Integrating Brand Equity in MMM for a Long-term Ad Effectiveness Measurement

16 Pages Posted: 16 Dec 2022

See all articles by Christina Antonie Reh

Christina Antonie Reh

Chair of Digital Marketing; WHU - Otto Beisheim School of Management

Konstanze Fichtner

Meta Platforms Inc.

Christian Schlereth

WHU - Otto Beisheim School of Management

Torsten Mueller-Klockmann

Marketing Science

Manuel Weber

Chair of Digital Marketing; WHU - Otto Beisheim School of Management

Date Written: November 23, 2022

Abstract

Marketing mix modeling (MMM) is a powerful tool for marketers when optimizing their advertising mix and promotional tactics. However, the current MMM primarily focuses on campaigns’ direct short-term effects. That means marketers try to link, e.g., ad spend to immediate sales and ignore indirect long-term effects. This ignorance bears the risk of underestimating the full effects of brand advertising and may lead to short-sighted advertising strategies. This paper proposes the incorporation of brand equity, i.e., mindset metrics that reflect how consumers think and feel about a brand, into MMM. We distinguish between consumer-based and sales-based approaches to capturing brand equity. In an empirical case study, we compare the relative importance of two ad channels on sales and brand equity in multiplicative regression models. The model with the incorporated mindset metrics delivers superior model fit and diagnosticity compared to simpler models focusing solely on direct sales. In our example, when ignoring the long-term perspective, we are misled into thinking that only one of the two analyzed channels affects sales. This finding highlights the need for incorporating brand equity into MMM.

Keywords: ad effectiveness, marketing mix modeling, long-term effect, brand equity

Suggested Citation

Reh, Christina Antonie and Fichtner, Konstanze and Schlereth, Christian and Mueller-Klockmann, Torsten and Weber, Manuel, Integrating Brand Equity in MMM for a Long-term Ad Effectiveness Measurement (November 23, 2022). Available at SSRN: https://ssrn.com/abstract=4103941 or http://dx.doi.org/10.2139/ssrn.4103941

Christina Antonie Reh (Contact Author)

Chair of Digital Marketing ( email )

Burgplatz 2
Vallendar, 56179
Germany
+49 (0)261 6509 460 (Phone)

HOME PAGE: http://https://www.whu.edu/de/fakultaet/marketing-and-sales-group/digital-marketing/

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

Konstanze Fichtner

Meta Platforms Inc. ( email )

Schopenstehl 13
Hamburg, CA Hamburg 20095
Germany

Christian Schlereth

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56719
Germany
00492616509455 (Phone)

HOME PAGE: http://www.whu.edu/digital

Torsten Mueller-Klockmann

Marketing Science ( email )

1601 S. California Ave.
Palo Alto, CA 94304
United States

Manuel Weber

Chair of Digital Marketing ( email )

Burgplatz 2
Vallendar, 56179
Germany

HOME PAGE: http://www.whu.edu/digital

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

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