Your marketing budget is tight, and every dollar counts. But are you spending your ad budget efficiently, or are you throwing money into channels that don’t work?
Marketing Mix Modeling (MMM) stops businesses from wasting money on ads by identifying which marketing efforts drive the most revenue—without relying on cookies or user tracking.
What is Marketing Mix Modeling (MMM)?
MMM is a data-driven technique that analyzes historical marketing data to determine the impact of different advertising channels on sales. It is an expert statistical methodology for measuring marketing effectiveness by examining how it influences marketing inputs and business outcomes such as sales, revenue, and customer growth. Basically, it tells you which ads work best and which don’t, so you can reallocate your budget wisely.
MMM takes into account all marketing efforts, including:
- Google Ads
- TV ads
- Social media ads (Facebook, Instagram, LinkedIn)
- Email marketing
- Influencer marketing
- Print and radio ads
- Economic factors (inflation, seasonality, competitor activity)
By using MMM, businesses can stop guessing and start making data-backed ad spending decisions.
Why Does So Many Ads Spend Go to Waste?
Brands waste millions every year on ineffective ads because many businesses fail to properly optimize their campaigns. A few reasons why many ads fail to get positive results are:
- Over-depending on Historical Data
Most marketers rely on tools like Google Analytics, which attributes conversions to the last-clicked ad. They ignore how quickly market trends, customer behavior, and platform algorithms can change. This can lead to misallocated budgets based on outdated trends.
If a model wrongly assigns sales to TV ads instead of social media ads, brands may keep spending money on efforts that don’t work. Also, if you don’t know which channel drives you the best return on investment (ROI), you might be spending too much on ads that aren’t working and too little on high-converting ones.
- Little or No Attention to Seasonal and External Factors
Sales fluctuate due to seasonality, economic trends, or competitor promotions. Many marketers fail to adjust their ad spend based on these factors.
- Click Fraud and Bot Traffic
Marketing Mix Modelling typically focuses on total spend vs. total income but doesn’t account for invalid traffic, bot clicks, or wasted impressions from poorly targeted ads. This can lead to brands overestimating the effectiveness of their campaigns. Also, competitors and automated bots can click on ads, consuming ad budgets without generating any real conversions.
How to Fix Ad Waste in MMM?
1. Collect and Organize Your Data
You need clean, structured data from all your marketing platforms before you can run an MMM analysis. Some important sources for data to look at are:
- Ad spend per channel (Google, Facebook, Instagram, Twitter, LinkedIn, TV, radio, print, direct mail, influencer marketing, etc.)
- Sales data (revenue, conversions, leads, repeat purchases, refunds, etc.)
- Website traffic and engagement metrics (sessions, bounce rate, time on site, page views, conversion rate, click-through rate, etc.)
- Seasonality trends (holidays, back-to-school, Black Friday, Cyber Monday, summer sales, Valentine’s Day, Mother’s Day)
- External factors (inflation, competitor promotions, economic downturns, industry trends, new regulations, supply chain disruptions, weather impacts, geopolitical events, etc.)
2. Run a Statistical Regression Analysis
MMM relies on regression analysis to measure how changes in ad spending affect sales.
How does it work? A statistical model is built to connect marketing inputs (spending, impressions) with business outcomes (sales, revenue). The model gives each marketing channel a weight, which shows which ones have the most effect.
Don’t worry if you’re not a data scientist! Google’s Lightweight MMM (LMMM) and Facebook’s Robyn (an open-source MMM framework) are tools you can use. You can also use marketing analytics apps like Tableau, R, and Python.
3. Identify Underperforming Channels and Cut Budget Waste
Running MMM will show you exactly where your ad money is going. Signs that you are wasting your budget can be:
Simply focus on channels that drive high ROI and shift ad spending from low-converting to high-converting campaigns to reallocate your budget.
4. Regularly Conduct A/B Testing
Even though MMM gives historical insights, marketing will always keep evolving. Conducting A/B testing regularly means continuously testing different versions of ads, landing pages, or marketing strategies to see which one performs better. By comparing two variations (A and B), businesses can identify which elements—such as headlines, CTAs, images, or ad copy—drive more conversions.
To keep improving, ensure you regularly run A/B tests, review MMM results quarterly to refine your strategy, and adjust budgets monthly based on performance trends. This will enhance marketing mix optimization efforts, reduce wasted ad spend, and improve overall ROI.
Stop wasting money; spend wisely instead, cos money doesn’t grow on trees. Marketing mix modeling can help any business looking to cut wasted ad spend. If you follow this 4-step framework, you will be able to identify underperforming ad channels and successfully shift your budget to marketing efforts that will bring you a high return on investment.
