Comparison of MMM analysis solutions: In-house or outsourced to an advertising agency or consulting firm? Explaining the pros and cons

If you are considering implementing Marketing Mix Modeling (MMM) or are already using MMM but want to consider an alternative solution, we will introduce the pros and cons of the four main MMM solutions and the type of company each solution is suitable for.

About MMM

The sudden increase in contact points with consumers has made it increasingly complicated to measure the effectiveness of marketing initiatives. In addition, many companies are facing difficult marketing challenges, such as changes in consumer lifestyles due to the COVID-19 pandemic and more stringent marketing investment decisions for companies.

MMM is an analytical method using statistical techniques that helps quantify the impact of marketing initiatives and non-marketing activities on business results such as sales. It can analyze multiple factors and evaluate how they affect business results. While privacy regulations implemented by Apple's iOS and other platforms may significantly reduce the amount of user data available, MMM is currently attracting attention as a solution for measuring the effectiveness of marketing initiatives and optimizing investments because it is a privacy-conscious method that does not use cookies.

Learn more about MMM here:
What is MMM? An explanation of the basics, analysis procedures, and implementation points of Marketing Mix Modeling.

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How to Choose the Best MMM Solution for Your Business

Before comparing MMM solutions to be implemented, it is a good idea to clarify your company's business model, marketing activities, and the data that will be required for analysis accordingly.

Sorting out the current state of the industry and business models

• Number of products and services to be analyzed
• Sales format (physical store, e-commerce, both)
• Distribution type (direct sales, agency, both)
• Seasonality

Take stock of your current marketing activities

• Diversity in the Marketing Mix
• Degree of offline media utilization
• Annual advertising expenses

Organize the quantity and quality of advertising and performance data

• What data sets do you have? (Amount invested in each medium, impressions and GRPs for each medium, online/offline conversions and sales, promotional data, etc.)
• Is there enough data for MMM analysis? (usually 1-3 years worth of data is required)
• Is the data at the level of granularity required for MMM analysis? (It needs to be categorized into daily and weekly periods.)

Once you have assessed your company's situation, let's take a look at four main MMM solutions.

MMM Solution #1: Analysis by In-house Team

This is a way to gather the personnel to conduct MMM analysis in-house.
To make effective use of MMM, you need an experienced team of analytics, media and data experts.

Large global companies that already have extensive experience with MMM through other solutions may choose to develop MMM solutions in this way using in-house teams, but most companies rarely take this route.

Benefit

• Analysis can be performed by a team with a deep understanding of your company's data
• Maximum customizability
• All data used for analysis is kept in-house

Demerit

• High costs of recruiting and training a team of experienced professionals, such as data scientists
• There is a risk that analysis results will not be translated into actionable insights

Suitable companies

• Companies that cannot provide data to external partners
• Companies that can invest manpower and money to conduct MMM analysis with their in-house team over a long period of time.

Please also take a look at this detailed article which goes beyond MMM analysis to discuss the advantages and disadvantages of conducting marketing analysis in-house.

Bringing marketing analysis in-house | Explaining the advantages and disadvantages

MMM Solution #2: Agency Analysis

This is a method of assigning an advertising agency to lead an MMM project. It allows you to grasp the performance of media through the advertising agency while reducing the required human resources compared to an in-house team.

Having the advertising agency in charge of media buying analyze the results of media investments makes sense, so it's a solution that many companies implement.

Benefit

• The advertising agency will lead the project.
• Since the analysis is about the media responsible for the advertisement, only some of the necessary data is available.

Demerit

• The cost of a single MMM analysis is often high, and additional costs are incurred for each additional analysis.
• It may take more than six months for the results to be available.
• There may be a potential conflict of interest (if the advertising agency also handles media buying)

Suitable companies

• Companies with a simple media mix or who only work with one advertising agency that offers MMM services

MMM Solution #3: Analysis by Consulting Firms

Compared to advertising agencies, the price of an MMM analysis project is higher, but the quality of the analysis results tends to be higher.

MMM analyses provided by consulting firms are usually quite expensive, but they can be flexibly customized even if your company's business model or media mix is ​​complex.

Also, since their main business is consulting, you can expect them to be able to interpret analysis results and make proposals based on them.

Benefit

• A consulting company will lead the MMM project.
• Comprehensive analysis is possible
• Receive actionable insights and recommended actions based on the analysis results
• Build a neutral partnership

Demerit

• It will cost a lot of money, exceeding tens of millions of yen (separate from consulting fees)
• In most cases, a one-time MMM analysis is all that is required, and additional costs are incurred each time the model is updated (adding data, making corrections, etc.)
• It may take more than six months for the results to be available.
• Collecting data required for analysis takes time and effort

Suitable companies

• Companies in urgent need of MMM analysis and looking for a temporary solution
• Large, well-funded companies with complex marketing initiatives

MMM Solution #4: Tools provided by a company specializing in data science and marketing

Here we will introduce the MMM tool "MAGELLAN" provided by our company.

The advantage of MMM tools is that they systematize the "trial and error analysis" that professional analysts spend a huge amount of time on within the service, thereby guaranteeing "analysis accuracy" and "speed" that cannot be achieved by human power.

By systematizing the process of MMM, it is possible to provide it at a relatively low cost. Therefore, the financial burden of using the solution is reduced, and compared to #1 to #3 above, it is the easiest to introduce and continue to use.

You can also view the analysis results on the dashboard and simulate budget allocation.

With the support of our dedicated data scientist team, we can flexibly respond to advanced analyses such as ad stock, saturation, and brand equity, as well as customization to suit your company's characteristics.

We go beyond just reporting the analysis results to provide you with a marketing consultant to interpret the analysis, provide actionable insights and recommended actions based on your goals.

Benefit

• A dedicated team of data scientists will lead the MMM project.
• Less expensive than other solutions (about half the price)
• The speed at which analysis results are obtained is fast
• Continuous model updates (quarterly or monthly) possible
• Continuously receive actionable insights and recommended actions
• Build a neutral partnership

Demerit

• It takes time and effort to collect the data required for analysis.

Suitable companies

• Companies that urgently need MMM analysis and require ongoing, not just one-time, solutions
• Companies concerned about the cost and time involved in building in-house teams, ad agencies and consulting firms
• Companies that have tried MMM with advertising agencies or consulting firms and want to change their solution

To the end

We have presented four different MMM solutions.

We hope that this will be helpful for those who are considering implementing MMM, or for marketers and managers who are already using one of the solutions.

If you want to learn more, check out our comprehensive guide to what marketers need to understand and pay attention to in order to make their MMM projects successful and lead to real action and contributions to their companies.MMM Practical Guide .

If you are interested in our MMM analysis service "MAGELLAN", please feel free to contact us.Service pageOr,Service materials .

Author information

XICA Co., Ltd. Marketing Team