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Why a SaaS Marketing Mix Model Outshines the Classic Approach

In the constantly evolving world of digital advertising, keeping pace with the most effective measurement tools is vital.

In the constantly evolving world of digital advertising, keeping pace with the most effective measurement tools is vital. With changing privacy landscapes and technological advancements, the traditional ways of ad measurement are being upended. One significant shift that's reshaping the world of digital marketing is the return of the Marketing Mix Model (MMM). But not just any MMM, the Marketing Mix Model SaaS solution is proving to be far superior. Let’s delve into the reasons why.

1. Adapting to the Digital Landscape:

The digital ad ecosystem has experienced major shifts. Apple's recent moves to limit advertiser tracking capabilities is just one example of how deterministic user-level measurement is becoming increasingly challenging. When this data becomes scarcer, companies that don’t adapt risk being left in the dark. The solution? The MMM SaaS solution doesn't rely on user-level data but rather thrives on the natural variation in aggregate data, providing reliable insights even as individual data becomes elusive.

2. Precision Through Calibration:

While MMMs are brilliant for working with aggregate data, challenges arise when marketing strategies vary greatly across channels. This is especially true for highly personalized digital campaigns. However, through the careful calibration of MMM using ad experiments, as suggested by recent Harvard Business Review findings, companies can achieve more accurate insights. Studies have shown that calibration can correct MMM-based return-on-ad-spend estimates significantly, sometimes by as much as 25% across diverse verticals.

3. Addressing Targeted Digital Ads:

Niche digital ad campaigns, especially those targeting custom audiences in regions like the U.S., have required calibration adjustments as high as 56%. This means that for companies focusing on specific channels or those with niche market segments, a SaaS solution that allows frequent recalibration is crucial.

4. Experimentation in a Data-Constrained World:

As user-level ad measurements become more challenging, ad experimentation will evolve. Techniques like geo ad experiments, where ads are shown to specific geographic regions, can provide data to calibrate the MMM. Such approaches, already offered by giants like Google and Meta and adopted by leading advertisers, have proven effective.

5. Ease of Calibration with SaaS Solutions:

The future of MMM lies in the careful calibration using ad experiments. A SaaS solution provides tools and methodologies to compare MMM results with ad experiments, choose models based on these comparisons, and even incorporate experiment results directly into the MMM. While this might sound complex, SaaS solutions often come with intuitive interfaces, making the process more streamlined.

6. Frequency of Calibration:

A Marketing Mix Model SaaS solution enables companies to recalibrate frequently. Depending on factors like ad spend and the number of digital channels, companies can decide on the number of experiments they should run yearly. For instance, a company spending more than $1,000,000 per month on ads might need to run 5 experiments per channel if they are advertising on 1 or 2 channels. This frequent calibration ensures that their marketing decisions remain data-driven and accurate.

Conclusion: Embracing the New Gold Standard

The landscape of digital ad measurement is undergoing a seismic shift. With challenges to user-level data measurement and the increasing importance of aggregate data, the MMM SaaS solution emerges as the new gold standard. By integrating both MMM and experimental calibration, companies ensure they remain agile, data-driven, and ahead of the curve in their marketing decisions.

As the Harvard Business Review suggests, it’s a reliable and effective method until new technologies like differential privacy become mainstream. In this transformative period for digital advertising, having the right tools, like a Marketing Mix Model SaaS solution, is not just an advantage—it's essential.