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Marketing Mix Modeling vs. Multi‑Touch

Attribution…a tail of two R’s (ROI vs.
ROAS)
Published on September 28, 2017
Nikos Tsagaroulis Follow
Analytics, Data Science and CRM executive 4 0 0
2 articles

An October 2015 Forester research report, introduced UMIA (Unified Marketing Impact
Analytics). Although it’s another name for an approach that has been practiced long before,
it is a useful concept. The approach essentially merges two of today’s most relied upon
performance measurement models, namely, multi-touch attribution (MTA) and marketing
mix modeling (MMM). What is new, is the addition of data science and machine learning
techniques applied on big and small data - now allowed by faster and more powerful
computing – along with a deeper understanding of the business. The result is, according to
Forrester, “a blend of statistical techniques that assigns business value to each element of the
marketing mix at both a strategic and tactical level.” In other words, one gets the best of
both worlds: top-down, high-level, insights from MMM, and bottom-up, granular, results
from MTA. The two worlds are essentially united through the right blend of science, art,
creative thinking and deep business studying.

One could follow the logic below to initially determine if MTA or MMM or both are
needed:

Offline and digital investments compete for “attention” and “allocation” rendering the need
for reconciliation critical. After all, today’s “always-on” consumers and business decision

Messaging
Search makers consume content in a unified, continuous and49fluid way. As a result,7 marketers need
to have “one version of the ROI truth” that originates from reconciling the two.

Before one asks the question “how do I reconcile MMM and MTA?” it is important to
understand what divides the two marketing-return measurement approaches.

Those differences explain why there is friction between MMM and MTA

·        They are complimentary to each other, not substitutes

·        They use different measurements and KPIs for evaluating the return on marketing
investment

·        The same activity, examined at the same level and time window, will almost certainly
have different ROIs when measured in MMM vs. MTA

·        Each one drives its own valid insights and interpretations

·        Each one has its own unique “blind spots”

·        In the absence of a unified, universally accepted, solution marketers usually choose
one of them, quite often MMM

The good news is that there are now a few solutions emerging in the data science literature
as well as commercial applications, that attempt to address the needed unification and
reconciliation; admittedly, we are far from having a consensus on what is the “best” method
but the will, know-how and tools are emerging to start addressing this huge blind spot.

Generally, the set of inputs needed is – note: not all solutions use all the inputs below:

1.      Customer-level digital data (ad server data)

2.      Marketing and sales CRM platform data

 Search 3.      Traditional direct response data 49 7

4.      Other marketing data (e.g. pricing, distribution, local competitive conditions)

5.      Non-marketing factor data (e.g. customer support/service center, weather, local

economic conditions, geo location)

6.      Aggregate-level media performance data

7.      Connecting different marketing channels across devices and platforms, such as

connecting a mobile device user with their browser-based activity

Once a stream of customer-level activity is created, varied data science, machine learning
and econometric techniques are applied to holistically measure marketing performance and
reconcile MMM and MTA.

The key takeaway is that as marketing decision makers, we need to constantly ask both
ourselves as well as our MMM or MTA solution providers the following three key
questions:

1.      Which method(s) is/are currently being used to measure and report on ROI?

2.      If one method is used, what does the other method imply? How different is the
answer? What are the consequences of accepting one vs. the other?

3.      How is the difference in ROI measurement between the two methodologies being
reconciled, so we have “a single version of the truth”?

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Nikos Tsagaroulis
Analytics, Data Science and CRM executive
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