arXiv · 2311.05587
A new framework for Marketing Mix Modeling: Addressing Channel Influence Bias and Cross-Channel Effects
Abstract
This research addresses two fundamental challenges in Marketing Mix Modeling: the tendency of models to over-attribute influence to high-investment channels and the difficulty in quantifying cross-channel effects. We propose integrating the Michaelis-Menten equation and Maxwell-Boltzmann kinetic theory into hierarchical Bayesian models to overcome these limitations. Our approach uses the Michaelis-Menten model to characterize shape effects with spending-independent parameters and Boltzmann-type equations to systematically quantify cross-channel dynamics. Experimental results show that this physics-inspired approach maintains predictive accuracy while providing superior analytical insights into channel effectiveness and interactions. The normalized Michaelis-Menten constant offers an investment-independent measure of channel efficacy, while the N-particle system simulation reveals previously ignored channel interdependencies, enabling more accurate attribution and informed resource allocation decisions.
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Javier Marin. 2023-11-09. A new framework for Marketing Mix Modeling: Addressing Channel Influence Bias and Cross-Channel Effects. https://arxiv.org/abs/2311.05587
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