Media Mix Optimization<br />by Seth Garske<br />
Factors and media effects<br />The most important aim of the attribution analysis is to get to the relationship between media spend and the KPI that we are optimizing for. In order to get there, we need to understand each media type impacts KPIs and each other<br />Media Cost Curves<br />Effectiveness Curves<br />Ad Stock<br />Effects<br />Total Budget<br />Optimizer<br />
Ad Stocking effects<br />Adding the ad stocking effect of media to the model helps account for the diminishing effects of an ad over time. The chart below shows the approximate half life of each media type modeled. Note some media types have a longer half life than others, i.e. the effect of TV ads tend to last longer than a banner ad for example.<br />Typical Half Life's by Media Types<br />
Media effectiveness curves<br />The effectiveness of media diminishes as the volume of exposure is increased. Eventually the incremental change in media will have little to no effect on the reached audience, the saturation point. Each media type reaches its saturation point at different levels of exposure (GRPs). <br />Diminishing Returns by Media Type<br />
Media cost effects<br />How media is purchased and discounted based on volume also effects the model. <br />Media Reach Curves: <br /><ul><li>Inventory constraints for each media type.
Planner judgment on maximum feasible investment levels.</li></ul>Media Cost Curves:<br /><ul><li>These reflect how media costs scale as spend scales.
These need to capture realities such as increasing costs per reach point, seasonality etc. in order to pragmatically reflect the media landscape.</li></li></ul><li>Budget effects<br />Because the saturation point and level of effectiveness changes at a different rate for each media type the overall optimal mix for each channel will change with the overall media budget. In the example below shows how optimal mix in spend shifts from one media type to another depending on the level of spend.<br />Diminishing Returns by Media Spend<br />Budget B<br />Budget A<br />
Optimization<br />The optimizer takes into account all of the factors, ad stocking, diminishing returns, cost and inventory constraints and through and through an iterative process chooses the optimal media channel for each incremental dollar spent.<br />Diminishing Returns by Media Spend<br />Final Optimized Results<br />