Not long ago, I came across a blog post written by BKV Digital and Direct Response that provides some insight into how to use a complex-sounding process called a Marketing Mix Analysis to calculate which of your marketing tools is delivering the best ROI.
As you know, calculating the ROI of an individual campaign is difficult enough. But how do you calculate the ROI of several marketing tools that are being used all at once? That’s where a Marketing Mix Analysis comes into play. It’s an amazing technique that’s perfect for people interested in learning which of their marketing tools are performing best and which ones are under-performing.
With that in mind, here’s the post from BKV that provides some additional information on Marketing Mix Analyses and how to use them.
Have you ever wondered how marketing factors impact your sales? What about that time sales decreased even though you had just increased your TV budget? Maybe you’d like to understand the ROI for each of your marketing channels, and what to do about it. If so, then you might be ready to conduct a Marketing Mix Analysis, the industry-wide approach that measures the impact of marketing on sales and conversions.
Sound scary? Not really. Marketing Mix Analysis is a scientific, statistical approach that measures marketing performance and calculates a true ROI for each marketing mix element. Fortune 500 companies around the globe use it to understand marketing performance, allocate their marketing budgets, and make major decisions on how to efficiently drive their business forward.
Maybe you already measure marketing ROI. How is a Marketing Mix Analysis different? Traditional ROI techniques involve allocating all your leads/sales across marketing channels based on the tracking for each channel, and then deriving an ROI. The problem with this approach is that it assumes that all sales can be traced back to marketing efforts, and that marketing is entirely responsible for changes in sales levels. Every marketer knows that sales are influenced by elements outside of her/his control: marketing spend from your competitors, seasonal effects, the health of the economy, etc…
Marketing Mix Analysis is unique in that it accounts for the effect of all these outside influences, producing a much more accurate depiction of each marketing channel’s incremental impact. A Marketing Mix Analysis will not only give you the true short-term ROI for each of your marketing channels, it will also help you understand how much to spend on each channel and what kind of return to expect. Companies that do Marketing Mix Analyses write specific recommendations for what to do with analysis results, and how to implement them. They’ll also help you understand what happens to your marketing ROI in the long run. New marketing channel? New product launch? Not a problem. A good data analytics provider can refine and improve the analysis to give you the tools you need to make informed decisions.
One of BKV‘s largest clients works closely with our Analytics team to understand marketing ROI through Marketing Mix Analyses. The results of our work have allowed Kool Smiles to confidently allocate their marketing budget and understand what is driving their business in the long run. Not only do we regularly update our analyses for this client, we frequently produce deep-dive analyses for specific marketing vehicles and even individual markets to help with further optimization.
That’s a Marketing Mix Analysis. Powerful tool? Yes. Hard to use? Not if you’re working with the right company.