mmm is a top down approach to estimating the impact of marketing efforts this approach is top down because it aggregates summary data to estimate correlations between the time that marketing dollars were spent and corresponding outcomes (conversions, revenue, etc) this model estimates what impact a $1 of marketing spend in channel x had on time period y, while taking into account all other factors (including other marketing efforts in that time period) we are left with a baseline demand plus the impact of marketing in combination with client side event attribution analytics, we can plug in our estimates and obtain marketing spend optimizations and recommendations for future spend why it matters for e commerce operators & analysts 1\ channel level roi, even without granular attribution mmm doesn’t rely on user level tracking (like pixels or cookies) that makes it especially powerful in a privacy first world , where attribution data is increasingly limited it helps answer 2\ full funnel visibility mmm accounts for both upper funnel (brand awareness) and lower funnel (conversions) activities it allows you to assign value to non clickable channels like influencer marketing, pr, or even sms campaigns that can’t be tracked with standard click based attribution 3\ scenario planning & budget optimization operators can use mmm to run “what if” simulations while we don’t yet offer scenario based simulations, the current model lays the foundation for future “what if” capabilities by establishing channel level response curves and measurable marginal returns this positions chord well to support simulation use cases in future iterations 4\ de biasing attribution models most e commerce attribution tools overvalue last click or post purchase touchpoints mmm helps balance that bias by taking a step back and analyzing macro level trends in your marketing and sales data why mmm vs multi touch attribution (mta) but why not use direct marketing attribution via multi touch attribution (mta) instead? the short answer is that we would love to it is directly measurable and provides a detailed order level interpretation however, unfortunately, the world is messy and we often cannot often 100% attribute a sale directly to its source the classic example of the need for mmm analysis is print or tv advertising in these cases, while the marketing events may have led potential customers to a desired sales outcome, the digital breadcrumbs of the events may not be preserved however, in reality, this type of unobservability also plagues most of our online marketing efforts opt outs, vpns, tech stack issues, and numerous other factors contribute to the potential for unobservability across all our marketing channels in reality, we should make both top down and bottom up estimates to help drive better decisions at chord, we empower you by bringing your client side eventing, order management system, and ad spend data all to one trusted place, where you can combine sources of truth to obtain the most accurate view of your marketing spend analysis how it works at its most basic, an mmm model is simply correlating the spend in time t with sales events in that time period we feed the spend data and the outcome data into the model, and estimate the weights outputs after estimating the weights for each marketing input above, we can generate the contribution for each input historical contribution allotted channel contribution to kpi via estimated weight and actual spend in time period t by baseline and marketing channels over time, by baseline and marketing channels ranked over time by baseline and marketing channels return on investment roi vs effectiveness effectiveness measures the incremental outcome generated per impression roi vs marginal roi the additional return generated for every additional dollar spent roi by channel with forecast intervals credible range of channel’s return over time cost per incremental kpi for each channel response curves for each channel response curves illustrate the incremental revenue generated for each dollar spent spend optimization recommended change in spend per channel optimized incremental revenue across all channels optimize spend response curves in conclusion over the past few years, the industry has seen a resurgence of mmm modeling techniques emerge that leverage advances in ml and ai, offering flexibility and power that would have been hard to imagine even a few years ago with bayesian simulation now available on gpu chip acceleration, along with the release of powerful open source packages from both facebook and google that have seen widespread adoption, it is becoming increasingly common for mmm to be a trusted modeling tool in the tool chests of most advanced marketing teams eligibility interested in adding this tool to your marketing tool chest today? to get started connect your ad spend sources in chord's "data sources " for any spend sources not covered in "data sources," utilize the ad spend amplification in the "amplifications" portion of the platform, especially for offline or manual spend then, reach out to help\@chord co to join the beta!