Addicted to Results? Why Your MMM and MTA Models Have You Strung Out

By Greg Silverman, Jan 25, 2021

Is your business addicted to results? Many organizations rely on marketing mix models (MMMs) and multi-touch attribution models (MTAs) to estimate the impact of their actions and gain insight into marketing channels.

But these models have their limitations that could leave you wanting. While these were some of the first tools used to optimize marketing efforts, they simply do not provide the granular, consumer-focused insights necessary for making the best decisions in the current marketplace.

The marketplace is constantly evolving, so it’s no wonder the MMM and MTA created years ago are not fulfilling your expectations. What’s needed is a transition from an outcome-based solution to a systems-based process.

The marketplace is changing, and so should you

The COVID-19 pandemic drastically changed the way many businesses operate, but the marketplace had been shifting long before it began. In 2018, McKinsey reported that the life expectancy of an S&P 500 company was rapidly changing. In 1958, the average life expectancy of a business was 61 years. Today, it is less than 18 years. Even more startling is that the company projects that by 2027, 75% of the companies currently on the S&P 500 will have disappeared.

Why such a sudden decline? It’s not that companies are lacking the expertise or drive of those from decades ago; it actually all comes down to competition and the global marketplace.

Here are some of the causes of the shortened business lifecycle in the 21st century:

Private equity roll-ups: When an organization wants to enhance its value and drive more revenue, private equity acquisitions are an attractive option. Of course, to do this, a company needs significantly more capital and it may find that some of its acquisitions are not sustainable, leading the entire business to crash down.

Mergers and acquisitions: Another way for a company to create more value is through a merger or acquisition. While these tend to be more successful than a roll-up, they don’t allow other brands to mature on their own and therefore decrease the average lifecycle of businesses as a whole.

Unicorn startups that truly innovate: Consider companies like Amazon and Uber. They entered the market as an alternative unbeknownst to the competition. While they have thrived, many other companies that weren’t equipped to handle their entry into the market had their life cycle cut short.

Startups that do not innovate: Then there were startups like Quibi, which brought quick 15-minute shows to your cell phone (but not your television). Needless to say, the company didn’t truly innovate or take the recommendations of their advisors, according to the Wall Street Journal. Though ultimately unsuccessful, Quibi fragmented the market before showing how easy it is for startups to fail no matter how much they spend on advertising and services.

Speed and impact of word-of-mouth influence: The ubiquity of social media has made the impact of word-of-mouth influence even faster and more impactful. One poor review, post or interaction between friends discussing your product or service can detract from your brand.

Global interconnectivity: The world is more interconnected than ever, which can make or break many companies. With plenty of global alternatives on the market, a brand needs to truly innovate to stay relevant.

Businesses must prioritize preserving and growing their brand in the new marketplace, and that means changing the way consumer data is collected.

So, what does your brand need to do?

While the shortening business life cycle may feel beyond your control, there are steps to take to combat it. This begins by shifting the focus from outcomes to systems.

Addicted to Results? Why Your MMM and MTA Models Have You Strung Out

It’s no secret that most brands manage through governance, meaning they have strict guidelines for how to present themselves. From color schemes and font sizes to content requirements, there are boxes to always check and missteps to avoid, with little middle ground. This black-and-white way of operating is used to protect the brand’s image, but such a fierce mindset stifles innovation and may ultimately lead to its failure.

That’s because a linear view of success isn’t practical for any business. In an ideal world, doing one thing would always result in another, but that isn’t the case in a dynamic marketplace where your brand, competitors and consumers are constantly influencing each other.

MMM and MTA models also operate in a linear fashion. They don’t predict or easily adapt to exogenous shocks to the marketplace, but simply continue to operate based on historical data.

Your business needs a solution that integrates the environment, consumers and competitors into one comprehensive market view. When the environment changes or competitors take unprecedented action, is your brand ready for the disruption? If not, it affects the longevity of your business. Now, it’s time for brands to decide how much to manage and quantify in order to survive, and a solution exists to help.

A systems-first approach allows businesses to adapt quickly

It’s no wonder your MMM and MTA models have you feeling burnt out. Your business needs to shift to a systemic view which will allow it to capture more valuable feedback about the market and adapt quickly to change.

Concentric Marketplace helps organizations understand not just about what will happen next quarter, but what’s actually right around the corner. But it’s not just a solution that we deliver, out team helps your business by:

  • Convincing the team of the need for a systemic view
  • Aligning analytics, brand management and the C-suite
  • Pulling together a team and data
  • Designing an experiment
  • Tracking results in a quantifiable way

Concentric Market is a move away from MMM and MTA models that helps businesses make better and more agile decisions that they need to survive and thrive in the marketplace. Contact Concentric today about this novel approach to data and analytics, and make sure to read the next and final installment in our series to learn about becoming a process junkie.

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