This article and the video illustrates the basics of how Marketing Mix Models work, via a highly simplified example.
Let's assume that your sales over time looks like this.
The objective of Marketing Mix Modeling is to estimate what part of this sales was driven by marketing, and what part of your sales is driven by other factors. First thing we need to do is give the model information on your marketing. Let's assume you are using two ad platforms, Google Ads and Meta Ads, and your investments to them over time look like in the chart below:
When we input this data to the Marketing Mix Model, it notices two things:
There's a peak in sales at the same time when Meta Ads have been online
There's a higher peak in sales when Google Ads have been activated on top
Using this information the Marketing Mix Model is able to estimate what part of two sales peaks were driven by Meta Ads and Google Ads, and what part is "base sales". Base sales means the sales you would have gotten without investments into marketing.
This information is interesting by itself, but we can also use it to calculate the ROI of each media like this:
