BEHIND THE BUZZ – WHAT IS ECONOMETRIC MODELING AND HOW IS IT DRIVING TODAY'S MARKETING DECISIONS?
WHY DOES ECONOMETRIC MODELING MATTER?
What’s all the buzz about and why should I pay attention
WHAT IS ECONOMETRIC MODELING?
A topline look at how econometric modeling works
TYPES OF MODELS AND THEIR USES
How and when is it appropriate to use MMM, Brand Equity Modeling and Long Term Modeling?
DEVELOPING AN ANALYTICS ROADMAP
How to make the most of the data available now while also planning for the future
GETTING STARTED – Best practices for designing an advanced analytics 3 GUIDING PRINCIPLES strategy KEY TAKEAWAYS
Key takeaways for brands considering econometric modeling
WHY DOES ECONOMETRIC MODELING MATTER? PRECISE BRAND-‐SPECIFIC LEARNINGS AT YOUR FINGERTIPS How should we allocate and optimize our marketing spend across all products and channels? How can we forecast how a budget change will impact our sales in one year? Five years? Ten years? The data shows us that awareness behind our product is increasing – why is this not translating to sales? As marketers, these are some of the questions we are faced with as we grapple to understand how to optimize marketing spend. While we often work against assumptions such as industry norms or brand comparisons within a category to determine how to allocate budget or build awareness, looking at historic and competitive data is not always enough. Today, more is being demanded of marketers and with that comes the pressure to precisely quantify the impact of marketing decisions. Econometric modeling is key to ﬁnding the answers to these questions, particularly when brand-‐ speciﬁc, precise recommendations and results are required. This Spotlight On goes behind the scenes to discover how econometric modeling works, how to choose the appropriate model based on common questions, and how to quickly start leveraging analytics for advantage.
DATA CONNECTIVITY WILL WHAT IS SAVE US ALL ECONOMETRIC MODELING? WHAT IS ECONOMETRIC MODELING? ‘Econometric modeling’ is a term that has become so prevalent, it’s beginning to sound like a buzzword, or industry jargon, used a to make learnings and results seem more scientiﬁc. The fact is econometric modeling sounds scientiﬁc because it is. Econometric Modeling leverages the variation in granular data to statistically tease apart the impacts of marketing activities on the KPI of interest. Today, various types of regression analysis are implemented in econometric modeling within the industry, including: multivariate, time series, vector auto regression and Bayesian methods. HOW DOES BASIC REGRESSION ANALYSIS WORK? Generally, we know that media over and under delivers in certain markets, and the amount of over/under-‐ delivery varies when examined on a weekly level. Therefore, when looking at a media plan on a DMA level, there is a signiﬁcant amount of variation in the executed data. Since there are 210 DMAs, that translates to 210 data points per week. Most models are built with three years (166 weeks) of data, resulting in 32,760 data points per variable. Therefore, if TV, print, radio, OOH and banner were all part of the media plan, this would provide up to ﬁve variables or 163,800 data points