40% of All Media Spend is Wasted Today. Here’s a Business to Help Brands Fix That.

It’s estimated 40% of all media spent today doesn’t do anything. Plus, the dominant marketing measurement solution, Multitouch Attribution, is so inaccurate Google and Meta have dropped it.

Media Mix Modelling (MMM) as a Service has the potential to fill the gap. For a patient team it can be a huge recurring revenue business with multiple exit opportunities.

Hi, I'm?Aaron Vidas, an entrepreneur from Vancouver, Canada. I shut down my data management platform and got stuck figuring out what to do next. So I’m talking to 100 CEO’s, Private Equity MD’s and SME’s over the next 100 days on their big pains. Things that if solved generate $100M+ in value - money made, cash saved, enterprise value increased - for them. Then I’m picking 1-3 ideas to execute this year and sharing the rest with you.

Commerce Signals estimates 40% of all media spend is wasted.

Anyone that markets online and offline today could be easily forgiven for wanting to huck their laptop off a balcony.

Complex customer journeys, ad fraud, privacy concerns, technical debt, a new ‘must do’ tactic every 8 months.

Then add in skeptical CEO’s and CFO’s want to axe a “fat” marketing budget because it can’t be tied directly to sales.

How’d it get this way?

Unfortunately, our “Modern” Marketing Measurement Blows

Most marketers today try to measure success with a combination of vague metrics like impressions and engagement with measurement tools like Multitouch Attribution (MTA).

MTA identifies if a customer has passed a ‘gate’ (clicked on an ad, visited a website, etc.) then it assigns a ‘weight’ to that gate pass. Concluding “that ad was 45% responsible for the sale.”

That’s a false conclusion most of the time. As it does not take into account?all?the marketing activities the company has driving attention to it like influencer posts, media coverage, billboards, tv ads or event sponsorships.

In math terms, it’s a problem of collinearity. Two variables - like impressions and sales - both moving up but impressions increasing had nothing to do with increasing sales.

MTA is so inaccurate Google and Meta no longer provide it.

Enter Ye Old Timey Marketing Measurement, Media Mix Modelling

Saddle up to the bar and grab a sarsaparilla cuz Old Man Vidas is ready to spin a yarn.

Media Mix Modelling was actually started at the dawn of mass radio and tv advertising in the late 1940’s in the US. It’s a series of statistical models answer “Did this marketing activity drive in a store visit/sale or would it have happened anyway?” and “What other factors contributed to our sales?” Think good weather, increase in organic demand, a competitor going bankrupt, etc.

It’s evolved to handle measure everything from tv ads to influencers.

It’s that clarity that allows a business to only spend time, and budget, on what’s actually driving in a customer in.

MMM allows Marketers to Turn Fuzzy Data into “Invest up to $345K here and we’ll see a 24% increase in store sales over the next 3 months.”

HOW I’D GET STARTED

MMM as a Service like Mint Measure and SellForte price on a monthly retainer model based on a percentage of the client’s marketing spend. Everything from 1 - 5%.

That means charging 3% of a $25M annual marketing budget could command $750K in annual fees.

Expenses are specialized. I’ve found you require data scientists and full stack developers that are intimately familiar with the problems of marketing analysis and the poor quality of marketing data. Plus, long sales cycles - 8 - 12+ months - have to be accounted for in any cashflow projection. So a team, and investors, comfortable with a longer time horizon for realizing a gain need to be engaged.

What’s most interesting to me is MMM as a Service has lots of options for exits in the next 2-5 years. Build up a solid client roster in a particular sector, or with the portfolio companies of a private equity company, and you’re a natural acquisition target. Large agencies, and ad holding companies, are also on the hunt for services like this to acquire all the time because the expertise, and technology, can be spread across a large client pool

RISKS + UNKNOWNS

If I was serious about starting this business the keys will be:

• The market for MMM as a Service is nascent. The leadership of SellForte, Mint Measurement, and Recast have all shared how much client education is required to get brands to try, and see success, with MMM. If client education is your forté, then you’ve found a business that suits you.
• Data ingestion is surprisingly difficult. Marketing data, even in 2023, is a mess. Early stage incrementality/MMM services need to commit significant resources upfront to ensure they can easily ingest a company’s data to do the analysis. All the MMM providers I’ve worked had this challenge.
• Creating deep relationships with small to mid-sized agencies to become the “in-house” measurement solution that can help them keep business and expand accounts because the agency can show they’re delivering on what they promised in impressions, clicks and sales.
• A ‘Godfather Offer.’ Working with brands, and agencies, to structure an offer so good that the brand would be stupid to say ‘no.’ This might be only getting paid if certain marketing budget goals are hit, or a % of the incremental sales brought in because of your insights.

This is my sixth post of my new 100 Business Ideas. $100M Each. 100 Days. series. Interested in seeing more? Want these in a different format? Comment below.