Introduction

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In today's competitive marketing landscape, applying a scientific approach to budget allocation is crucial for maximizing return on investment (ROI). This guide will walk you through a step-by-step process to optimize your media mix, focusing on incrementality measurements and Marketing Mix Modeling (MMM) techniques to unlock media ROI growth.

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Understanding Incrementality and Multitouch Attribution

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Incrementality, a key concept in marketing, measures the additional sales generated by a specific marketing action. Essentially, it evaluates the effectiveness of a marketing campaign by comparing the results with and without the campaign.

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This approach offers a more accurate assessment of marketing efforts, as opposed to multitouch attribution, which only measures where conversions come from and can result in biased measurements of what's driving sales.

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In contrast to incrementality, multitouch attribution assigns credit to different touchpoints in a customer's journey to conversion. While it provides valuable insights into where conversions occur, multitouch attribution may not accurately reflect the true impact of a marketing campaign on incremental sales.

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By focusing on incrementality measurements, marketers can gain a more accurate understanding of which campaigns truly drive incremental sales and ROI. This approach enables better-informed decisions when allocating budgets, optimizing media mix, and ultimately maximizing returns on marketing investments.

Step 1: Identifying Low Hanging Fruits: Kill wasteful investments

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The easiest way to improve your media ROI is to kill non-performing campaigns. 

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However, identifying these non-performing channels can be close to impossible with normal multitouch attribution measurement systems.

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For example, consider Google Search Brand. It might have a lot of sales attributed to it because it's a bottom funnel campaign, but most of the time, it doesn't drive incremental sales.

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(Conclusion is based on the analysis of more than 500 companies that modeled their Media Mix with Cassandra).

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By effectively taking actions on these underperforming campaigns, marketers can focus their resources on more impactful initiatives.

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There are two primary methods to identify low hanging fruits: Marketing Mix Modeling (MMM) and the Geo-based Deprivation test.

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MMM is a statistical technique that helps determine the effectiveness of different marketing channels and campaigns by analyzing historical data on sales, marketing spend, and other relevant factors. By identifying the channels and campaigns that are not driving incremental sales, marketers can make informed decisions on where to reallocate their budgets.

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Alternatively, the Geo-based Deprivation test is another approach to determine the impact of marketing campaigns on incremental sales.

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For example, let's say we want to validate if Google Search Brand drives incremental sales or not.

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Marketers can compare the performance of their campaigns in different geographical regions with and without the campaign.

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This comparison enables them to gauge the true incremental sales generated by their marketing efforts and make better-informed decisions on budget allocation.
(Geolift source)

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Step 2: Discovering Over-investment in Channels

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You killed your non performing channels? Great, let's move forward.

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The next step is to detect in which channels we are over-investing.

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This process involves understanding the concept of diminishing returns, which states that as more resources are allocated to a particular marketing channel, the incremental returns generated by that channel will eventually decrease.

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The goal is to identify these channels and reallocate budgets to underinvested ones, ensuring a more balanced and efficient media mix.

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By leveraging Marketing Mix Modeling (MMM) insights, marketers can effectively pinpoint channels with over-investment.

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MMM provides a detailed understanding of the relationship between marketing spend and sales across different channels, revealing where diminishing returns are occurring.

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This allows for better-informed decisions on budget reallocation, ensuring an optimized media mix that maximizes ROI.

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Reallocating budget from over-invested channels to under-invested ones allows for a more balanced approach to marketing spend.

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This strategy ensures that resources are directed towards channels and campaigns that drive the most incremental sales, ultimately leading to higher returns on investment and a more efficient media mix.

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Step 3: Budget Allocator Predictions

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You killed waste, optimized volume of investment in performing channels, now we go a little more complex.

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If you actually got this far, you probably already saw a 10-15% improvement in ROI. 

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This step is not a requirement for your media optimization but will make it easier for your organization to calibrate your budget allocation decisions and improve both velocity and accuracy of your decision making.  

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The final step in unlocking media ROI growth involves using Marketing Mix Modeling (MMM) simulation-based predictions to devise an optimal media plan.

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MMM simulations provide insights into the potential impact of various marketing strategies, allowing marketers to make data-driven decisions when allocating their budgets and designing media plans.

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By understanding these simulation-based predictions, marketers can learn how to allocate their budgets across different channels and campaigns to maximize ROI.

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This involves identifying the ideal balance between overinvested and underinvested channels, as well as targeting campaigns that drive the most incremental sales.

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Once the optimal media plan is determined, it's crucial to implement the recommendations and track the results to ensure ROI growth.

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Through continuous monitoring and refinement, marketers can consistently optimize their media mix, driving better returns on investment and achieving long-term success.

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Why Cassandra

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Cassandra's marketing mix modeling software has proven effective in helping businesses optimize their media mix and unlock ROI growth.

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Cassandra makes it extremely easy to follow these steps for your marketing team. 

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We are helping more than +500 companies and aiming to help tens of thousands in the near future.

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Cassandra: the process results'

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To show you how effective these steps can be for your team, here there is an example: 

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Cassandra partnered with CURA of Sweden to improve their Media mix. 
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We followed these three steps finding:

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• wasteful channels,

• understanding the right volume of investments through diminishing returns
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• Receiving personalized media plans to run what if scenarios
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We've been able to improve their number of conversions by 82% in less than 5 months. 

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Here is the case study. 

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Conclusion

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In summary, unlocking media ROI growth requires a systematic approach that includes identifying low hanging fruits, discovering over-investment in channels, and leveraging Marketing Mix Modeling (MMM) simulation-based predictions to create an optimal media plan.

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By following the step-by-step guide outlined in this article, businesses can make more informed decisions on budget allocation, optimize their media mix, and maximize returns on investment.

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Investing in Cassandra's marketing mix modeling software and benefiting from their expertise and partnership with Meta, potential customers can confidently optimize their marketing strategies for long-term success. To learn more and start your journey towards media ROI growth, visit cassandra.app.