You are back at your desk after a merry festive break and pondering last year’s marketing activity. It raises questions such as ‘what is driving my sales?” or “how did my Christmas campaign perform?” You do have some different options to work this out and guessing is not one that we favour, econometrics may be what you need. In this blog we explore five different uses for an Econometric Model, hopefully helping you to answer at least one of the questions that you are currently pondering.


When you REALLY want to know how your recent Christmas campaign fared?

We get a flurry of calls each January from people eager to get a read on how their previous year’s media has performed. MetaMetrics blog - 5 Uses For An Econometrics ModelChristmas features high on the list. It’s a time when many brands go to town to try and take advantage of the extra demand that’s around in the build-up to Christmas (as well as for peace, joy and love). Budgets are stoked, creatives are polished. All that’s needed is some evidence of what all that extra energy and investment gave back in terms of tangible results. Enter econometrics. What better way to start your new year as a marketer than by getting a fix on the last year’s activity. It will give you the proof you need to carry you into 2022 with confidence and vigour. If speed is of the essence, why not try our innovative RapidROI™ methodology, which gives you an 80/20 read on your key marketing spends double-quick and for less outlay.


When you’re suffering from diminishing returns. Or worried that you might be. 

Christmas is also a time when, on occasions, we might sometimes overdo it in the food department. And what’s true of Christmas pudding is also true of mediaMetaMetrics Blog - 5 uses for an econometric model investment. Did you know you can have Too Much Of A Good Thing? In media circles it’s called “diminishing returns” and basically means that you have spent so much on your media that the return you get on each extra pound you spend gets rather low, or “diminished” as we say. Diminishing returns is almost always present in your media to some extent, so it’s really a question of degree – that is, when does it become so punishing that you are better off redeploying your marketing budget elsewhere and in different ways, to boost your overall ROI? 

If you’re feeling like you pigged out with your media this Christmas, you might want to consider an econometric model to help you get the right levels of spend in 2022. 


When everyone is claiming the thing they did is what drove all the extra sales. 

Success has many fathers, but failure is an orphan. Unfortunately, human nature being what it is, this is far, far too common. But putting aside considerations of vanity and credit-thieves, the real issue at stake is what DID drive your extra sales. Was it the new brand ad? Was it the 50% promotion, with additional off-shelf feature and display? Or was it the weather?

The boring likelihood is that it was a mix of all three. But, and here’s the keyMetaMetrics Blog - 5 uses for an econometric model question, how much of each? Until you can answer that with confidence you won’t know what worked and – more importantly – what to do more of this year to drive even more sales. Econometrics is, as we often say, data-agnostic. It doesn’t intrinsically favour one potential sales driver vs. another. All it looks for is the size and strength of the relationships between each of them and sales, giving you exactly the clarity you need when it comes to handing out prizes at the next company town hall meeting – and shutting up a few of your more boastful colleagues. 


When the brand needs some additional investment and the CFO doesn’t quite share your view. 

Let’s say you know your brand needs some more investment. Let’s say every instinct and last ounce of experience you have as a professional marketer is screaming atMetaMetrics Blog - 5 uses for an econometric model you that you need to spend more to support your brand. 

How do you persuade the CFO? 

He hears this all the time. Literally. From everyone in the business. Literally. Why should he trust your gut instincts more than anyone else’s? 

You know this, which is why you prepare for that meeting with the latest click-through rates from your paid search, the latest engagements from Facebook and the latest re-shares from Twitter. And you watch him, as you recite this ream of stats, slowly glaze over and he starts palpably willing you to leave the room, if not the company. 

Here’s a better idea: Have the conversation about your marketing plans in terms your CFO can appreciate – in terms of extra sales earned, in terms of hard-won budgets deployed more efficiently, in terms of better return on investment. Many of our clients use the models we build for them precisely for this purpose. 


When you need to slash budgets in a hurry with the least possible amount of damage to your brand. 

MetaMetrics Blog - 5 uses for an econometric modelI wish it were otherwise, but things don’t always go well in businessland. And maybe for reasons unrelated to marketing the order comes down and you find yourselves having to “do more with less” to make up for some hideous hole in the P&L in another area of the business. Having helped my clients through the 2008-9 global credit crunch and ensuing recession, I know that sometimes some exceedingly tough decisions become necessary for such arcane reasons as cashflow, profitability and even share price.

If this is your situation right now, an econometric model can tell you where to cut from to do the least amount of damage to your brand. It identifies the performance of each element in your mix, and simulates how your sales will respond if you cut this channel by 10% or that channel by 15%. Moreover, by creating a direct line of sight from your marketing decisions now to your sales tomorrow, it builds a wider appreciation for the impact that these decisions have, and they are less likely to be taken lightly. It sounds an odd thing to do – spend to save – but that’s exactly what econometric modelling is. To learn more about econometrics, how it works and why you should consider an econometrics project, read our ebook ‘Guide to Econometric Modelling for Modern Marketers’.

Download the ebook here

There are many other reasons to carry out an econometric model, but these five are some of the common ones we hear at this time of year. So if you are wanting to understand how your Christmas campaign performed or get a clearer picture on media spend vs. ROI or simply justify marketing budget to those who write the cheques, then get in touch to discuss your challenges and we can see how econometrics could help.