27 Aug Media Mix and Marketing Mix Optimization in the Digital Age
What is a media mix and marketing mix?
Media mix and marketing mix refer to the ratio between marketing channels, budget, and results across the universe of marketing activity. Media mix and marketing mix analysis are decision-making tools which:
- Help marketers understand performance across all elements of marketing
- Are the framework through which decisions are made.
What is the difference between media mix and marketing mix?
In modern usage, a media mix and a marketing mix are the same (defined above). Historically, however, “marketing mix” is defined differently.
Traditionally, a marketing mix, (also known as the 4 Ps) is ’the set of marketing tools that the firm uses to pursue its marketing objectives in the target market.’ Thus the marketing mix refers to four broad levels of marketing decision, namely: product, price, place, and promotion.” (Source: wikipedia) This also includes the 4 Ps extensions – 7 Ps, Lauterborn’s 4 Cs, Shimizu’s 4 Cs.
Buried in this and other sources is a mention of digital channels in relation to promotion. The traditional definition is a hypothetical framework, whereas modern marketers require actionable tools.
Anecdotally, in the “real world” of business, the term media mix is rarely used and the working term is the marketing mix. The internet thinks differently. While search crawlers will tell you they are different, in modern business use, a marketing mix is a media mix.
We’ll use both terms in the hopes of moving the algorithms more toward this reality.
What are the most important factors in optimizing a marketing mix?
Knowing Your Goal (KPI/OKR)
Clearly establish goals before engaging. Specifically, what is the business optimizing toward – lead generation, awareness, Customer Acquisition Cost (CAC), CPL, lift over control, ROI.
Good decisions come from good data and any data is better than none. Even young startups will have some data that can be used to establish baselines.
Whether using basic tools or advanced ML-driven modeling, it is essential to connect your goal to the marketing channel that drove it. Without this, optimizing a media mix and marketing mix is impossible. “A Beginner’s Guide To Marketing Attribution” discusses attribution broadly.
Deep understanding of how marketing channels interact with each other and how each contributes to the broader goal is necessary.
For example, video is great for awareness and weak for conversion. But, in a performance marketing context, video can be valuable overall but may not appear so purely through the lens of target metrics.
What does “the ratio between marketing channels, budget, and results across the universe of marketing activity” mean?
A business’s media mix and marketing mix is the ratio of three things:
- Marketing channels where activity happens – paid and unpaid marketing channels
- Paid Search (SEM/PPC)
- Organic Search (SEO)
- Social Media Marketing (and specific marketing vehicles)
- Affiliate Marketing
- Display Advertising
- Television Commercials
- Digital Radio
- Terrestrial Radio
- The dollars spent through each marketing channel
Assume a business’s weekly reporting table of marketing results looks like:*
*Simplified; assumes offline channels – PR, Events – do not have advanced attribution modeling in place
As a marketing mix, it can be represented as:
A marketing leader can use this table to determine if the balance between budget and results make sense and where improvement is needed.
In this example, the business spends 30.8% of its budget on non-branded search (SEM/PPC) delivering 26.8% of leads while branded search has 1.7% of the budget and 11.7% of leads.
Are these good, bad or mediocre? This is where the trained eye comes into play.
Here, branded paid search is probably maxed out. There are only so many search queries for a company’s name so things are good.
Alternatively, display remarketing represents +1.6% of the budget yet only 0.6% of leads. But, its cost per lead (CPL) is 40% less than generic display and seems to perform well broadly. Perhaps this is where budget should increase…is inventory available; how many users are in the audience pool?
Why should I care about the marketing mix?
Successful marketing programs require continuous improvement. A business’s media mix (marketing mix) is an illustration of a marketing program’s performance and a tool to guide improvement.
All marketers should understand what it is and how it can be used to optimize performance. It helps marketing teams:
- Know what is happening on multiple levels:
- Marketing Channel
- Identify opportunities for improvement
- Attribute actions to marketing channels
- Provide strategic alignment of budget to outcomes
- Help in budgeting and advocating for additional resources
What does optimization mean?
The dictionary defines optimization as “The action of making the best or most effective use of a situation or resource.” (Source: Lexico, powered by Oxford)
In marketing broadly and digital marketing specifically, optimization is the incremental improvement made to a marketing action. These include bid adjustments, geographic targeting, keyword exclusions, audience targeting, budget updates.
Why is an optimized media mix or marketing mix important?
The key insight of a media mix (marketing mix) is to help marketers understand:
- What actions drive goals
- How to accelerate improvements – which channels can boost performance
- Where budget can be allocated for strategic goals like brand building, testing, increasing ROI and reducing CAC
What else can an optimized marketing mix be used for?
It is a strategic decision-making tool and next-level scorecard for high performing marketing teams. An optimized marketing mix has other strategic uses.
An optimized marketing mix helps teams forecast performance with increasing probability to identify the ideal mix for specific business goals. For example:
- Marketing leaders can model performance and identify an optimal mix to maximize ROI, total new customers or lowest CAC
- Channel managers can use historical performance to forecast and set performance improvement goals per marketing channel
- Finance professionals can better estimate ROI based on budget and channel and determine where more or less should be allocated
Improving Performance Where It’s Needed
An optimized media mix and marketing mix helps marketing teams understand how and what levers to pull to drive performance. For example:
- To increase Brand Lift, increase the video budget
- Need to lower CAC? Increase the Social Media budget
- Want to increase ROI/ROAS? Shift budget to Paid Search (SEM/PPC)
An optimized media mix and marketing mix helps marketing leaders set realistic expectations and goals for the team. Though a snapshot in time, an optimized mix provides a powerful baseline to judge performance. For instance, if the marketing budget increases 2x but the most efficient marketing channels are maxed out, an optimized media mix and marketing mix can help right-size expectations.
As a powerful forecasting tool, an optimized media mix and marketing mix highlights performance issues early. This visibility allows channel managers to identify the cause and course-correct fast.
An optimized media mix provides marketing leaders visibility into how budgets will perform based on its allocation to marketing channels. This offers the team the ability to model a media mix that achieves goals while also freeing budget for experimentation.
At its core, an optimized marketing mix is a math problem. By changing variables (budget by channel), a marketer can find the balance point where goals are met (CAC, leads, ROI, etc.) and some budget remains for testing new channels, tactics and messaging.
Media mix optimization (marketing mix optimization) is a powerful tool with applications across the whole marketing universe. From CMO to tactical practitioner, all marketers benefit from understanding what a marketing mix is, how to build it and how it can be used.