A vision of positive change through digital transformation
Marketing Measurement & Optimization (MMO) is an approach many businesses use for analyzing the impact of their marketing activities and inputs, to determine which work best, and to optimize future marketing investment as a result.
Traditionally at Ekimetrics, MMO has applied econometric modelling to all aspects of the marketing mix, ranging from media to more complex marketing levers. These include: all paid, earned, and owned media; promotions, pricing strategy, trade activity including point of sale, sponsorship, distribution, new product launches, stock issues, and broader competitor activity. MMO is used both strategically and operationally, enabling brands to address both high-level considerations (such as optimizing budgets between brands and markets) and day-to-day tactics (like forecasting the impact of a launch campaign).
We apply the same level of granularity and rigor in analyzing each and every marketing input to provide truly holistic measurement. By understanding, incrementally, the impact of all past actions, we can forecast future plans and identify risks and opportunities. This is the key to better allocating marketing spend and seizing the opportunities presented by optimization, a vital strategy for brands looking to thrive in today’s volatile world and global market conditions.
Historically, MMO has often been delivered by external, third-party service providers. As more companies have experience of MMO, the discipline has become more sophisticated, able to provide more reliable forecasts and simulate scenarios based on hypotheses and constraints. And as MMO grows up, it is being increasingly embraced as a necessary management decision-making tool to grow and scale businesses.
Many brands feel the need to be more knowledgeable and empowered in the simulations and models they build and run to enhance their business decision-making. This desire for direct control of MMO is a powerful driver of in-housing MMO and it should be supported by a transformation strategy. This is because change of ownership when organizations in-house is a key predictor of success. Brands need to consider the principal pillars of transformation that need to be developed further: business value and analytics capabilities (including data, technology, process, and people).
Why might now be a good time to consider in-housing MMO?
MMO is now well-established in many of the world’s leading businesses that make a significant investment in marketing. Most have undertaken MMO successfully, often working with expert external service providers as part of a process of transformation. Many boards are now coming to appreciate the role and value of MMO, and the discipline has convinced CFOs in particular that marketing no longer needs to be indulged as unquantifiable. The application of rigorous data science and econometric modeling to analyze and optimize marketing investment has shown precisely how marketing can be a powerful driver of growth by shaping decision-making. Experience with and appreciation of the value of MMO has convinced many companies that the discipline delivers a critical competitive advantage and so they are starting to assess opportunities around in-housing.
Understandably, many companies’ initial experience of MMO comes by working with external, third-party service providers, harnessing their expertise and specialism in data science and modelling. As they gain more experience in MMO, many find that third-party automation often doesn’t fit with the customized needs of their business and operating model. The imperative to develop a bespoke solution that addresses their specific needs is accelerating the consideration of in-housing MMO.
Companies that sell multiple products in multiple categories and across many different markets often work with several different media and marketing agencies and holding companies. Each one produces performance and customer data in its own way which can get overly-expensive very quickly. Many brand owners have come to feel distant from their own data – data which can be used in models to predict growth and optimize performance. Meantime, in-house data management and data processing capabilities are improving and accelerating in many corporate functions, including in finance, supply chain, and customer data. Companies increasingly want to analyze and manage their own data in their own environment. The growing desire and ability to own and harmonize data across categories, markets, and agencies is driving companies to weigh up their options for in-housing elements of their MMO.
But it’s important that, before starting out on the journey to in-housing elements of MMO, organizations go into this process of transformation with their eyes wide open. In-housing is not right for all businesses. It is an expensive undertaking that can take many years to pay back and deliver meaningful ROI. But done right, it can be genuinely transformational.
Ekimetrics has recently published a white paper on in-housing MMO. In March 2022, our Global CEO, Jean-Baptiste Bouzige hosted a webinar on in-housing MMO in partnership with Forrester. To read the Executive Summary and download a copy of Ekimetrics’ White Paper click here.
The next in this series of articles focuses on what’s involved in in-housing MMO. You can read this article here.