The Role of Adstock and Saturation Curves in Marketing Mix Models: Implications for Accuracy and Decision-Making
DOI:
https://doi.org/10.15662/IJARCST.2024.0702005Keywords:
Marketing Mix Modeling, Adstock, Saturation Curves, Advertising Carryover Effects, Diminishing Returns, Budget Optimization, Marketing ROI AttributionAbstract
Adstock and saturation curves are fundamental concepts in marketing mix modeling (MMM) that enable marketers to quantify the effects of advertising over time and identify diminishing returns. By modeling the lagged and cumulative impact of marketing spend (adstock) and incorporating nonlinear response functions (saturation curves), MMMs offer actionable insights for optimizing budgets. This paper explores the theoretical foundations and practical applications of adstock and saturation curves in MMMs. Through empirical examples, we illustrate their influence on model outcomes, highlighting how they enhance interpretability, accuracy, and the reliability of marketing ROI estimates. Furthermore, we discuss challenges and best practices in implementing these mechanisms.
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