When we talk to consumer brands about MMM, the concerns about its capabilities are sometimes slightly outdated.
MMM has historical roots that trace back to the ‘Golden Era’ of the 1960s when big CPG companies pioneered the use of models to evaluate the impact of their ad campaigns. This methodology worked really well as it provided empirical evidence and insights into their most profitable channels.
However, as we transitioned into the 21st century, the world changed. With digital marketing’s rapid evolution, traditional MMM tools faced an uphill battle in capturing the granular, real-time data that online platforms needed
Just as it looked like we had to say goodbye to MMM, the world changed… again. Growing concerns over digital privacy and new regulations have completely broken digital tracking. This is ironically turning the tide back in favor of MMM. And, as the barriers to entry of using these tools come down, adoption amongst smaller organizations that could have previously not afforded MMM is increasing.
For today’s marketing data scientists, the rebirth of MMM offers a blend of holistic strategy assessment combined with the agility to navigate contemporary challenges.
MMM might still be right for your brand or it might not, but it’s important to understand the differences between Traditional MMM and Modern MMM so that you don’t make that decision on what it used to be. We will cover the differences in this article.
Traditional MMM: Made for Upfront Buying
The most important difference between Modern MMM and Traditional MMM is whether it is designed for in-flight optimization or not. There are others, but we hear brands often complain about how “out of date” the data that they are receiving from their MMM vendor is so we need to focus on this one.
If we think back to MMM in the 70’s-90’s, the vast majority of marketing spend went to linear television. Advertising spots were bought via “upfronts” – where brands would buy all the media for the next six months to a year.
Marketers were only making big decisions about their marketing mix once or twice a year. Legacy marketing mix modeling vendors would (and still do) base their methodology around preparing for the upfronts. They’d run their model a couple of times a year, assess the relative efficacy of the different marketing channels, and then they’d make a recommendation about how much that brand should go buy in upfronts.
In that framework, you could run a fairly simple linear regression and it’d give you decent results because the platforms were very static so the ROI was expected to be too, and because there weren’t that many platforms in their marketing mix.
In that world, MMM worked just fine. The problem is that the world no longer works that way.
The Change: Digital Tracking
Digital tracking changed everything. Marketers don’t buy media, put it to the world, and sit back to see what happens. The vast majority of marketing dollars no longer go into linear TV. They go into dynamic digital platforms, but also traditional channels like TV have become much more dynamic and aren’t bought via upfront months in advance anymore.
Modern marketing organizations are dynamically allocating their budget daily or weekly. That just isn’t compatible with an MMM that gives you a PowerPoint presentation every six months. The decision-making cadence needed to win today made Traditional MMM obsolete.
Digital tracking worked well… until it didn’t. That has left brands scrambling for a solution that is not based on following people across the internet. That’s where modern MMM comes into the picture.
Modern MMM: In-flight Optimization
When Recast started, our co-founders knew that modern teams needed to be up to always have the most up-to-date information for making decisions – that’s why they designed Recast to be updated weekly.
Marketers today really need technology that is much more dynamic and responsive to changes on the ground. Facebook can make a change to its algorithm, and it can dramatically increase or decrease your performance in a matter of days or weeks. If you’re releasing new creative every two weeks, you can’t wait six months to measure its effectiveness.
Sometimes people say that they don’t need to check their MMM results every week – and that might be true. There might be some weeks where things aren’t really changing much.
But the thing is: when you want the results, it is very critical to be able to have them at that time.
For example, when your competitor is launching a big campaign, you need to quickly know how it’s affecting you. When you just launch a big brand TV campaign and you need to know whether you want to commit to buying an extra month or two of television ads based on the current performance of what you have, you can’t wait.
The value of having weekly updates is that when you need the results, you will have them. When you need to make in-flight optimizations, you will have the data to make more informed choices.
Recast: Revolutionizing MMM
The idea behind Recast was to take the idea of MMM’s top-down statistical model, which we believe can work, but modernize it. Let’s use modern statistical methods and new technology so that our models can handle the dynamic changes of these marketing platforms that marketers are dealing with – and let’s give them the tools they need at the time that they need them.