Econometrics at scale draws agency attention | WARC | The Feed

Econometrics at scale draws agency attention

Dentsu Media has signed an exclusive deal with an AI-powered market-mix modelling startup, as a combination of accelerating technology and the need to plan for and prove marketing effectiveness becomes vital for agency groups to provide at scale.

Why it matters

Econometrics, specifically market-mix modelling, is a technique that allows practitioners to model and then measure media spending plans according to their chosen KPIs. It allows a deeper and more intentional understanding of media and creative performance but tends to be relatively time consuming. Startup Mutinex claims to be able to speed the process up at scale, hinting at a more econometric future.

For a fuller explanation of econometric best practice, check out WARC’s explainer here.

What’s going on

 “Our ultimate goal here is to connect marketing metrics with business metrics,” explains Danny Bass, CEO of Dentsu Media, in an interview with Mi-3. The story explains the new partnership in Australia, which is based on an exclusive deal that will see the two companies pool aggregate ROI data.

-          Agencies have run econometrics departments for a while, but what’s new about the deal is that the technology aspect (Mutinex operates on a SaaS basis) is intended to scale faster than an in-house solution.

-          The aim is for the technique’s relationship modelling to offer sometimes counterintuitive solutions to problems. Mi-3 gives the example of maintaining TV spend amid declining TV audiences if it is right for the specific brand or campaign, thanks to a link observed in the econometric modelling.

Econometrics, a refresher

“Econometric modelling is a broad-level analytical approach that enhances understanding of marketing effectiveness and the benefits of long-term advertising. Econometric modelling can determine which media channels offer the best return on investment and can enhance creative strategy.

“Better suited to a macro context, the limitations of econometric modelling are exposed when it comes to offering immediate and actionable real-time insight” – from ‘What we know about econometric modelling’ on WARC.

Sourced from Mi-3, WARC