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The (Mis)Measurement of Marketing

2011 January 25

We’ve all been conned.

Metrics.  ROI.  Optimization.  These all have some intrinsic value.  However, they’ve also led to a misguided Wall Streetification of marketing that has confused means with ends and correlation with causality.  As we transition to a digital world, the tendency for destructive reductionism becomes even more pervasive.

The result has been a rejection of the intangible in favor of what we can model in Excel.  An abdication of the spirit in the pursuit of rationality.  To a great extent, in our quest for accountability, we’ve lost what’s important.

Metrics and Conversions

In marketing, we have a ton of research and measure lots of things.  Too many in fact.  Usually we can get a pretty good picture using just a few.  Here’s an example of just how we can do that.

Awareness: Awareness is fairly easy to measure.  Although the link to brand performance is tenuous, most would agree that it’s a good first step.  Moreover, we understand awareness and how to increase it reasonably well.  When in doubt, you can always spend more money (as simplistic as that may sound, it does work).

Market Share: Like awareness, measuring market share is simple to evalulate, but has its problems.  There are a number of ways that we can increase market share with little indication of brand health.  Discounting, “flooding the channel” and artificially segmenting the market to your advantage are all good examples.

Advocacy: What happens after a purchase is just as important (and some would argue more important) than what happens before.  The most popular measure, net promoter, is useful, but even its proprietors stress that it, in and of itself, doesn’t guarantee success.

Using all three metrics, we can evaluate conversions.  Here’s a simple hypothetical example postulating two brands with equal market share:

Less people are familiar with Brand A, but it coverts the awareness it does have into sales very efficiently and its consumers are likely to recommend it to their friends.  Brand B, on the other hand, is better known, but doesn’t perform as well.  Both brands obviously have different needs.

It’s tempting to attribute the difference to product performance.  However, that is often not the case.  After all, brand promotion itself can affect how consumers experience products.  Some brands have a mystique, others target particular fertile segments, still others attract a cult following.

Metrics can highlight problems, but offer little in the way of solutions.

A Sports Analogy

Being from the US and therefore partial to both sports analogies and American football, I’m going to risk annoying my European friends by offering both.

Every year, hundreds of young hopefuls show up for the NFL scouting combine, where their performance is measured in tasks such as the 40 yard dash, bench press and vertical leap.  The results on that one day will affect how early they are chosen in the draft and will translate into millions of dollars won or lost.

However, at the other end of their careers, those metrics mean little.  When star performers are inducted into the Hall of Fame, there is little talk of metrics, but much is made about the intangible aspects of their careers: their courage, ferocity, judgement under pressure and their knack for inciting the roar of the crowds.

How do we measure such things?  We don’t and that’s the point.

Occam’s Razor

Another problem with metrics is that we have far too many of them.  Analysis of them gives way to further research and additional studies.  Ten slides are used where one would suffice.   “Paralysis by analysis” often ensures.

A simple heuristic that can guide us through the morass is Occam’s Razor, which argues that “entities must not be multiplied beyond necessity.”  In other words, we should try to explain the maximum amount of variables with the minimum number of statements.  When in doubt, leave it out.

This isn’t a mere philosophical point.  In studies ranging from how people pick stocks to how doctors evaluate back pain, it has been shown that more information can often impede good judgement.

By limiting the amount of data we have to deal with, we are more likely to make better assessments.  We’re more able to use our imagination and make the kind of intuitive leaps that move brands forward.  Most of all, a relative dearth of data helps to remind us of how little we know and how much we can still discover.

The Power of Ideas

I am not advocating a wholesale abandonment of metrics, nor am I suggesting some sort of Hegelian synthesis in order to come to a compromise between heart and head.  Pursuit of excellence in one does not negate the other.  We should be able to walk and chew gum at the same time.

However, I am suggesting that we all too often favor what we can measure over what we can’t.  “Show me the numbers” is a common refrain which belies a modus operandi that often obscures more than it reveals.  Brand value is not rational, but transcendental.

Crowdsourcing is no substitute for the passion of professionals who devote their life to their craft.  Apple prevails not through superior product specifications but by molding form into function so seamlessly that they become indistinguishable from each other.  As more of what we do is driven by bits rather than atoms, we are increasingly competing in a passion economy.

Accountability is, after all, a personal quality and not an algorithm.

.- Greg

6 Responses leave one →
  1. January 26, 2011

    Greg. This is the best post you’ve written yet! But hey . . . I’m biased. ;)

    [Reply]

    Greg Reply:

    Thanks, Tom!

    – Greg

    [Reply]

  2. January 26, 2011

    Greg,

    This is exactly what’s been bothering me for quite a while now. Reading your thoughts has helped me gel my own, as always.

    In my day to day work life I’m often trying to convince a decision maker of the value to be had by trying something new to their way of thinking. I think you nailed it with the NFL combine example. When something is new and unproven, decision makers have a tendency to grasp for anything that will give them a reason to hide behind in case of failure.

    A huge majority of products made and sold now have been around for a very long time. The formula for success was set in stone well before today’s decision makers worked for the company they’re now charged with leading. With no margin for error, and
    very little understanding of new media, they rely on
    measurements that don’t impact reality. Often these false criteria lead to placing trust in exactly the wrong hands, if only because, those hands have the right answers to questions that don’t matter.

    [Reply]

    Greg Reply:

    Thanks, Roger.

    I think you nailed it on the head with the phrase “in the wrong hands.” There’s nothing wrong with metrics, they just shouldn’t be followed blindly. There are lots of factors that are difficult to measure. That doesn’t make them less important.

    – Greg

    [Reply]

  3. February 6, 2011

    Greg,

    Great article! The final paragraph concerning crowdsourcing being no substitute for creative passion, says it all.

    Gerry

    [Reply]

    Greg Reply:

    Thanks, Gerry. Have a great week!

    – Greg

    [Reply]

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