Measuring the Long-Term Effects of Advertising with Marketing Mix Models
Marketing mix modeling is a well-established and widely used standard approach for measuring key drivers of sales or any other business metric. In our previous article we provided a detailed explanation of how this tool works and compared our solution with Robyn, the open-source tool by Meta. Here you will learn about how MMM is used to measure the long-term effects of advertising. MMM allows estimating the incremental increase in sales, driven by both media features (through the nonlinear transformation of their metrics — response curves) and other external factors (macroeconomic indicators, pricing, promotions, distribution, etc.). They are particularly useful and are usually applied for identifying the short and medium-term impact of marketing This approach works well for products in mature stages or those that have reached a certain level of brand-awareness. However, products in the growth or market entry stages often require a different approach. Brand-building through creating an emotional connection between the consumer and the brand forms enduring consumer preferences and directly influences the upward trend in sales. To understand and evaluate the real effectiveness of marketing in such cases, it is necessary to assess not only short and medium-term but also long-term marketing effects. Approaches to measuring… Read more »
