Retail media has added a layer of complexity to marketing plans, but marketing mix modelling (MMM)

A new report from WARC and Amazon Ads attempted to explore how MMM has evolved for the era of retail media. And while MMM has existed as a concept for more than 70 years, the research found that retail media has made MMM more relevant as a way to provide insights into sales, shopping behaviour, pricing and ad effectiveness for improving channel planning and execution.

That is because today’s consumers interact with a brand across 20 media channels on average in their journey to purchase. In addition to the number of touchpoints involved, the complexity of marketing measurement is further complicated by the fact that consumers don’t see the distinction between online and offline. They move seamlessly between online and offline media and retail spaces, with 54% checking out products online before later buying in-store.

The report sets out five reasons why MMM matters in relation to retail media. The first is that MMM can identify base sales from those driven by marketing activities in addition to showing the impact of channel activity on incremental sales. MMM can also isolate the media channel effect to show the individual contributions of each channel, while factoring in category dynamics and external market conditions. MMM also
demonstrates online and offline synergies to help marketers understand the effectiveness of multi-channel campaigns.

MMM also helps show the contribution of both brand building and sales activation strategies for short- and long-term planning. The final benefit of MMM to retail is that it’s a durable measurement solution in an evolving digital and regulatory landscape — and is a privacy-first solution.

There are, however a few barriers – namely, cost, complexity and accessibility – because it requires an internal specialist resource or reliable external partner, as well as an accurate data feed. That said, the report concludes that MMMs have become more accessible, with more partners and options in the market helping make solutions more cost effective and timely.

Chris Williams, chief marketing officer of marketing science company Arima, says the report’s findings hold true, but finds that the “retail” part is unnecessary, as MMM is effective for all marketing initiatives. “What’s important, but not in the report, is the connection of MMM to the media planning tools; both your speedometer and your engine are vital parts of the car, they’re not separate things. The audience’s media habits need to be combined with the advertiser’s effectiveness, hence MMM-based media planning.”