Over the past 30 years, we’ve seen the media landscape become increasingly complicated. The rise and rise of digital media formats has driven a need for supporting measurement frameworks and the advertising industry has certainly responded to support clients in this need. Now, as we face the death of the cookie and increasing government scrutiny on privacy more generally it’s time for media agencies to stop marking their own homework and embrace market mix modeling with third parties.
Demand for market mix modeling is strong
Demand for marketing mix modeling is growing strongly. Why is that? There are a couple of factors at play. The first is that many customers are managing the shift away from multi-touch attribution (MTA) models that can no longer be supported without the cookies that hold them up. While monitoring the customer journey remains to be among the most effective marketing tactics in designing a great customer experience, touchpoints on the customer journey can no longer be used as a reliable stand in for the effectiveness or otherwise of marketing. Market mix modelling can help customers and agencies to remove the noise and uncertainty associated with MTA and see what’s effective in terms of revenue.
This brings us to the second reason for the increased interest in market mix modeling. It’s a tough year for marketers. People are being asked to make savings where they can. Without a doubt, the most effective way to identify where savings can be made and incremental sales growth identified is with market mix modeling. Many customers also find that talking in terms of revenue makes it far easier to convince a finance team that marketing really is creating value.
The value of media agencies
So where does that leave agencies in all of this? Media agencies play a crucial role in guiding customers through the measurement transition already underway and in helping to identify the strategic change in times of pressure; media agencies aren’t just another supplier, they’re a trusted partner. It makes sense for agencies to cash in on this demand by setting up marketing mix modeling consultancies and building their own solutions, right? Wrong. Here’s why.
Firstly, creating great market mix modeling is not a profitable side hustle. Good modeling is hard. Really, really hard. While you may be able to hire the right people to set up a heritage style consultancy that builds bespoke models from the ground up for each customer, it’s not going to be cheap. So, you’re already charging clients an arm and a leg.
In addition, companies like Mutinex have already realised that SaaS-based foundational models that can support fast data refresh and learning on the go will outperform static PowerPoint presentations where it really matters: helping customers to get to insights quickly and make decisions. That kind of modeling isn’t just powered by data scientists, but by developers and product teams. So, are you a technology company now? You have to ask yourself if you have the chops to pull that off.
But let’s say you do want to “build” or “buy” so to speak, should you? Media agencies are customer partners in investment. Agencies make recommendations and then implement investment strategies and the performance of the agency is judged partially on the success of those recommendations. It’s one thing to provide customers with the results of their campaigns, but should agencies be responsible for assessing the effectiveness of these marketing investments?
It’s time for media agencies to stop marking their own homework
Agencies’ own modeling has a valuable role to play, but we also think there is significant value in agencies working with an independent third party to provide market mix modeling. In some cases, modeling is presented as “neutral” in and of itself. Who can argue with data right? But the reality is that all models depend on a set of assumptions. Assumptions can be misleading. And before you know it, your model is biased towards the best interests of the agency and not the customer. It’s just good ethical hygiene to avoid even the perception that the results of a market mix model could be biased in this way.
That’s why Atomic 212° and Mutinex have partnered to provide independent market mix modeling services to the former’s customers. There’s a whole other article on why we have chosen each other as partners. The point is that as valued partners, it is the duty of agencies to help customers to the next phase of marketing measurement, but that should not come at the expense of either agency profitability or unbiased reporting. Marketing measurement is changing. Let’s take this as an opportunity to draw the line in the sand and say no more to agencies marking their own homework.