How MMM helps navigate economic uncertainty

When the economy turns, the pressure hits marketing first.

Budgets shrink overnight. Forecasts get foggy. And suddenly, you’re being asked to do more with less — or nothing at all.

However, history shows the cost of remaining quiet: after the 2008 recession, brands that cut their media spend lost ground they never fully regained. Meanwhile, those who remained visible grew their share of voice and rebounded faster, with some experiencing an increase of more than 17% in incremental sales.

In a downturn, success isn’t about spending more; it’s about spending smarter. That’s where marketing mix modeling (MMM) becomes a critical advantage.

The challenge of marketing during economic downturns

When the economy contracts, the marketing budget is often first in line for cuts. But pulling back too far — or in the wrong places — can cost more than it saves.

Budgets shrink fast. Uncertainty makes leadership cautious. Marketing spend is often cut early, reducing visibility and weakening engagement when brands need it most.

Going dark is also dangerous. Pausing campaigns may save money short term, but it erodes brand awareness. The longer you're silent, the harder and more expensive it is to recover.

There is also a bottom-funnel trap that some businesses fall into. But focusing your marketing efforts only on short-term conversions starves your brand. Without upper-funnel investment, long-term growth stalls.

The brands that truly hold ground — or gain it — are the ones that stay present. They focus on what works and remain visible while competitors go quiet.

In moments like these, success isn’t about spending more — it’s about spending smarter. To do that, you need to understand how a recession reshapes the average consumer and their spending habits.

How consumer behavior changes in a downturn

In a downturn, the average consumer changes fast — and often unpredictably. Both ability and willingness to spend take a hit, and familiar purchasing patterns start to shift. Price sensitivity spikes as people become more value-driven, trading down from premium to practical. Spending habits shift toward essentials, with non-essential items postponed or cut altogether. Caution sets in. Brand loyalty hardens, and consumers stick with what they know — trusted names feel safer than new options.

Promotions to your existing customers suddenly carry more weight. Discounts and sales become key motivators, especially for those with high ability but low willingness to spend. Big-ticket items stall, with many delaying major purchases or trading down to lower-cost alternatives. Also, digital marketing channels surge in importance. As people cut back, they hunt for deals online, seeking convenience and better pricing.

But knowing how consumers change isn’t enough — you also need to know where to reach them and which levers to pull. That’s where MMM becomes indispensable, helping you pinpoint the customer segments, channels and messages that deserve your marketing budget.

How MMM helps you optimize your spend 

Marketing mix modeling doesn’t just show what has worked. It shows why it worked, how much it worked and what to do next to get the best ROI out of your marketing budget.

Here’s how MMM delivers:

Identifies your most efficient channels

Marketing mix modeling uses historical data to model how each channel contributes to conversions and revenue after controlling for external factors like seasonality, pricing and promotions.

Let’s look at an example. Imagine you spent $100K on Facebook and $50K on YouTube. Your model might reveal that YouTube drove more incremental revenue per dollar because Facebook's performance was already saturated. There’s your reallocation opportunity. 

In a downturn, rather than turning off all marketing, optimize the channels that are actually performing.

Visual example: Budget shift after MMM analysis

MMM helps you go beyond intuition and into data-backed decision making. The chart below shows a typical reallocation scenario, before MMM, the brand was overspending on TV and underinvesting in high-performing digital channels. After the analysis, they shifted spend toward Paid Search and Social Media to boost ROI.

Measures true marketing impact (not just correlation)

It separates the incremental lift caused by marketing from what would’ve happened anyway (like organic traffic or repeat buyers). It does this by using advanced statistical techniques — usually multivariate regression or multiple linear regression — to quantify the true incremental impact of each offline and digital marketing channel while controlling for everything else that could influence sales or conversions.

Conversely, this can help you understand how much of a drop in sales in a downturn is attributable to your marketing and how much to the economic slowdown itself.

Say your email campaign ran during a low-sales period, but you can’t be sure if low sales are caused by an external factor like low consumer spending or if your campaign just isn’t working. Marketing mix modeling adjusts for that baseline, showing you how much of the spike was truly driven by the campaign. This is also true of boom periods, where sales may have occurred because of seasonal factors.

Forecast outcomes before you spend (scenario planning)

Once MMM has built a statistical model of how your marketing channels impact sales, it can simulate different marketing spend scenarios using that model. Think of it like a crystal ball, but powered by data. You won’t get 100% certainty into the future, but you will gain valuable insights that can lead to better strategies. 

With MMM, you can play around with budget changes and predict outcomes before you make them, so you don’t have to make uninformed decisions or act reactively.

Thinking about cutting display ads by 20%? MMM can tell you the likely impact on total revenue if you do — maybe you lose only 2% in sales, freeing up budget for higher-performing channels or to target higher converting audiences.

Surfaces forward-looking KPIs like marginal ROAS and CPA

Unlike regular ROAS, marginal ROAS tells you how much additional return you’ll get from putting more money into a channel, accounting for diminishing returns.

Say your current ROAS on paid search is 4.0, but MMM shows your marginal ROAS is only 1.3. Meanwhile, marginal ROAS on TikTok is 2.7. That tells you where the next $10K should go.

Visualizes diminishing returns

MMM doesn’t just tell you what worked, it shows how performance scales with spend. The chart below demonstrates how different channels reach a saturation point, where more budget leads to smaller returns.

This kind of response curve is a core output of MMM. It helps marketers identify when a channel is maxed out, and when shifting dollars elsewhere could yield better ROI. In a downturn, this clarity is critical: you’re not just optimizing spend, you’re avoiding waste.

Longtail reveals hidden insights often overlooked

With MMM, most data focuses on average trends. But longtails are rare, extreme data points that can signal important shifts in consumer behavior or unexpected market changes that might not just be noise. Ignoring them means missing crucial insights:

• Find hidden opportunities: Longtails highlight unusual but impactful events, like a sudden spike in sales from a new trend or an unexpected competitor move. These outliers can reveal what really drives success and help you spot opportunities others might miss.

• Prepare for the unexpected: During uncertain times, economic downturns or market shocks often cause outlier events. By factoring these into your MMM, you can better anticipate shifts and adjust your strategy before your competitors do.

• Optimize your spend: Longtails help refine your marketing budget. By focusing on extreme data points, you ensure you’re investing where it truly counts, even if the average trends don’t show everything.

• Stay agile: Longtails give you the ability to pivot quickly. They help your MMM model adapt to both the usual trends and those rare, high-impact moments that could change everything.

These outliers aren’t just statistical noise — they’re strategic signals. When you build your MMM to account for them, you gain the foresight to adjust spend dynamically. Let’s look at how to put that into practice and implement MMM in a way that drives smarter, more responsive budgeting.

Implementing marketing mix modeling for smarter budgeting

In an economic downturn, every marketing dollar carries more weight. When budgets shrink and pressure mounts, MMM gives you the clarity to spend wisely.

MMM quantifies the impact of each marketing channel on business outcomes like sales or leads. It separates signal from noise, identifying what’s working, what’s wasting budget and where to invest for maximum return.

Here’s how to implement MMM to strengthen your strategy during a downturn:

Gather key data sources for a strong MMM approach

The quality of your marketing mix model depends on the data you feed it. CMOs should work closely with analysts or partners, whether using a SaaS platform or consultancy, to collect the right inputs.

Start with the essentials: weekly sales data (online and offline), media spend, brand tracking and any industry-specific variables. While more data usually means better accuracy, relevance matters more than volume.

Three years of data is the sweet spot. Go too far back and you risk diluting your model with outdated behavior — no one’s basing 2025 decisions on 1970s sales. The same goes for fast-growing companies or those that have recently restructured. When the business changes, your data window should too.

Focus on data that reflects the current business reality. That’s how you build a model that actually helps you spend smarter.

Practical steps for brands looking to incorporate MMM

You don’t need to build a model from scratch, but you do need a clear roadmap to get it right.

• Engage support: Whether you’re using a SaaS platform like Funnel or working with a consultancy, you’ll need support to get started.

• Align stakeholders: Define key business questions with marketing, finance and leadership from the outset.

• Set success metrics: Agree on KPIs that matter most — revenue, leads, ROAS or other business-critical outcomes.

• Audit data quality: Check your tracking, tagging and platform integrations to ensure clean, consistent data.

• Consolidate historical data: Gather around three years of spend, impressions, conversions, pricing and external factors like seasonality and promotions.

• Define variables: Clearly separate your dependent variables (e.g. sales) from independent ones (e.g. channel-level spend).

• Structure the dataset: Use weekly data and align it across regions or business units for consistency.

• Select your modeling approach: Start with multiple linear regression. Explore regularization or Bayesian methods as needed.

• Validate the model: Use holdout testing or cross-validation to check accuracy before rolling out.

• Interpret results: Analyze ROI, contribution and marginal returns across your marketing mix.

• Integrate into planning: Embed the model into your planning cycle to guide budget allocation and campaign strategy.

What this means for you as a CMO: 

Using MMM to optimize your marketing in a downturn isn’t just about understanding what worked — it’s about forecasting what will. Instead of chasing attribution, you’ll get a full picture of marketing performance and the tools to scenario-test next steps. If you cut $10k from TV and shift it to TikTok, what impact might that have? Marketing mix modeling helps you answer that, and it backs your plan with data.

With this level of oversight, marketing stops being just a cost center. It becomes a strategic lever for growth.

How Funnel supports data collection and transformation for MMM

In a downturn, CMOs face the same targets, with a fraction of the support. Funnel helps you stay sharp, show impact and move fast without overloading your team.

• Timely, trustworthy performance insight: No more chasing fragmented reports. Funnel centralizes clean, comparable data from all of your marketing channels so you can spot inefficiencies and reallocate spend fast.

• Evidence for every budget conversation: With MMM-ready data and clear attribution, you can prove what’s working and confidently defend or cut spend.

• Faster decisions without extra headcount: Funnel delivers analysis-ready data with managed support, so your team can focus on marketing strategy, not firefighting spreadsheets.

When budgets tighten and scrutiny intensifies, Funnel gives you the clarity, credibility and speed to lead with precision.

MMM isn’t a “nice to have” when the economy dips — it’s a survival tool. It helps you protect high-performing investments, cut the rest and lead with data, not instinct. Funnel powers that shift — so you can make smart cuts, not blind ones.

MMM gives you the marketing intelligence to act with confidence

Marketing mix modeling gives you the clarity to spend with purpose — even in tough markets. When budgets are under pressure, the smartest decisions are grounded in reliable marketing intelligence.

By showing what’s really driving performance, advanced measurement helps you cut waste, double down on what works and forecast the impact of every dollar you spend.

It’s not just about reporting — it’s about planning with precision, staying agile and making marketing strategy a measurable advantage.

Uncertainty isn’t a reason to pull back. It’s a reason to get sharper.

Don’t go dark. Spend smarter instead.