There is One MMM Truth. But Infinite Budget Optimization Answers.

One of our course subscribers asked a very interesting question. “In the course you mention that there is one ground truth MMM model but in Budget optimization there are many ways to get to the same target KPI. How do you reconcile the two?”

It is a great question and it is something every MMM analyst at some point grapples with.

Marketing Mix Modeling (MMM) and Budget Optimization are often spoken about in the same breath. But they solve fundamentally different problems.

📌 MMM is about truth. Optimization is about possibilities.

In the context of Marketing Mix Modeling (MMM), it is believed that there is one true MMM model that accurately reflects the relationship between marketing variables and observed sales.
This true model represents the actual parameters that generated the sales figures. The endeavor of MMM is to identify this ground truth or true model.

But the moment you move into scenario planning and budget optimization, the game changes. You are no longer explaining reality.

You are reimagining it. I also wrote a post sometime ago that MMM is not about predicting the future but changing the future (link in comments).

Now the question becomes: How else could I achieve the same (or better) outcome?

– What if i cut YouTube by 20% and push Meta by 20%?
– What if i scale TikTok aggressively?
– What if i rebalance across all channels ?

Each of these is a different world. And in each world, there are multiple valid paths to the same KPI.

In these hypothetical situations, where the market mix itself is being altered or explored, multiple models or approaches might be considered to understand potential outcomes and optimize budget allocation.

This differs from finding the single true MMM model that explains past performance.

In a nutshell:
MMM tells you what was.
Optimization tells you what could be.

And knowing the difference is where real strategic leverage lies.