With the emergence of new media i.e. Internet, viral marketing, event marketing, sports marketing, product placement, cell phones etc, there has been a substantial effect of traditional media i.e. the television. With upcoming technologies, one can even skip commercials while watching television. Thus, a significant amount of marketing spend has shifted to the new media. But with so many marketing channels to advertise, managers need to optimize the combination of marketing and advertising investments in order to increase sales and overall improve marketing ROI. With the help of data analytics, one can measure potential value of all these factors and hence identify the right marketing investment channel. Analysts call it Marketing Mix Modeling.
Marketing Mix Modeling is a statistical analysis technique used by marketers to understand the individual and combined contributions that multi-media marketing investments have on business results. Thus, marketing mix models help estimate the ROI associated with historical marketing spending, as well as forecast the prospective business results that future spending will generate.
Marketing Mix Modeling involves breaking up of sales volume into various components, and analyzing spend on each of them to calculate ROI from each of these components. After knowing ROI at different levels of marketing activity, threshold and saturation levels, one can forecast sales through each of these activities and hence optimize the marketing spends to gain maximum value.
In the last 10 years many CPG companies have adopted MMM. Many Fortune 500 companies such as P&G, Kraft, Coca-Cola and Pepsi have made MMM an integral part of their marketing planning. This has also been made possible due to the availability of specialist firms such as Fractal Analytics, who have developed Marketing Mix Modeling solutions to help their clients optimize their marketing spends and hence improve their brands across markets. Statistics show that with same budget, clients have improved their brand sales by up to 35%.
To know more about Marketing Mix Modeling and its success stories, please refer to the links below:
Marketing Mix Modeling
Marketing Mix Modeling–Analytics Solution to increase marketing ROI
Marketing Mix Model: A Genetic Approach
Tags: CPG Marketing, Forecast Sales, Fractal Analytics, Improve sales, Marketing Channels, Marketing Mix, Marketing Mix Modeling, Marketing Mix Models, Marketing ROI, Marketing Spend, Optimize Marketing Spend, Retail Marketing
