Advanced media mix modeling paints the big picture in ad measurement

MMM accounts for various media attributes (e.g., price, reach, quality and performance benchmarks) to assess and predict the effect of paid media on a brand’s sales. Expanding from media mix modeling (MMM) to marketing mix modeling factors in nonmedia marketing activity (e.g., press coverage, promotional pricing of products or services) as well as external factors (e.g., weather, macroeconomics).

Marketers believe MMM is the best type of measurement for identifying drivers of business outcomes, according to a July 2024 survey EMARKETER conducted with Snap. Even so, it’s best practice to calibrate MMM outputs with experimental benchmarks that validate the causal relationship, according to Julian Runge, assistant professor of marketing at Northwestern University, and William Grosso, CEO of Game Data Pros.

In addition to its comprehensiveness, MMM has privacy benefits. Because it doesn’t require user-level data, MMM has seen a resurgence since signal loss has made multitouch attribution less viable.

MMM’s lack of granularity is a shortcoming, especially considering its resource intensiveness, which can limit accessibility for smaller brands. MMM requires expertise in statistical modeling and is typically executed by a third-party partner. In addition to the monetary expense, it takes time for advertisers to compile the necessary data inputs and more time still to receive actionable results.

Currently, MMM is best suited for high-level measurement. It’s a powerful tool for budget allocation among channels as well as the optimal distribution of budgets throughout the planning year.

But MMM will eventually improve its lower-level utility. Almost two-thirds (61.4%) of advertisers are pursuing better, faster MMM, per EMARKETER’s research with Snap. AI and machine learning come in handy on this front. Media agency Media Matters Worldwide has developed an AI-powered MMM method called agile mix modeling with automated data collection and weekly readouts.

Big platforms are leaning into MMM, too. Meta and Google have both developed open-source MMM packages in an attempt to democratize the technique. And seven RMNs have added MMM capabilities in the last year, bringing the total number of RMNs that offer MMM to nine, according to Mars United Commerce’s September 2024 “Retail Media Report Card.”

Read the full report, Ad Measurement Trends H2 2024.