Episode #619: Knowing Which of Your Marketing Dollars Are Working with Mike True, Prescient AI

Release Date: December 27, 2024
Host: Greg Kihlström
Guest: Mike True, CEO and Co-Founder of Prescient AI
Podcast: The Agile Brand™ with Greg Kihlström

Introduction

In episode #619 of The Agile Brand™, host Greg Kihlström welcomes Mike True, the CEO and Co-Founder of Prescient AI, to discuss the critical topic of optimizing marketing effectiveness through advanced methodologies like Marketing Mix Modeling (MMM) and predictive analytics. The conversation delves into how businesses can accurately track and enhance the return on their marketing investments in an increasingly omnichannel landscape.

The Importance of Tracking Marketing Dollars

Mike True emphasizes the necessity for businesses to "do more with less," highlighting the intense pressure on marketing organizations to deliver measurable results. He states at [03:17] "Having a strong understanding of where to allocate their media mixes and having confidence in what the predicted outcome is going to deliver that incremental growth with their marketing budgets that they have set each year."

Without clear insights into ad spend effectiveness, companies risk missing out on growth opportunities and failing to keep up with rapidly changing consumer preferences and emerging channels.

Understanding Marketing Mix Modeling (MMM)

Greg introduces the concept of MMM, and Mike breaks it down at [05:29]:

"The notion of an MMM or marketing mix modeling was really defined to help allocate budgets across and within various channels. And it's using historical learnings... it's trying to look at the holistic picture and figuring out where should you make that next bet?"

MMM leverages historical data to determine the statistical relationship between marketing spend and key performance indicators (KPIs), offering a comprehensive view that traditional multi-touch attribution (MTA) methods, which rely on pixel-based tracking, often miss.

Prescient AI’s Innovative Approach to MMM

Mike discusses how Prescient AI has revolutionized MMM by making it more dynamic and granular:

"Instead of running MMM once a year or quarterly at a channel level, we've created a more dynamic MMM that runs every single day at the campaign level. It's omnichannel and allows insights into how each paid spend, like Connected TV or TikTok campaigns, drives sales across various platforms."

At [07:13], he shares, "We've built what we call halo effects... redistributing credit from the bottom of the funnel to the top, indicating how awareness campaigns drive downstream conversions."

This approach enables real-time optimizations and more precise budget reallocations, enhancing the effectiveness of marketing strategies for brands like Hexclad and Good American.

Challenges of Attribution in an Omnichannel Environment

At [10:47], Mike addresses the complexities of attribution in today’s omnichannel world:

"Traditional forms of measurement, like multi-touch attribution, rely on deterministic clicks, which becomes challenging when customers interact with multiple channels before converting. For instance, seeing a YouTube ad but converting later on Amazon isn't easily tracked."

He contrasts deterministic methods with MMM’s probabilistic approach, explaining that while MTA provides detailed insights into specific interactions, MMM offers a broader, holistic perspective essential for understanding overall channel effectiveness.

The Role of AI in Enhancing MMM and Predictive Analytics

Mike elaborates on how AI enhances MMM:

"Our AI ingests all historical data to learn the statistical relationships between spend and revenue, accounting for factors like seasonality and promotional periods. Unlike traditional linear regression models that assume consistent saturation points across channels, our AI identifies unique saturation curves, enabling precise budget optimization."

He further explains at [16:00], "AI allows us to find the sweet spot where additional spend yields diminishing returns, ensuring that marketing budgets are allocated efficiently."

AI-driven predictive analytics not only analyze past performance but also forecast future outcomes, enabling businesses to make informed, proactive decisions.

Predictive Analytics: Maximizing Revenue and Profitability

At [17:51], Mike discusses the power of predictive analytics in MMM:

"Predictive analytics tells you what to expect based on your current spend and allows you to simulate changes for incremental growth. Prescriptive analytics takes this a step further by recommending specific actions, such as increasing top-of-funnel spend during peak seasons to maximize profitability."

He envisions a future where AI-driven automation handles these optimizations, increasing efficiency and allowing marketers to focus on strategic creative initiatives.

Future Trends: AI and Automation in Marketing

Looking ahead, Mike highlights the convergence of AI and creative strategies:

"The future lies in generative AI for creating diverse and engaging content, combined with AI-driven measurement and optimization. This synergy will enable automated media buying based on confidence scores and predicted outcomes, streamlining marketing operations and enhancing effectiveness."

He anticipates a shift towards more automation, where AI not only advises but also executes marketing strategies with minimal human intervention.

Staying Agile in a Fast-Paced Environment

In the final segments, Mike shares his personal strategies for maintaining agility:

"On a personal level, I'm a daily runner and enjoy reflecting on the day and planning ahead. Professionally, I ensure that my team maintains a strong culture and stays aligned with our business goals through continuous collaboration and idea exchange."

His emphasis on a balanced approach between personal well-being and strategic business management underscores the importance of agility in both personal and professional realms.

Conclusion

Greg and Mike wrap up the episode by reiterating the transformative potential of AI-enhanced MMM and predictive analytics in optimizing marketing spend. Mike encourages marketers to adopt a holistic and dynamic approach to measurement, leveraging AI to stay ahead in the competitive landscape.

Notable Quotes:

• Mike True at [03:17]: "Having a strong understanding of where to allocate their media mixes and having confidence in what the predicted outcome is going to deliver that incremental growth with their marketing budgets that they have set each year."
• Mike True at [07:13]: "We've built what we call halo effects... redistributing credit from the bottom of the funnel to the top..."
• Mike True at [16:00]: "AI allows us to find the sweet spot where additional spend yields diminishing returns, ensuring that marketing budgets are allocated efficiently."

Learn More: To explore more insights from Mike True and Prescient AI, visit the show notes for relevant links. For additional episodes and resources, visit www.gregkilstrom.com.

The Agile Brand™ is produced by Missing Link, a Latina-owned, strategy-driven production company focused on crafting intelligent and engaging content. Stay Agile and tune in to future episodes for more expert discussions on marketing technology and customer experience.