MMM Marketing Mix Modeling

Marketing Mix Modeling (MMM) is a statistical technique for quantifying the contribution of each marketing channel (TV, search, social, email, etc.) to overall revenue, then optimizing budget allocation across channels. You collect historical weekly or daily data: spend by channel, revenue, external factors (seasonality, competitor activity). Then you build a regression model that estimates the causal impact of each channel on revenue. The output is a set of elasticities: 'a 10% increase in search spend causes a 8% increase in revenue' (elasticity = 0.8). Using elasticities, you simulate scenarios: 'if we cut TV by 10% and shift that budget to search, what happens to total revenue?' The channel with the highest elasticity gets the additional budget.