08 Jun Four Models You Need to Measure Your Marketing Effectiveness
How do you determine your marketing effectiveness? You must measure your marketing and pick the right methodology to measure it based on the available data and the business question. There are four primary modeling types:
1) Attribution Modeling
Attribution modeling is a great measurement model for all types of online media. (Don’t tell anyone, but you can use it for direct mail, coupons, and inbound call center campaigns). It’s mostly used to optimize online media investments to drive short-term consumer behaviors. If you’re mostly doing online media with little traditional or one-on-one marketing, then this is probably the modeling and analytics tool for you.
There are several subsets of attribution modeling, including first-touch attribution, last-touch attribution, and weighted attribution. Using attribution modeling is ideal if the conversion happens directly after the consumer’s exposure to the marketing message.
2) Randomized Control Trial (RCT)
Randomized control trials are designed to measure the effectiveness of one-on-one marketing messages, such as email, DMs, calls, and SMS. RTC analyzes past marketing activities and consumer responses to find where differences in marketing actions across the population lead to differences in consumer response. Identifying these differences allows marketers to connect the incremental impact of each marketing action and marketing sequence to the desired response. Then they can optimize their messages for the overall best result.
3) Marketing Mix Modeling (MMM)
Marketing mix modeling helps to optimize the mix of online media and traditional media. MMM can measure aspects of all 4P’s in the marketing mix (Product, Price, Place, and Promotion). Marketers use it to determine the short-term value of a media channel. Generally, these are used for a single brand and don’t look at the category overall.
4) Consumer Behavior Modeling (CBM)
Consumer behavior modeling evaluates how consumers make purchase decisions. Understanding how consumers make purchase decisions can then optimize media in light of all other brands in the category. CBM includes analyzes various aspects of the purchase funnel and the consumer’s shopping behavior. It also analyzes the brand consideration process and builds a category-level model of the marketing (across the 4P’s) of all brands in the consumer’s consideration set. Marketers typically build consumer behavior models using agent-based modeling.
Choosing the Right Model
It’s not necessarily that one measurement model is better or more accurate than the others. Each model type has its advantages and disadvantages in answering different types of business questions. The critical factor is TTI — Time To Insight. Which modeling methodology can deliver insights you need quickly and accurately so that you can act confidently today versus three months from now?
The choice is yours.