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Market Mix Modeling:

Search For The Perfect Mix

5th Annual Big Data Conference (2017), Santa Clara

Amit Satsangi
 Amit Satsangi
https://www.linkedin.com/in/amitsatsangi/

• Data Scientist (Consultant)

• 10 years: Analytics, IT and
Management experience
MS Physics  MS Comp Sci  MBA
Online channels and Revenue Allocation

3
Problem Definition

DisplayAds/Paid Search (SEM)

Email

Television Ads

Print Ads

PR Events

4
Attribution: Assigning $ Value to online events

5
 Marketing The Channel Attribution Problem
Activity
Spend
Day1: SEM
User searches for a beauty ($16) Originating Channel
product, and clicks on Google Ad
(SEM)

Day 5: SEO
Organic Search by user, lands on ($5) Assisting Channel
the company website, provides (SEO)
email, abandons cart
Day 6: Email Assisting
User receives email and clicks on ($0.05)
it, but still does not buy
Channel
(Email)
Day 7: Facebook
User sees ad on Facebook, clicks Ad Converting
Channel
on the ad, and makes a purchase ($2.0)
(Facebook)
Revenue Generated $100
Multi-touch Attribution Modeling

SEM
First-click
Facebook
Last-click
All
Linear .

???
Time Decay
7
Attribution Models  Media Mix Optimization 

8
 Issues With Multi-touch Attribution
Modeling

Soccer

How should we distribute the prize money of $10 Million amongst these players?
• Give 100% to the goalkeeper(First Click Attribution)?
• Give 100% to the player who hit the ball in the goal (Last click Attribution)?
• Something else???

Does This Sound Totally Absurd?

So, should Attribution Modeling 9
 Let’s Talk About Sex

Detector

01

10
Marketing, Promotion & Advertising 101

11
 Patterns of Advertising Response

01 Current Effect

02 Carryover Effect

03 Shape Effect.

04 CompetitiveEffects

05 Dynamic Effects

06 Content Effects

0737%
Media Effects
12
Temporal Effects of Advertising

Modeling Marketing Mix

Gerard J Tellis
13
Modeling The Market Mix Modeling Problem

14
 Market Mix Modeling: A Few Techniques

1. Basic Linear Model 2. Multiplicative Model

A, P, R, Q: Email, Price, Display Ads, SEO, TV

Paid Search, Print
Sales = 169 + 2.5*Email + 45*Price + 3.5*TV + …

3. Logit Model

15
Modeling Marketing Mix (Gerard J Tellis)
Market Mix Modeling : Experimental Results

16
Input Data

17
Results From The Linear Regression Model

18
Results From The Log-linear Multiplicative Model (I)

19
Results From The Log-linear Multiplicative Model (II)
licative Model

20
Learning is the eye of the mind…

21
 Learnings
• Channel Attribution fails to provide even a minimally acceptable
solution to the problem of Media Mix Optimization (marketing
budget allocation)
• At best Channel Attribution can be used to determine the most
popular “channel paths” that the customers take (using Markov
Chains)
• Using MMM one can go to various levels of model complexity
depending on the effects that are desired: current vs. carryover
vs. shape etc. (see Tellis)
• With MMM the costs of building and keeping the model up-to-
date go up with complexity (accuracy)
• Any MMM model (even the most basic one) takes time and
effort to build – check for Heteroscedasticity, Collinearity,
Normality. Auto-correlation etc.
22
It is not the answer that enlightens, but the question.

…Eugene Ionesco