Now is the time to start planning your 2025 advertising budget. With tighter economic conditions and rising media costs, staying competitive requires a strategic approach to “right size” your budget. This involves allocating funds more efficiently and ensuring every dollar spent delivers measurable results. In this article, we’ll explore key steps to help you optimize your advertising budget for 2025, allowing you to balance immediate performance and sustained growth.

Here’s a quick overview of everything we’ll cover in this guide: 

• How to Review Your 2023-2024 Spend and Performance

  • Conduct a Marketing Mix Modelling Analysis

• Defining Your 2025 Sales Goals

• How to Improve the Process with Integrated MMM & Media Planning Tools

• Adjusting for Industry Trends and Challenges

Reviewing Your 2023-2024 Spend and Performance

Before diving into 2025, take a close look at how your media budget performed in 2023-2024. Looking at past results is essential for understanding what worked and what didn’t, providing  a solid foundation for next year’s strategy. Here are some ways you can go about reviewing past spend and performance: 

Conduct a Marketing Mix Modelling (MMM) Analysis:

Start by running an MMM analysis to learn how your media investments impacted sales. This will help you see which channels and tactics delivered the highest ROI and where you may have fallen short. By analyzing your past media spend, you'll get a data-driven understanding of what’s driving results and what needs to be adjusted for 2025.

Learn how marketing mix models can optimize your 2025 budget by Booking a Co-Pilot with Arima. 

Analyze Competitive and Market Factors:

Performance isn’t just about your media spend—external factors like competition and market conditions can play a big role too. Evaluate how these dynamics impacted your results. For example, did a competitor’s aggressive campaign shift market share? Were there any industry trends that disrupted your performance? Understanding these factors can help you anticipate challenges and opportunities for how you advertise in 2025.

Identify High-Performing Markets:

Look at which regions or markets outperformed or underperformed your expectations. This can reveal valuable insights about where to allocate more or less budget next year. For instance, if a specific region consistently exceeded goals, it could warrant increasing media investment in 2025.

Review Winning Tactics:

Identify which tactics worked best for your campaigns—whether it was specific ad formats, creative strategies, or audience segments. Recognizing these “winners” will help you fine-tune your approach moving forward. At the same time, evaluate what didn’t work and decide whether those efforts should be scaled back or reworked.

Identify Valuable Cross-Media Partnerships:

Were there media partners who added extra value, such as proprietary insights or cross-platform opportunities? These types of partnerships often deliver more than just ad space—they provide a strategic advantage. 

Evaluate Your Processes and Tools:

Finally, consider whether any new tools or processes could have improved efficiency or performance this past year. For example, could a different media planning tool have saved you time, or would more advanced analytics have led to better decision-making? Now is the time to explore such options, integrating them into your strategy for 2025. By leveraging new technologies and workflow improvements, you’ll set yourself up for more efficient and effective campaigns. 

Want to talk to us about tools that fit your needs? Get in touch with Arima. 

Define Your 2025 Sales Goals:

Prior performance review in hand, it’s time to consider what the next business cycle will look  like. Here are some steps for defining your 2025 sales and media goals.

Set Specific Sales Objectives:
Establishing clear sales goals is the first step to hitting them. Whether you’re aiming for increased revenue, market share, or unit sales, your media strategy should be directly tied to these objectives. For example, if your goal is to boost sales by 10%, your media plan should outline the channels, audience segments, and campaign tactics to achieve this growth.

Is Your Advertising Budget Enough?
Once sales goal(s) are solidified, you’ll need an appropriate budget. You can use tools like a budget optimizer to decide whether your current media investment  is enough to hit your targets. If the budget falls short, you’ll need to either 1) adjust sales goals or 2) increase the budget. This process helps create a realistic plan where your media spend is aligned with expected results, preventing wasted efforts on underfunded campaigns.

Align Goals Across Different Levels:

Advertising budget established, now ensure your media goals are consistent across geographic regions (national, regional, or local) or on a per brand basis. For example, a known brand’s national campaign may focus on overall awareness, while regional efforts emphasize specific product lines or include distinct messaging to activate purchase activity. While each subset may have varying requirements, they should all ladder up to your overall business objective(s). Be clear on the purpose of each campaign element to ensure synergy across all marketing efforts.

Determine Key Media Metrics and KPIs:

Key Performance Metrics that measure success should be chosen thoughtfully. Example KPIs include reach, frequency, engagement, paid search volume, site traffic, etc. By determining the right KPIs, you’ll have a clear understanding of what to track and how to measure the effectiveness of your media efforts.

Set Target Reach and Frequency Goals:

Once you've identified your audience, it's essential to set specific goals for both reach and frequency. How many people do you want to reach, and how often should they see your ads? To optimize this, consider using a media planning tool that allows you to allocate your budget across channels and sub-channels effectively. This will allow you to adjust your frequency targets based on your brand’s recognition—whether you’re reinforcing an established message or introducing something new. 

Arima’s media planning tools can support these decisions, ensuring you reach the right number of potential customers without overspending or underdelivering. 

Use MMM for ROI Measurement:

Marketing Mix Modelling (MMM) is an invaluable (and underused) tool for measuring ROI at the campaign level. This data-driven approach will give you insights into which channels are delivering the highest ROI. 

Set Stretch Goals for Each Media Format:
Don’t settle for just meeting your baseline targets, set stretch goals for each media format. For example, if your goal is a 5% increase in leads from digital ads, aim for a stretch goal of 7-8%. This mindset encourages your team to strive for higher performance and use your media investments to their fullest potential.

Diversify Media Channels:
A balanced media mix is essential for reaching a broad audience. MMM is not going to include media channels you have not used in the past. However, using the MMM-based media planner combines historical analysis of past spend with media channels yet to be tested. This enables you to spread your budget across digital, traditional, and emerging media channels to maximize reach while keeping the plan focused on the primary business objective (e.g. sales, etc). 

Leverage Strategic Media Partnerships:
Don’t just look for media placements—find media partners that offer more. Strategic media partnerships may provide additional value, such as audience insights, exclusive inventory and measurement options as well as co-branded opportunities. Partnerships may enhance your media strategy and drive more effective campaigns by offering unique access or added services that go beyond simple ad space. Identify media platforms that align with your target audience and business goals. Look for partners with a strong presence in your industry or in markets where you're trying to grow.

Incorporate Testing and Optimization:
Put aside a portion of your budget for experimenting with new channels, creatives, and geographies. Testing allows you to explore what works best for different audiences without using your entire budget. Use real-time data to optimize campaigns as they run, making adjustments to improve performance. Whether testing new creative messaging, ad formats, or targeting strategies, constant optimization is key to long-term success. 

For those hesitant about testing, MMM provides reassurance by analyzing the performance of different tactics. This helps you measure the impact of each variable—whether it’s a new channel, creative, or target segment—on sales and ROI. MMM also identifies high-performing areas and low-performing ones, allowing you to adjust and reallocate your advertising budget in real time.

Improve the Process with Integrated MMM & Media Planning Tools

As you plan your 2025 advertising budget, using tools like Marketing Mix Models and media planning platforms will simplify the advertising process. These tools help you make smarter, faster decisions —from planning to running your ads to tracking the results.

Why Combine MMM and Media Planning Tools?

MMM provides a comprehensive understanding of how different marketing channels impact overall performance, while media planning tools help to put these insights into action by optimizing future campaigns. Using both allows for a more cohesive, efficient, and effective advertising strategy. Instead of operating with a siloed view of each channel, these tools give you a holistic picture, showing how various touch points work together to drive business outcomes.

Synthetic Data vs. First-Party Data: The Role in MMM

Synthetic data plays an important role in Marketing Mix Modelling, especially when first-party data is either limited or incomplete. At Arima, our synthetic populations fill in the gaps by providing a richer dataset for modelling and forecasting. This type of data helps predict performance in new markets or media channels you haven’t yet tried, making it easier to decide where to spend your budget.

While first-party data offers valuable insights into your customers’ behavior, it often doesn’t provide enough scale for detailed modeling. That’s where synthetic data shines. 

How Arima’s Tools Support Your Goals

Arima has created a suite of tools designed to maximize the effectiveness of your media strategy. Our MMM-based media planning tools integrate data from multiple sources to help you allocate resources more efficiently. These tools allow for real-time adjustments to your campaigns, ensuring you can pivot based on performance, competitive dynamics, and market shifts.

By integrating media planning and measurement, we give you a streamlined process to manage your campaigns—from setting the strategy to analyzing the results. This approach improves coordination across teams, saves time, and eliminates the guesswork when deciding which tactics to scale or reduce.

Why Invest in MMM-Based Media Planning Tools?

Investing in MMM-based media planning tools gives you the power to make better, data-driven decisions. Here are some key benefits:

• Better ROI: By analyzing the historical performance of various media channels, these tools allow you to allocate budget to the most effective channels and adjust your strategy based on real-time data.
• Better Forecasting: MMM provides robust predictions of how your media investments will impact sales and other business goals, helping you create a more accurate and achievable plan.
• Holistic View of Marketing’s Contribution: Instead of focusing on individual channels in isolation, MMM provides a multi-channel perspective that highlights the contribution of each touchpoint. This omnichannel view enables more coordinated, integrated campaigns that contribute to broader business objectives.

How MMM Tools Improve Efficiency

MMM-based media planning tools streamline the planning, execution, and measurement of your campaigns. These tools allow you to plan across platforms in a cohesive way. They also automate many of the time-consuming tasks involved in media planning, such as budget allocation, optimization, and performance tracking.

Adjust for Industry Trends and Challenges

As you plan your 2025 advertising efforts, you must account for the evolving landscape of marketing and media. Several key industry trends and challenges are reshaping the way advertisers allocate their budgets:

• More Advancements in Marketing Data Science: Tools like the Huff Model for forecasting store and online retail visits are becoming more advanced. The Huff Model leverages synthetic data to simulate consumer behavior and predict which store locations or e-commerce platforms will see increased foot traffic or online visits based on media spend. Incorporating such tools into your strategy will enable more accurate predictions and targeted investment.
• Eliminate Proprietary Vertical Attribution Systems: Retail media networks and brand lift studies often rely on vertical-specific attribution systems, which can be limiting. To complete the view of media effectiveness, it's important to adopt cross-channel, omnichannel attribution models. 
• Mindful of Competitive Activity and Historical Share of Voice (SOV) Trends: Pay close attention to competitive activity, especially shifts in share of voice. Historical trends in SOV will help gauge your brand’s position in the market relative to competitors. If competitors are ramping up their media spend, you may need to adjust strategy to maintain or increase SOV, ensuring your brand remains visible and top-of-mind.
• Impact of Macroeconomic Factors: Macroeconomic factors like inflation, economic downturns, elections, or even unexpected events like pandemics or extreme weather impact consumer behavior and media costs. For instance, inflation may cause media prices to rise, affecting your overall budget. Stay flexible and allocate a portion of your budget to account for these fluctuations, ensuring your campaigns remain competitive and effective under changing circumstances.
  
  

Examples of Non-Media Factors & Macroeconomics found in Arima’s MMM

Conclusion

MMM-based media planning tools are no longer just a competitive advantage—they are essential for optimizing media strategies and achieving better results. They offer a holistic view of how each media channel contributes to business outcomes, allowing for more efficient budget allocation and real-time adjustments. By leveraging MMM, you can improve ROI, gain a clearer understanding of cross-channel performance, and make more informed decisions.

As you plan your advertising budget for 2025, investing in MMM-based media tools will streamline your processes, save time, and ensure every dollar spent is driving tangible results.

To stay competitive, it’s not enough to optimize current strategies. Proactively explore advancements in synthetic data, cross-platform analytics, and new media channels. Continuously educating yourself and your team will enable you to maintain a cutting-edge strategy that adapts to market shifts and evolving consumer behaviour.

Plan ahead, and embrace innovation, and you’ll ensure that your 2025 advertising efforts not only meet but exceed your business objectives.

Ready to get started? Explore Arima's platform to transform your media strategy and optimize your 2025 advertising budget.

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