FEATURE7 August 2017

In the Mix

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Knowing where best to invest marketing spend requires context, precedent and common sense. Marketing mix modelling can be a vital tool for determining return on investment, but the models are not without their limitations. By Tim Phillips

In the mix 1

Marketing mix modelling (MMM), in which historical data is fed into a model to try to optimise the return on marketing investment, has been a tool for marketers since the early 1990s. In the 2010s, it has created a flourishing sub-discipline: predicting the demise of marketing mix modelling. “To be provocative, I believe it will become obsolete, ” said Laura Desmond, then CEO of Starcom MediaVest Group, in 2011. 

“If MMM is to survive, it is essential that it change and experience a rebirth, ” the editors of GreenBook claimed in September 2016. For this article, Michael Wolfe – one of the pioneers of the technique in the 1980s – told Impact that he believes the discipline is “in crisis” (see p30, A crisis in MMM?).

Like any statistical tool, MMM can’t please everyone all of the time. There are marketers who can’t learn much of any interest from the available data – for example, if there is a particularly long and complex ...