Building MMM the Traditional Way: Why It’s Way Too Expensive

In our previous article, we explored why small and medium-sized media agencies have yet to adopt marketing mix modelling (MMM). One key reason stood out: the high cost of building MMM the traditional way. Let’s break down why this cost is so significant.

What is MMM?

At its core, MMM is a multivariate regression model designed to explain variations in a key performance indicator (KPI), such as sales, by analyzing multiple predictor variables like media spend, promotions, pricing, competitor actions, and more. However, MMM isn’t just a simple regression model—it must meet specific marketing and statistical criteria:

• Media Variables: Typically have a positive impact, but their contribution needs to be quantified.
  
• Promotions & Discounts: Positive, as they boost customer engagement.
  
• Pricing: Higher prices may deter customers, while lower prices attract them.
  
• Product Distribution: Greater availability enhances sales.
  
• Competitor Activity: Often negative, as competitors can pull customers away.
  
• External Factors: Variables like public holidays, weather, economic trends, natural disasters, or pandemics can have diverse impacts.

The challenge lies in balancing these variables, assigning reasonable impact levels (positive or negative, strong impact or weak), and combining marketing expertise with rigorous statistical standards.

The Complexity of MMM

Building MMM involves more than just handling statistics. It requires passing various statistical tests—like multicollinearity checks and goodness-of-fit evaluations—while ensuring the model aligns with real-world marketing dynamics. You can refer here for details on the specific statistical tests involved in building an MMM. This dual complexity of statistical rigor and marketing insights is what drives up costs. 

Why is MMM So Expensive?

Given MMM’s complexity, skilled data analysts or data scientists are indispensable. But finding the right talent comes with challenges:

• Talent Scarcity: Skilled analytics professionals are in high demand.
  
• High Costs: Hiring a skilled data analytics expert can be a significant expense. Outsourcing to vendors or consultants is often just as costly.
  
• Quality Risks: Without attractive salaries or fees, agencies risk hiring average talent, leading to subpar models and results.

We recently looked into an MMM service vendor called Cassandra, and their pricing list reveals that their MMM services start at a minimum cost in the four-figure range.

Another MMM service provider, Mass Analytics, offers software-as-a-service solutions for users to build their own MMMs. However, their pricing is not listed publicly, suggesting it may not be a cost-effective or budget-friendly option.

For many small and medium-sized agencies, these barriers make MMM feel like an unattainable luxury.

A Smarter Solution with More Than Data

At More Than Data, we believe that where there’s a will, there’s a way. That’s why we’ve created Minute MMM: a budget-friendly, easy-to-use, customizable, and fast MMM solution tailored to agencies of all sizes.

With Minute MMM, you can:

• DIY your marketing mix models with ease.
  
• Incorporate your unique industry knowledge for actionable insights.
  
• Save time and reduce costs without sacrificing accuracy.

If this sounds like the solution you’ve been waiting for, let’s connect! We’re here to make MMM accessible, effective, and affordable for all.