How Marketing Mix Modelling can help the budgetting process in your company!

Are you discussing strategy and media budgets for 2024? Do you have business facts and arguments included in your argumentation?

It’s a challenge for many CMOs to get the optimal marketing budget approved if he/she is not able to use the right and fact-based argument in the dialogue with the CFO. And if you do not have valid arguments, chances are that you will face a reduced budget for 2024 – even if this is not the optimal business scenario.

MMM-based driver analysis can provide you with valuable insights into your sales, marketing, and media performance. MMM ensures that decisions are made based on a deep understanding of all significant drivers influencing sales performance, rather than relying on broad assumptions about budget-related impacts.

It is easy to see when sales are down, but more difficult to explain and document why. This is one of the main reasons why we need MMM. Many factors can have an impact on sales performance. 

-          Distribution

-          Media Budget Size

-          Media Performance

-          Price increase

-          Competitor

-          Inflation

-          Weather

We also need to remind ourselves that just because sales are down this doesn’t necessarily mean that marketing impact and ROI are down…

Insight into cause and effect becomes crucial, especially when faced with a potential need to make a budget reduction. Instead of making blind cuts that could potentially harm revenue, a data-driven approach can help identify areas where reductions can be made with minimal impact on sales.

Insights from MMM analysis can help you as a CMO to bring new and more data-driven arguments to the budgeting process. When your CFO asks for consequences of different budget levels you can illustrate how much each scenario contributes to sales and these insights will assist you and the company in building a better budgeting process and an optimal marketing budget for 2024.

8 out of 10 CMOs make reductions without a clear understanding of where and what to reduce and the consequences, which highlights a common challenge in the industry. Conducting a comprehensive MMM-based driver analysis can set you apart by providing the necessary insights for informed decision-making.

At Predictify we want to help businesses make decisions based on thorough documentation from all phases of the customer journey. Please contact Pontus Norberg, Jesper Dam Nielsen, Tommi Grønkjær Christiansen , and Kristian Vejborg at Predictify Consulting to find out how we can help you manage all advertising dynamics and total marketing impact.