Agent-based Modeling

Mark Battaglia, ThinkVine Chief Executive Officer, presented at the Boost Media Value event in Sydney this month with TrinityP3 and Datalicious on agent-based modeling, a breakthrough approach to marketing mix optimization. In his presentation he discuss how new consumer behavior is changing the marketing landscape; why agent-based modeling is a smarter appraoch to MMO; and how organizations are achieving a greater ROI by connecting consumer behavior to marketing decisions.

Fundamental shifts in the consumer marketing landscape have created a demand for better ways to understand both consumers and the marketing used to influence them. Historically, firms have used a variety of statistical techniques to build mathematical representations of the relationship between marketing spend and the resulting outcomes, typically some measure of sales. And in the past when there were fewer options on how to spend marketing dollars, these techniques fit the requirement well. Today, the number of options available to connect with consumers has exploded – each with unique measurements, resulting in a general lack of confidence in the effectiveness of traditional statistical modeling tools.

As the author pointed out in the article If User-Level Data is Too Costly, Look into Alternatives, we live in a highly connected world where real-time access to news, data, and information has transformed the way both people and businesses make decisions. 

Please note: this blog post is the first in a series of posts on the current state of marketing mix modeling.

The current tools for marketing mix models include a range of time series, traditional regression, and specialized regression models that attempt to explain the impact of the marketing mix on sales performance. They vary in breadth and granularity, but all of these models have one important flaw – they ignore the most important “P” in marketing: People.