Ad costs are skyrocketing, cookies are on their way out, and advertisers are grappling with an overwhelming lineup of platforms to manage. These new changes are reshaping how we track and target audiences. Advertisers need answers—fast—but in a world this complex, guessing doesn’t cut it.
That’s where marketing mix modeling (MMM) steps in, offering clarity amid the chaos. MMM shows advertisers which channels drive real results, where budgets deliver the biggest impact, and how to plan your next move.
What is MMM in advertising?
Marketing mix modeling (MMM) in advertising is the measurement of the effectiveness of ad channels like digital, TV, and print. It assesses each channel’s impact on driving key outcomes, such as sales and brand awareness.
By analyzing historical campaign data, MMM helps advertisers understand which channels and marketing tactics deliver the best results. This enables more precise budget allocation and a stronger marketing return on investment (ROI).
Read more: Understand the difference between marketing mix and marketing strategy
Why do advertisers need marketing mix modeling?
The reality of a cookieless world is already impacting digital marketing. Research shows that brands are losing $29 to acquire a customer, a 222% increase in the acquisition costs over eight years. Privacy changes mean fewer data points on individual users, making it tough to attribute success accurately.
MMM advertising doesn’t rely on individual-level data. Instead, it uses aggregate data—analyzing broad sets of information from various sources like sales, media spend, and external factors—to identify performance patterns. MMM steps up to solve these specific advertising challenges:
- Fragmented customer journeys: Consumers interact with brands across countless touchpoints—online, offline, social, and direct. Understanding which of these touchpoints truly drives conversions and revenue is crucial for accurate attribution and resource allocation.
- Budget pressure: The stakes are higher with rising ad costs and limited budgets. According to Gartner’s 2024 Annual CMO Spend Survey, there’s a 15% decrease in the annual marketing budget on average. Allocating resources effectively can make or break campaign success, especially when you need to demonstrate ROI to stakeholders who demand clear financial results.
- Shifting privacy regulations: With third-party cookies being phased out and new data regulations emerging, advertisers can no longer rely on granular, individual-level insights to track users. MMM steps in with an aggregated view, helping advertisers make decisions based on patterns and media channel impact rather than user-level tracking.
- Need for strategic decisions: Instead of focusing only on immediate results, MMM gives you insights that help with long-term marketing planning. Even if it’s creating the perfect balance of brand and performance media in your annual plan, MMM shows historical performance and trends, guiding future marketing campaigns based on solid data.
Read more: The Difference Between Marketing Mix Modeling and Multi-Touch Attribution
Top 4 MMM insights for advertisers
MMM offers advertisers more than just data—it provides a roadmap. But what do marketing mix models show advertisers exactly? Dive into these key insights of MMM to strengthen marketing performance.
1. Channel performance analysis
At its core, MMM helps advertisers determine which marketing channels deliver real value. Through statistical analysis, MMM identifies how much each medium—be it social media, search, or TV—contributes to the overall business objective, such as sales or brand lift. Knowing this helps advertisers avoid “over-attributing” success and instead focus on a balanced approach. The data also helps when you’re testing a new channel.
The MMM analysis is especially important when retail media measurement is all over the place with the individual networks sharing an inflated value of your ads. In this type of scenario, MMM shows the true conversions. For example, it can show if your Amazon ads account for 10% of your total conversions while other media search ads contribute to 30%. This breakdown allows you to optimize marketing spend to maximize high-converting channels and minimize budget waste.
2. Improved budget allocation
Budgeting is always a balancing act, especially when advertising costs are high and funds limited. MMM simplifies the allocation by showing the diminishing returns on investment for each dollar spent, by shifting your focus to important metrics like iROAS and mROI. It tells advertisers how much more (or less) they should invest in each channel to maintain optimal performance.
MMM analysis can also indicate incrementality and show, for example, if your TV ads are hitting a point of diminishing returns, meaning any further investment in that channel won’t yield the same ROI. Armed with this knowledge, you could reallocate funds from TV to a high-potential channel like display ads, ensuring every dollar works harder.
3. Real ROI measurement
For many advertisers, the goal of MMM is to get clear, quantifiable ROI metrics. Traditional ad measurement tools often rely on assumptions or average numbers, which don’t reflect true campaign impact. The estimates lead to metrics like ROAS, and consequently, its pitfalls. MMM goes a step further, offering concrete, data-backed ROI metrics that help advertisers see exactly how much revenue each campaign or channel is driving.
For example, MMM can break down ROI not just by overall spend but by sub-categories, like digital and print. The clarity in ROI helps advertisers make informed budget adjustments and clearly communicate the value of their campaigns to stakeholders.
4. External influences understanding
Market factors like seasonality, competitive activity, or economic shifts impact advertising performance, often unpredictably. With MMM, you can measure these external influences and see their effect on campaigns. This data is especially valuable in volatile markets, where changes in consumer sentiment can impact ROI.
Say a retail brand finds its ad performance spikes in December due to holiday shopping but dips in January. MMM advertising helps quantify and understand the impact of the holiday season. So, when it comes to less active months, your marketing spend optimization efforts will help you retain a steady revenue flow.
Use cases for strategic MMM-powered advertising decisions
The next step is applying to your ad strategies all the insights from your marketing mix models. Top use cases include:
1. Investment optimization
MMM advertising gives you channel-level data, helping you avoid spreading budgets too thin and instead focusing on high-yield channels. The information from your marketing mix model also helps you move away from relying only on your marketing instincts to make budget allocation decisions.
The data-driven marketing approach ensures that every dollar spent delivers the best possible return. If, for example, display ads are underperforming, but search ads consistently convert, MMM recommends reallocating funds to search. This targeted approach reduces spend wastage and boosts ROI.
2. Campaign adjustments on the fly
Though MMM uses historical data, AI-powered platforms like Keen offer real-time insights to guide adjustments. By identifying patterns, like which days or times of day perform best, MMM enables advertisers to refine timing and targeting without overhauling entire strategies.
For example, if an MMM analysis reveals that a specific campaign performs well only on weekends, advertisers can shift more budget to weekend slots, maximizing engagement while saving money during off-peak times.
3. Long-term forecasts
Planning for future campaigns is challenging without predictive analytics in marketing. MMM helps bridge that gap by forecasting potential business outcomes based on past performance, guiding long-term budgeting and ensuring sustained campaign success.
By analyzing historical data and market trends, MMM in advertising provides forecasts to help advertisers plan for future campaigns. The forecasts are especially useful for budgeting and annual planning, where past performance can shape future investments.
4. Risk reduction
When advertising costs are high, minimizing risk is crucial. MMM helps advertisers identify underperforming channels at risk before they drain budgets, allowing them to pivot toward channels that deliver results. By avoiding unnecessary spending, advertisers ensure their marketing dollars are put to work in the right places.
Maximize your advertising spend with Keen
Marketing mix modeling changes the game for advertisers, offering clear insights to refine strategies and maximize results. With Keen, these insights become actionable. Our powerful media planning solution simplifies complex MMM data, allowing advertisers to analyze media performance, simulate scenarios, and make confident, data-driven decisions—all without requiring technical expertise.
Keen’s intuitive features make it easy to shift from insight to strategy, helping you fine-tune campaigns. This approach allows you to stay focused on what matters: driving results and gaining a competitive edge.
Ready to see how marketing mix models can empower advertisers? Request a demo to explore how Keen turns data into real growth.
