Unlocking Marketing Efficiency: Insights from PwC and Analyx

Chief Marketing Officers (CMOs) and Chief Financial Officers (CFOs) often struggle with optimizing marketing budgets to maximize return on investment (ROI). Efficient resource allocation and accurate impact measurement require a deep understanding of marketing mix modeling (MMM) and advanced analytics.

Optimizing marketing budgets is crucial for maximizing ROI, but it comes with its own set of challenges. What are the primary challenges in optimizing marketing budgets?

Cosma Nouschirvan: One of the primary challenges is data fragmentation across multiple platforms and a lack of consistent media taxonomy, which complicates the process of obtaining a unified view of marketing performance. Different platforms often have their own metrics and reporting standards, making it difficult to consolidate and analyze data effectively. Additionally, rapidly changing consumer behavior and the proliferation of digital channels require real-time analysis and continuous adaptation. Companies need to be agile to keep up with these changes and make timely adjustments to their marketing strategies.

Sascha Stürze: I agree. Another significant challenge is the robust isolation of the marketing impact on sales. Pure digital attribution and traditional “MMM 1.0” models often struggle to capture the complex interactions between different marketing channels plus external influencing factors - leading to suboptimal budget allocation. For instance, the impact of a TV ad on SEA clicks finally driving online sales might not be immediately apparent.

Given these challenges, how can Marketing Mix Modeling help address them?

Cosma Nouschirvan: MMM helps by evaluating the impact of various marketing activities through rigorous statistical analysis. It quantifies the contribution of each channel, allowing companies to make more informed budget allocation decisions. By understanding which channels are driving the most value, businesses can reallocate their budgets to focus on high-performing areas. Furthermore, MMM can identify diminishing returns on investment, helping companies avoid overspending on less effective channels. This makes the entire marketing strategy more efficient and aligned with business goals.

Sascha Stürze: MMM 2.0 goes a step further by not only isolating the effects of different marketing actions while accounting for factors like seasonality and external market conditions. But also by EXPLICITLY taking into account the mid-term impact “via” brand. This granular analysis provides actionable insights that can be used to reallocate budgets to the most effective channels. For example, an MMM might show that Display ads drive superior performance in the short-term but taking into account mid-term impact, linear TV might become much more relevant. Thus, companies can adjust their spending accordingly. Our solution leverages such advanced MMM techniques to help CMOs to either maximize ROI but – more importantly – maximize mid-term value creation.

Advanced analytics has become a cornerstone in marketing strategies. What role does advanced analytics play in enhancing marketing efficiency?

Cosma Nouschirvan: Advanced analytics transforms marketing efficiency by moving beyond basic performance metrics to more sophisticated predictive and prescriptive analytics. By leveraging machine learning and big data, companies can uncover hidden patterns and trends that are not immediately obvious. This enables more strategic decision-making, such as predicting future customer behavior or identifying the most effective marketing channels. Advanced analytics also helps in segmenting the audience more precisely, allowing for personalized marketing campaigns that resonate better with different customer segments.

Sascha Stürze: Advanced Analytics also allows for dynamic monitoring and optimization of marketing activities. The term "real-time" might be an overstatement, but our solution, for example, is designed to support "agile budgeting": In the past, MMMs (Marketing Mix Models) were often used to evaluate historical effectiveness. Today, the focus is on providing higher-frequency insights and optimization recommendations, for example, on a monthly basis. This allows companies to quickly respond to changing market conditions and consumer behavior. Whether it's optimizing the next campaign or reallocating budgets in response to performance data, advanced analytics ensures that marketing efforts are always aligned with current market conditions. This level of flexibility and precision is crucial to maintaining a competitive edge in today's fast-paced digital landscape.

Indeed: In the past, MMMs were rather rigid constructs. Modern MMMs are agile and can be easily adjusted. How can companies ensure their MMM models remain relevant over time? How often is it advisable to make adjustments?

Cosma Nouschirvan: To ensure that MMM models remain relevant over time, companies need to adopt a proactive approach to data management and market analysis. This involves regularly updating the model with fresh data and incorporating new variables that reflect current market trends and consumer behavior. In terms of frequency, I would recommend a quarterly review for most businesses. This allows enough time to collect meaningful data and observe market trends. However, for companies operating in highly volatile industries, more frequent adjustments—such as monthly reviews—might be necessary to stay agile and responsive.

Sascha Stürze: When we look at our client base, we see an increasingly frequent update cycle on the one hand, this entails weekly data updates to track campaign effectiveness in quasi real-time. More importantly, it is about quarterly model refreshs to follow changes in channel efficiency and adjust marketing plans accordingly. The core is to make MMM part of operational decision making instead of a “looking backward tool”.

Collaboration between different firms can often lead to more comprehensive solutions. How does your joint cooperation work and what value does it bring?

Cosma Nouschirvan: When a company approaches us with the need for MMM, we start with a comprehensive consulting engagement. This involves understanding their current marketing strategy, business goals, and operational constraints. Our initial focus is on diagnosing the problem areas and identifying the key objectives the company wants to achieve. We then work closely with Analyx to gather and analyze the necessary data. This partnership allows us to leverage Analyx's technical expertise while we provide strategic oversight and ensure that the solutions align with the client's broader business goals.

Sascha Stürze: The partnership with PwC allows us to focus on our key areas of expertise which is: Data, Modeling and Self-Service budget optimization software. Once we have the data, we use our solution which is designed to deploy MMMs on a truly global scale. Most of our clients are multi-brand, multi-product, multi-national firms with a need for a consistent approach across the globe. The insights derived from our tools are then fed back to PwC. This facilitiates an improved marketing strategy embedded into process improvements – just think about upgraded planning processes involving client, our solution and the media agencie(s). The collaboration with the PwC consultants ensures that the client not only understands where to allocate their marketing spend but also how to implement these changes effectively across their organization in an upgraded Target Operating Model (TOM). The value this joint cooperation brings lies in combining strategic consulting with advanced analytics, resulting in actionable insights that drive better business outcomes.

Could you share an example of a successful joint project?

Cosma Nouschirvan: Absolutely. A notable collaboration with Analyx involved optimizing a client’s media budget allocation using media mix modelling (MMM) in the Swiss market. We combined Salesforce’s Marketing Cloud Intelligence (MCI) with Analyx's MMM solution. We started by leveraging MCI to gather and harmonise marketing data across multiple channels, establishing a global classification strategy to ensure data consistency and comparability. This improved automation and efficiency, leading to a 20% increase in marketing budget efficiency.

In the second phase, we uploaded the harmonized dataset to Analyx's MMM for analysis to optimize lead generation. Analyx MMM allowed us to perform what-if analyses and determine the optimal budget mix. The analysis revealed LinkedIn Ads as the most effective channel. Analyx MMM recommended increasing the LinkedIn Ads budget by 29%, SEA by 11%, and reducing programmatic advertising by 50%, resulting in increase in new leads without increasing the overall budget. Notably, this was not even a “classic” B2C example but a more complex B2B marketing effort. The collaboration gave us actionable insights and a robust framework for data-driven decisions. Combining MCI and Analyx MMM enabled a comprehensive, real-time view of the client’s marketing performance, optimizing the strategies effectively.

Improving marketing efficiency is a key goal for many companies. Finally, what advice would you give to companies looking to improve their marketing efficiency?

Sascha Stürze: My primary advice would be to embrace data-driven decision-making starting on a strategic level – without losing touch with human intuition. Think about it: If you have 6 product brands, 20 media channels, 5 countries and 4 quarters per year – your company is making 2.400 budget decisions per year, consciously or not! Relying on intuition alone is no longer sufficient in such complex and fast-paced marketing landscape. MMMs can provide valuable insights that are simply not possible relying on benchmarks and other heuristics. By leveraging such insights, companies can make informed decisions about where to allocate their marketing budgets most effectively – driving mid-term value creation!

Cosma Nouschirvan: I completely agree with the emphasis on data-driven decision-making. However, I would add that an integrated approach is crucial. It's not enough to just have the right insights—you need to ensure these insights are aligned with your overall strategy and effectively implemented across your organization. This involves breaking down silos between departments and ensuring that everyone is on the same page. Insights should be integrated into the broader business strategy and operationalized in a way that drives real change. This is where partnering with a consultancy like PwC can make a significant difference.