Use predictive modelling to reduce future risk and improve profitability

Yvonne O'Brien and Tomasz Kolanowski

We all know budgets are facing increased scrutiny and pressure, with the latest IPA Bellwether Report showing record declines in marketing investment.

This is coupled with growing scepticism in the boardroom as many chief financial officers believe they rarely see any ROI data on marketing investment. This pressure is also being exerted at agency level, when marketers must justify the case for investment levels and what they will return to the business.

Marketing mix modelling has been the backbone of analytics in our industry for 15 years but its emphasis has been on analysing the impact of past investment strategies and their relative effectiveness. Are we spending too much time on evaluating past performance, such as creative executions, when this is only half the story, and should we be moving to use our knowledge to reduce future risk?