Marketing mix modeling (MMM) looks beyond clicks, making it both future-proof and full-funnel friendly.
Most brands have a good understanding of which marketing channels drive sales, however many critical decisions are still based on gut feeling and best guesses. With rising acquisition costs and increasing complexity in the marketing mix, guesswork just doesn’t cut it anymore.
Why should you care?
Brands, specifically within e-commerce, have been over-reliant on attribution, where it’s assumed that all touchpoints before a sale are tracked, and your MTA attribution model then attributes the value fairly along the touchpoints. There are a few problems with this view, but the most important one is that you can’t trust that you catch all touchpoints in the buyer’s journey., Therefore it often ignores the impact of crucial upper-funnel marketing (influencers, brand awareness campaigns) and the synergetic effects of targeting consumers in all stages of their purchasing journey. The result? Brands are overspending on visible, easily measurable channels like retargeting and branded search, while underinvesting in strategies that drive lasting long-term growth.To make matters worse, many are relying on outdated attribution models, forced to accept the growing limitations of cookie-based attribution.
Challenges of Cookie-based Attribution
As everyone knows, most sales don’t happen from a single ad click. Instead, they’re influenced by many touchpoints across the buying journey. Relying on classic attribution, which is cookie-based, misleads marketers into thinking that lower-funnel channels are disproportionately effective compared to activities higher up in the funnel. Since cookies have a record low level of the complete journey, because of GDPR, etc, the attribution model “disregards” the media mix's synergies and steers spend toward easily measured lower-funnel channels.
How Relying on Attribution Limits your Profitable Growth Trajectory
Over time, this leads to poor budget decisions, limiting profitable growth. Brands relying only on cookie-based attribution get limited insights into true demand drivers that help them build their brand equity over time. In many cases this also primes consumers into purchasing products at a discount since they lack a deeper connection to the brand.
Finally, not all clicks are incremental. Sales from consumers who would have purchased from you regardless of seeing an ad or not will be attributed to an ad that they clicked on in an attribution framework. This is a major reason why brands feel like they’re wasting their ad spend today. They keep buying conversions from consumers who would have purchased their products anyway.
Benefits of investing your future in MMM
Increased privacy regulations has left many marketers in the dark, lacking the tools needed to survive in a world where trusted tools are outdated. Luckily, Marketing mix modeling (MMM) is an alternative that’s now available to a wider audience than before. Unlike pixel-based methods, MMM uses machine learning to analyze overall trends instead of tracking individual users. It’s a future-proof way to measure the effectiveness of investments across the full funnel. Thanks to technological advancements, MMM is no longer limited to large brands with massive marketing budgets.
MMM measures all marketing efforts—Attribution does not
Another major reason to switch to MMM is the possibility of measuring the impact of all marketing efforts, not just the last click. MMM considers all of your investments, both online and offline. Also, in a world where purchases are influenced by more than clicks (view-through, impressions), cookie-based attribution models fall short in comparison to MMM.
MMM Enables Scenario Planning—Attribution Does Not
Finally, since the cookie based attribution models heavily rely on the last clicks, they take an overly simplified approach to measurement. The relationship between spend and efficiency is assumed to be constant, for example a ROAS of 4 gives a false perception that all the spend has a return of 4, which is not an accurate way to view the world. By using MMM, you can understand what your ROAS is currently, but also how that would change if you were to increase or decrease your spending. This makes MMM more than an analytics tool; it’s a framework that empowers data-driven decision-making.
How you can get started today
- Audit your current measurement framework. Are you relying on cookie-based tracking for all your marketing measurement?
- Get your data in order. MMM, regardless of doing it in-house or outsourcing it to a third-party provider, requires clean and structured data. Gather all your marketing and sales data from the past 2-3 years to become MMM-ready.
- Establish buy-in from key stakeholders internally. Switching out your approach to measurement is a team-effort. Make sure your team is onboard before diving in.
Key takeaways
Cookie-based attribution is broken. It overvalues lower-funnel channels and ignores brand-building efforts, leading to misallocated budgets and missed growth opportunities.
Not all clicks are incremental; many conversions would have happened anyway. Cookie-based attribution leads brands astray and results in wasted ad spend on non-incremental sales instead of investing in true demand drivers.
MMM is the future of measurement. Unlike cookie-based attribution, MMM provides a privacy-compliant, full-funnel view of marketing effectiveness, helping brands optimize for sustainable, profitable growth.
Want to learn how to future-proof your marketing measurement strategy? Now is the time to switch to MMM! Get in touch with one of our experts to understand how Dema can help you!