Contents
Intro
The application marketing industry is about to encounter a huge change with the scheduled updates of privacy protection. Apple is going to launch the Privacy Manifest, and Google announced that it will gradually apply its privacy sandbox throughout 2024. These updates will greatly affect the currently popular marketing prediction models and performance measurement methods, such as fingerprinting and 3rd party cookies.
Japan is not an exception to this new privacy flow, and mega marketing agencies in Japan like Dentsu and Hakuhodo, have already looked into other ways to prepare for the upcoming changes. Among the possible options, the Marketing Mix Model (MMM) is getting attention. Both Dentsu and Hakuhodo worked with Google in Q3 of 2023 to test and confirm the possibility of MMM, and both Dentsu and Hakuhodo released an updated MMM guidebook. (Reference: Think with Google)
What is MMM?
For those who are not familiar with MMM, it is a prediction model that tells a marketer what would be the optimized distribution of the marketing budget. MMM makes it possible by analyzing massive raw data according to the laws of statistics. Yet one thing to note is that MMM is not a newly invented method. This is a conventional model that was widely used not just in the application marketing industry but also in the marketing of any type of product before digital marketing developed. Google Japan defined three characteristics of MMM as below:
Why MMM?
MMM is getting attention because it can provide a reliable marketing prediction and measurement model without having to rely on 3rd party cookies or Google or Apple-provided ID codes. Another merit of using MMM can be its flexibility. Many factors affect an application’s growth besides which advertisement channels or methods you use–for example, its subscription price, seasonal issues, competitors’ updates, and more–and MMM is capable of taking all the possible factors into account. Lastly, MMM helps to reduce opportunity losses as it uses the existing data set and is free from initial introduction costs.
However, it also has some downsides. To build a reliable and more accurate MMM, it requires an existing data set. Simply put, more data makes a more reliable MMM. So it may not be suitable to use for an urgent request that asks for a promotion simulation and optimization of budget distribution within a week. It may also be unlikely that MMM can be a great help for a newly developed application or a new market.
Can I use MMM?
As long as you have enough existing data and time to wait to build a reliable MMM, it is highly recommended. Building an MMM would not be picky about a specific genre or category, so you do not have to be an e-commerce app or a hyper-casual game to consider MMM. Also, once you have a working MMM in a market, you may benchmark it upon advancing to a new market or country. Yet a new country may have a different seasonal issue to take into account and user behaviors that may be dramatically different than the existing one, so it may be advisable to get notes from a professional in that market.
Outro
The application marketing field seems tense facing the major privacy updates scheduled in 2024. First-party cookies will become more significant than ever, and more acute data analysis skills may be required. In this notion, the Marketing Mix Model has been getting attention lately even though it is a relatively old method, especially for application marketing. In spite of MMM’s disadvantages, its flexibility and being free from opportunity loss and 3rd-party cookies make MMM more than worthwhile to be considered in 2024.
This article is part of our article series 2024 Japan Marketing Forecasting, where we delve deep into the keywords that holds significant importance in navigating the evolving landscape of marketing in Japan for 2024. Stay tuned for more upcoming articles!
2024 Japan Marketing Forecasting Picked Keywords (links will be updated after every upload):
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