In-housing marketing mix modeling vs. agency: which is right for you?

Deciding whether to build in-house marketing mix modeling capabilities or partner with an external MMM agency represents a significant strategic choice for B2C brands. This decision impacts not just your marketing analytics but your entire approach to measurement, optimization, and media investment strategies. For CMOs, CFOs, and CEOs in Scandinavia and the Baltics, understanding the tradeoffs is essential for making the right choice.

The strategic importance of MMM in today's landscape

Marketing mix modeling has become increasingly critical as privacy regulations like GDPR limit individual-level tracking and cookie deprecation continues. With over 50% of European marketers projected to increase their reliance on MMM by 2025, understanding your options for implementation has never been more important.

MMM provides a privacy-compliant way to measure marketing effectiveness across channels, offering a solution that works regardless of cookie availability or tracking limitations. For B2C brands across Scandinavia and the Baltics, this has become particularly valuable as consumers become more privacy-conscious and regulatory requirements tighten.

Cost considerations: in-house vs. agency MMM

In-house MMM costs

• Talent acquisition and retention: Econometricians and data scientists command premium salaries in Scandinavia and the Baltics, often €80,000-€120,000 annually per specialist
• Technology infrastructure: Data storage, computing resources, and modeling software can require €50,000-€100,000 in initial investment
• Ongoing maintenance: Regular model updates, data pipeline management, and continuous improvement require dedicated resources
• Training and knowledge development: Keeping teams current with latest econometric approaches requires continuous investment

Agency MMM costs

• Project-based engagements: Typically range from €50,000-€250,000 depending on complexity and scope
• Subscription models: Many agencies now offer €5,000-€15,000 monthly subscriptions for ongoing MMM support
• Scalable pricing: Costs that adjust based on media spend (often 1-3% of managed media budget)
• Predictable cash flow: Fixed costs without the volatility of staffing changes

When evaluating total cost of ownership, remember that MMM can yield ROI improvements of 20-30% on your marketing investments. A €2M media spender could justify €5,000-€10,000 monthly MMM costs through efficiency gains realized within a quarter.

Control and flexibility tradeoffs

In-house advantages

• Complete ownership of methodology: Define your own approach to adstock, saturation, and baseline calculations
• Custom integration with internal data: Direct access to proprietary data sources and systems
• Rapid iteration cycles: Make model adjustments and run scenarios without waiting for agency timelines
• Institutional knowledge building: Develop deep econometric expertise within your organization

Agency advantages

• Proven methodologies: Benefit from approaches refined across multiple clients and industries
• Objective perspective: External partners can challenge internal assumptions and biases
• Flexible resource scaling: Adapt analytical support based on seasonal needs without hiring/firing
• Cross-industry benchmarks: Access comparative data from similar B2C brands in the region

For B2C brands in highly regulated sectors like banking or telecommunications (common in the Baltics), agency partners may already have sector-specific compliance frameworks that would be costly to build internally.

Expertise and capability considerations

In-house expertise requirements

• Econometric modeling specialists: Understanding of adstock, saturation curves, and diminishing returns
• Data engineering: ETL processes and data pipeline management
• Marketing science leadership: Strategic oversight of model development and application
• Interdepartmental coordination: Ability to translate technical outputs to marketing teams

Agency expertise advantages

• Specialized talent: Agencies attract and retain top econometric talent through diverse project exposure
• Cross-industry experience: Insights from similar challenges faced by other B2C brands
• Methodology development: Ongoing investment in new approaches and technologies
• Complementary skills: Teams that blend statistics, data science, marketing, and business strategy

The talent question is particularly relevant in the Scandinavian and Baltic markets, where the pool of experienced marketing econometricians is more limited than in larger European markets. An MMM implementation requires at least 3-6 months with the right expertise, making talent availability a critical consideration.

Data ownership and privacy implications

In-house data advantages

• Complete data sovereignty: No sharing of sensitive business data with external partners
• Direct control over privacy compliance: Internal management of GDPR requirements
• Integration with proprietary systems: Seamless connection with internal data warehouses

Agency data considerations

• Privacy-safe methodologies: Agencies typically work with aggregated data that minimizes privacy risks
• Data processing agreements: Clear contracts that specify data handling procedures
• Specialized compliance knowledge: Experience navigating GDPR requirements across multiple markets
• Cross-client anonymized benchmarks: Benefit from industry comparisons without compromising privacy

For B2C brands operating across multiple Scandinavian and Baltic markets, MMM's aggregate-level approach offers a privacy-compliant measurement framework regardless of in-house or agency implementation.

Speed to insight and implementation timelines

In-house development timeline

• Initial build: Typically 6-12 months from hiring to operational models
• Data preparation: 2-3 months for comprehensive historical data collection
• Model development: 2-4 months for initial model validation
• Operationalization: 1-2 months to integrate insights into planning processes

Agency implementation timeline

• Onboarding: 4-8 weeks for data collection and requirements
• Initial models: 8-12 weeks to first validated models
• Optimization insights: 3-4 months to actionable recommendations
• Ongoing refinement: Quarterly model refreshes and scenario planning

A key advantage of agency partnerships is the ability to leverage pre-built components and frameworks. As one example, Analytical Alley claims to run up to 500 million simulations when building scenarios, a scale that would be difficult for most in-house teams to match.

Hybrid approaches gaining traction

Many B2C brands in Scandinavia and the Baltics are adopting hybrid approaches that combine:

1. Agency strategic modeling: External partners build and maintain core MMM models
2. Internal tactical application: In-house teams apply model outputs to media planning
3. Shared scenario development: Collaborative approach to testing hypothetical budget allocations
4. Knowledge transfer: Progressive capability building for internal teams

This approach allows organizations to benefit from agency expertise while developing internal capabilities at a measured pace.

Decision framework based on organization maturity

Early-stage considerations (media spend <€500k)

• Recommendation: Start with agency partnership
• Rationale: Lower initial investment, faster time to insight, external expertise
• Timeline: Engage quarterly for basic MMM insights while building internal data readiness

Growth-stage approach (media spend €500k-€5M)

• Recommendation: Agency partnership with internal capability development
• Rationale: Balance immediate needs with long-term capability building
• Timeline: Begin with fully managed service, transition to hybrid model within 12-18 months

Enterprise strategy (media spend >€5M)

• Recommendation: Evaluate hybrid or fully in-house approach
• Rationale: Scale justifies dedicated resources, proprietary methodology development
• Timeline: Build center of excellence while maintaining agency partnership for specialized needs

Case examples from the region

While specific company names are limited in public sources, several patterns emerge from B2C brands in Scandinavia and the Baltics:

• A Baltic banking institution increased media efficiency by 38% through an agency MMM partnership, surpassing growth targets by 26%
• A Scandinavian retailer built an in-house team after two years with an agency, retaining the agency for quarterly validation
• A Baltic telecom provider maintains a hybrid model where in-house analysts work alongside agency specialists

Making your decision

When deciding between in-housing MMM and using an external agency, consider these key questions:

1. Budget reality: Can you afford the upfront investment of building an in-house capability?
2. Talent landscape: Can you attract and retain the specialized talent needed?
3. Strategic priority: Is marketing measurement a core competitive advantage for your business?
4. Data maturity: Do you have the data infrastructure to support sophisticated modeling?
5. Speed requirement: How quickly do you need actionable MMM insights?

The most successful approaches recognize that MMM is not a one-time project but an ongoing discipline that requires continuous refinement and adaptation.

For many B2C brands in Scandinavia and the Baltics, starting with an external partner while building internal knowledge offers the best balance of immediate value and long-term capability development. This approach can help you reduce ad waste by up to 40% in the near term while developing the strategic capabilities needed for sustained marketing effectiveness.

Ready to explore how marketing mix modeling can transform your marketing effectiveness? Contact Analytical Alley to discuss which approach might be right for your organization's unique needs and constraints.