What a very high correlation of your total media spends with sales tells about your brand?
If your Total Sales are very highly correlated with Total Media Spends, your “Organic” is probably very low. And that’s not a problem.
Yes, one can’t assert this statement always, correlation is not causation. MMM should be used to confirm. But in our practice, we have often seen that a very very high correlation often results in low base.
This is typical in domains like D2C, Quick commerce (Blinkit, Zepto – In India),
Beauty and personal care products and even in App installs and Gaming.
📌 The phenomenon :
If your total sales goes up whenever your media spends go up
or
total sales goes down whenever your media goes down, then it tells you the following:
▪️Your business is media driven, not demand-driven.
▪️Your baseline is small (could be small most often than not).
▪️Your growth engine is paid activation, not latent brand pull.
However there is nothing wrong with the above.
Yes, every brand would like to get sales on ‘auto pilot’ mode courtesy brand equity (organic). But not every domain is conducive for that.
There are high-velocity, high competition and low inertia categories.
If you stop spending, demand doesn’t gradually drop, it collapses.
But all is not lost. For brands in this categories, You have direct control over revenue. You can dial growth up or down. You can optimize profit in near real time.
📌 “We need to build a brand”
Often brands rightly recognize that they need to build a brand and achieve good brand equity. However for brands that observe very low inertia among customers, ‘building brand’ right now may not be the right answer. It could definitely be a long term goal. Ideally in these cases, we need to win every day or every week in terms of good sales) for us to have a fighting chance to build a brand in future.
Forcing brand KPI onto a fundamentally activation led business could cause more harm than good.
Hence, the right question in these cases is not: “Why is my organic low?”
It is: “Given my category dynamics, what should my base realistically be?”
MMM doesn’t judge your business.
It just reveals the business model that you are following.
We at Aryma Labs, view and study each clients requirements in great detail. We don’t paint all the clients with the same brush. We build MMMs for a 100 yr old brand and also MMMs for beauty care brand just 2 years from its founding. We don’t build the same kind of MMMs. We adapt and make bespoke models that better reflects the ground reality.
