MARKETING MIX MODELING
Here’s What You Need to Know!
Thinking of in-housing your MMM?
It’s not an easy decision to make.
MMM is becoming integral to the success of companies’ marketing strategies. In fact, 48.7% report using the technique to drive decision making, according to the September 2022 edition of The CMO Survey by Deloitte and Duke University, a semiannual study of senior US marketing leaders.
However, while MMM holds great potential, many companies still face uncertainty regarding their ability to effectively employ this method. A Gartner survey revealed, in May 2022, that 61% of CMOs lack the in-house capabilities to implement their MMM strategies, and 26% consider marketing data and analytics as a top-three capability gap.
When it comes to MMM, three primary approaches exist: fully outsourcing, in-housing, or adopting a hybrid model. At MASS Analytics, we understand that each approach carries its own merits and costs, contingent upon your company’s strategy and needs. In this article, I will explore the case for in-housing MMM as a viable option worth considering.
Build a Cost-effective Measurement Capability
Managed services for Marketing Mix Modeling often come at a significant cost, typically in the six to seven figures. It is important to view this as an investment that will ultimately enhance your marketing strategy and increase your Marketing Return on Investment (MROI), whether you choose to in-house or outsource. However, the key difference lies in how you approach this investment. Allow me to introduce BOT (Build, Operate, Transfer), the process that we adapted and deployed to help our partners in-house MMM
As strong advocates of democratizing Marketing Mix Modeling, we embrace the BOT approach, ensuring a smooth transition to in-house capabilities. Initially, we construct your Marketing Mix Model and provide comprehensive support throughout the process. Over time, we gradually transfer knowledge and expertise to your internal team as your marketing analytics capabilities mature. Transparency and collaboration are paramount to our partnership, with the ultimate goal being the complete independence of your internal team.
Gaining Independence and Scalability
As accurate marketing measurement assumes increasing strategic importance, many companies recognize the need to maintain independence and scalability within their marketing analytics function. A robust Marketing Mix Modeling capability can extend its reach globally, covering multiple geographies, business units, and specialized industry applications. In such scenarios, we recommend establishing a core in-house capability supported by an external MMM partner. This collaborative approach enables you to address technical complexities or accommodate the volume of projects, ensuring seamless operations and the achievement of desired outcomes.
Difficulties of Sharing Data with External Parties
Obtaining approval to share company data can be a complex and intricate process. It often requires securing buy-in from various stakeholders, including legal teams, database administrators, and senior leadership. Moreover, concerns surrounding proprietary company data, such as strict privacy regulations and security policies, can make it challenging for marketing teams to obtain executive support for data sharing with external parties.
To address these challenges, it is crucial that MMM projects involving external providers are executed within the framework of strategic partnerships built on trust and transparency. Given the data-intensive nature of MMM projects and the frequency of data requests, in-housing your MMM activities can help you navigate administrative bottlenecks and alleviate security concerns. By keeping the work in-house, you can save valuable time while ensuring the confidentiality and integrity of your data.
Respond Swiftly to Pressing Business Questions
We all encounter situations where immediate answers are crucial. This is where an in-house MMM team truly shines. With an internal team, you have the ability to obtain the answers you need promptly. Additionally, leveraging your MMM model for experimental insights becomes more accessible. For instance, you can increase the frequency of updates provided by your MMM model, analyze hypothetical scenarios, or modify data inputs for more granular results.
While external MMM providers can also offer these capabilities, sometimes they may go beyond the scope of your partnership. If data-driven decisions and speed are priorities for your organization, having an in-house MMM team can supercharge your marketing analytics.
In conclusion, the decision to in-house or outsource your Marketing Mix Modeling is not a matter of one approach being better or worse than the other. The answer to this strategic question depends on your business needs and strategy. Whether you choose the first or second option, it is crucial to consider all factors and follow reliable and trusted steps to make the most out of your Marketing Mix Modeling investment. At MASS Analytics, we believe in empowering companies to harness the full potential of MMM through in-housing, enabling them to unlock success for their marketing strategies.