Econometrics: Get the best from econometric modelling

Louise Cook
Holmes & Cook

Econometrics is often misunderstood and viewed with suspicion. But used appropriately it is a powerful tool to maximise the effectiveness of marketing strategies.

Econometric modelling allows us to determine how movements in sales or other brand KPIs come about. Were they driven by communications, price, weather or some other factor? As we build a model, we identify the key drivers and quantify their impacts over both the short and longer term. For communications, this is enormously helpful. It allows us to determine how much each media channel contributes and over what timescale. It can also help us identify threshold spend levels at which communication is becoming less effective pound for pound. Ultimately, therefore, it helps us to allocate our media money more effectively.