Why you should use marketing mix modeling to accurately measure advertising effectiveness
The truth of advertising
Is it true that the effectiveness of advertising can't be measured?
We see a variety of advertisements in our daily lives, such as TV commercials, huge billboards in front of train stations, video ads playing in taxis, flyers in our mailboxes, etc. To what extent do such advertisements influence our purchasing behavior as consumers?
In every industry, people say, "Focus on cost-effectiveness."The effectiveness of advertising is often not measured properlyTherefore, people may think, "Because we released it last year," or "I'm sure it will increase awareness."Many companies continue to advertise by relying on experience and intuition..
Japan's total advertising expenditure exceeds 6 trillion yen (*1).
For a company, advertising expenses are nothing less than a huge investment.
Is it okay to keep spending money without knowing the results?
We at XICA provide an advertising effectiveness analysis tool called "MAGELLAN(hereinafter referred to as Magellan)” lies in this sense of the issue.
There are ads whose effects are easy to see and those whose effects are hard to see.
Some advertisements have visible effects, while others have less visible effects.
Advertisements placed on the Internet, such as manga ads and shopping site ads, that appear without your permission while you are surfing the Internet"Online advertising (or Internet advertising)"Online advertising can track the behavior of people who see an ad, from the screen display to clicking and purchasing, so it is possible to know the impact of the ad on sales, etc.Ads that are easy to see the effects of.
On the other hand, TV commercials, taxi ads, billboard ads, and other ads cannot track the behavior of individuals after viewing them, unlike online ads."Offline advertising"Investment in offline advertising exceeds that of online advertising (*2).The effects are difficult to see, and in many cases measures are implemented intuitively, such as by referring to past cases..
In addition, various factors influence the actions consumers take before purchasing a product, such as, "I saw a TV commercial and searched for the product online. Later, the weather was nice so I went to the store and asked the salesperson for advice. There was a discount so I bought it in the store."
While factors beyond our control, such as the weather, temperature, and competitors' policies, also affect purchases,It is also difficult to visualize and quantify the relationships between ads, consumer behavior leading up to a purchase, and the impact of external factors.It is said.
(*1) Source: Dentsu "Advertising Expenditures in Japan"https://www.dentsu.co.jp/knowledge/ad_cost/
(*2) The market size of online advertising (internet advertising) is approximately 2.2 trillion yen. Meanwhile, the market size of offline advertising (the four mass media of newspapers, magazines, radio, and television plus promotional media) is approximately 3.9 trillion yen. (Source: Dentsu "Advertising Expenditures in Japan"https://www.dentsu.co.jp/knowledge/ad_cost/）
Such an analysis is dangerous
It is dangerous to judge a measure as "effective" based on only one measure and its results.
There are many tools that claim to be able to analyze advertising effectiveness, but you need to be careful because some of them evaluate an ad as effective without properly analyzing the effectiveness.
For example, some of the popular TV commercial effectiveness measurement services today use TV commercial placement data and consumer behavior data (such as purchase data on websites).They make a one-to-one comparison and conclude that "TV commercials were effective."However, such analyses are very dangerous.
As I wrote in the previous chapter, various factors influence the purchasing behavior of modern consumers.It is rare for a single measure to have an impact on the final goal, such as sales..
If you analyze the impact of other measures and the relationships between the measures, you may find that the impact of other measures was actually greater.
Be careful not to rely too heavily on one-to-one analysis, as you may take the wrong action and ultimately suffer losses.
Marketing Mix Modeling: Visualize Any Advertising(MMM)
MMMAnd
Marketing Mix Modeling (MMM) isA method of measuring effectiveness that comprehensively analyzes the impact of online and offline advertising, as well as external factors such as weather, temperature, and competitor trends on results..
How MMM works
At MMM,Statistical analysisWe use the techniques of statistical analysis.An analytical method that clarifies data trends, characteristics, and relationships between data by combining various data and creating equations that represent their relationships..
As I wrote in "The Truth About Advertising," the effectiveness of advertising and marketing is influenced by a variety of measures and factors. Therefore, in order to accurately measure advertising effectiveness, MMM, which incorporates an analytical method called "path analysis" that reveals the relationships and compatibility between factors, is suitable.
(*3) Analysis that clarifies the complex relationships between factors using a "path diagram," which uses arrows to show the causal and correlational relationships between factors.
MMMThree things you can do
① Understand the effectiveness of offline advertising
By conducting analysis using MMM, it is possible to measure the effectiveness of advertisements such as TV commercials, newspaper advertisements, and flyers, which are said to be "advertisements whose effectiveness is difficult to see."Quantifying the effectiveness of offline advertisingAvailable
② Understand the relationships and compatibility between policies
At MMM, we don't just look at the effect that advertising had on results, but also look at things like "magazine advertising assisted the effectiveness of web advertising."Relationships between policiesAnd the weather and temperatureInfluence of external factorsSince it can also be visualized,"Which measures are compatible with which other measures?" "What is the flow of customers leading up to a purchase?" "When is the best time to implement this measure to be most effective?"You can also find out:
Large companies may have more than 100 marketing initiatives running in parallel.
If you try to measure the effectiveness of each individual measure, there is a high risk of making an incorrect evaluation..By taking into account the relationship between each measure and accurately measuring the effectiveness of each measure, you can maximize your marketing results.
3) Understand how to allocate advertising budget to maximize sales
The statistical analysis used in MMM isEquation of the impact of measures on results and the relationships between measuresTherefore,It is possible to estimate "how much budget should be allocated to each measure to maximize sales" and make future predictions..
MMM, future possibilities
Until now, online advertising has been measured by tracking and recording the behavior of individuals on the web. However, cookies, which are logs of individual behavior, will become obsolete by 2023 for privacy reasons (*4).Online advertising measurement will become less accurateIt is said.
MMM is common overseas, and many companies have in-house analysis teams and provide analysis tools. There are still not many companies in Japan that are practicing MMM, but in the future, more companies will likely follow the example of overseas companies and adopt MMM.
It allows for comprehensive analysis of online and offline advertising, with high measurement accuracy.Demand for MMM is growing in the marketing fieldIt is expected that
◆For more information on the impact of going cookieless on marketing, please see the following article:
For information on domestic and international trends regarding MMM, please also refer to the following articles:
Three reasons why Japan should adopt MMM in marketing in the cookieless era | XICA Co., Ltd.
(*4) Google has announced that it will phase out third-party cookies in its web browsers, including Google Chrome, by 2023.
MMM x Tool = Magellan
Magellan's Strengths
Until now, MMM, which requires specialized knowledge of statistical analysis, was thought to be something only data scientists could do. Therefore, if you wanted to put MMM into practice, it was common to outsource it to a specialized consulting or research company.
On the other hand, many of the recently emerging tools that claim to "easily measure the effectiveness of TV commercials" perform a simple, one-to-one analysis of TV commercial advertising data and results, raising concerns about the accuracy of the analysis.
This is the strength of the MMM tool "Magellan" provided by XICA, and the reason why it is said to have no competitors in Japan is thatEven those without specialist knowledge can perform highly accurate on-off integrated analysis.In the five years since Magellan was released, about 5 companies haveData analysis of over 170 major domestic companiesBecause we have a track record of doing so, we are able to reflect the know-how we have gained from experience in Magellan's analysis algorithms and feature development.
Comparison with competition
- Difference from other TV commercial effectiveness measurement tools: Accuracy is different
Since measures are related to each other, it is important to accurately measure the effectiveness of each measure, taking into account the relationships between them. Many general TV commercial advertising services determine whether a measure is "effective" based on a one-to-one analysis, but Magellan considers the relationships between marketing measures in its analysis, so it can correctly analyze the effectiveness of each measure.
- Differences from consulting companies and research companies: Analysis difficulty, time, and cost are different
If you hire a consulting or research company, a professional data scientist will conduct an integrated analysis, which will be highly accurate but will take time and money.
It is also important that the analysis results lead to the next action, but external consulting firms often only conduct analysis, so they may not produce analysis results that lead to the decision and execution of action.
XICA is "Democratizing Data Analysis"It has made it possible to use MMM (on-off integrated analysis), which previously required specialized knowledge, without specialized knowledge.Save time and money while getting accurate, actionable analyticsAvailable
The environment surrounding marketing is constantly changing, with diversification of media and changes in consumer lifestyles. We live in an age where it is difficult to continue to achieve results by relying solely on experience and intuition. That is why we recommend that you conduct proper analysis and use data as a company's weapon.
[An illustration]Tabeasuchan