With the 2024 U.S. presidential election approaching, Americans are once again keenly interested in predicting outcomes. Techniques for forecasting election results using punch cards and early computers were developed in the late 1960s. Today, the use of AI has significantly improved our ability to predict election results and tabulate them accurately. Interestingly, the principles of forecasting elections and projecting the impact of marketing dollars in the business world share some similarities.
In both politics and business, analyzing the past provides valuable insights for navigating the present and future. Just as politicians strive to win over voters, businesses aim to convert prospects into buyers and establish their brands. Likewise, setting clear future goals and allocating resources efficiently are crucial for achieving success in both fields.
The past contains valuable information that can help businesses make better decisions. Thanks to advancements in machine learning and AI, it’s now easier to gain in-depth marketing insights and forecast the impact of marketing investments.
One powerful tool, Marketing Mix Modeling (MMM), is a statistical technique that uses historical data to estimate the impact of marketing campaigns on sales, leads, or other key performance indicators (KPIs). Unlike earlier versions, which were initially created in the late 1960s based on voter forecasting models, many versions of today's MMM leverage the capabilities of AI and machine learning.
MMM models analyze all marketing channels, including digital, PR, web, and email. They also incorporate non-marketing data, such as economic trends, weather conditions, and competitor pricing, to provide a comprehensive view. Automated data flows now make it easier to collect information from multiple marketing channels and sources, including CRM systems, customer data platforms, digital platforms, and web analytics. Furthermore, external data sources like climate and economic data can be integrated seamlessly.
Cloud computing has revolutionized the modeling process, making it more agile, speedy, and simpler to update. Marketers can now make changes in just a matter of minutes, rather than weeks, allowing them to update models frequently and make informed decisions based on the latest data available.
Today’s MMM has become more accessible and no longer requires advanced statistical skills or specialized expertise. This accessibility means that companies of all sizes can deploy MMM models, even those without the resources for a dedicated team of data scientists. Businesses now have multiple options for adopting MMM. Numerous AI tools currently exist, with more evolving continually, to facilitate data collection, organization, and analysis across multiple platforms. Experienced data scientists can also explore open-source packages to tailor their MMM approach according to their unique needs.
While the past can provide important historical performance data and trends, establishing clear future objectives and marketing KPIs is essential in the business world to determine marketing return on investment (ROI). While revenue or sales are typically primary metrics for determining true marketing ROI, not all campaigns solely focus on generating direct income. Some campaigns aim to raise brand awareness or foster goodwill with customers.
To set marketing goals, the first step is to establish the performance metrics that need to be measured. For instance, if the objective of a campaign is to enhance brand awareness or improve brand reputation, it is necessary to conduct a pre-and post-campaign analysis.
One way for business leaders to ensure the success of their marketing spend is to benchmark the current state of brand awareness. This allows them to set clear goals and measurement intervals to track progress. After the campaign, the benchmarked data is compared to post-campaign results to determine whether the campaign moved the needle, and by how much. By setting clear goals, businesses can tailor their approach to measuring ROI and adjust as needed to hit the desired outcomes.
Just as forecasting plays a pivotal role in predicting election outcomes, it is equally important in determining the impact of marketing dollars on business success. By leveraging historical data, embracing modern technology, and setting clear future goals, companies can make more informed decisions, optimize their marketing strategies, and maximize their ROI in an ever-evolving market landscape.
Contact Robin to learn more about how Chief Outsiders can help move your business forward with sound forecasting techniques for marketing budgets.