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4 Popular Marketing Concepts That Need to be Rethought

2013 January 16
monkey_thinking-236

The marketing industry runs on heuristics, although nobody actually uses that term.  Simple rules of thumb become axioms, which are then dressed up in a new, snappier shell and presented as insights.  They are then recycled and reused.

They do, of course, contain grains of truth and so they resonate.  They gain traction.  Consensus builds around them and they propagate, under slightly different guises, through various agency frameworks and client marketing programs.

Unfortunately, as momentum builds, so does inertia and it becomes difficult to pivot or even evolve.  Just as it used to be that no one got fired for buying IBM, no marketer gets called out for propagating conventional wisdom, even if the evidence doesn’t support it. Some of today’s most popular marketing concepts need to be rethought.

1. From Target Consumers to Consumer Networks

“I waste half of my advertising money, but I’m never sure which half,” is an old marketing cliché attributed to various people.  The standard solution has generally been more effective targeting.  Get your message to the right people, so the thinking goes, and you not only increase sales, but save a load of money as well.

In truth, the whole thing was always a canard.  A recent Catalina study shows that more than half of sales comes from outside of the target (and besides, anybody who has ever optimized a TV schedule or even a banner campaign, knows that the primary source of waste is excess frequency, not poor targeting).

As Tara Walpert Levy of Google argues in a recent post, you’re much better off thinking about your consumers as an interconnected network than a vast sea of disparate points. She advocates replacing the traditional marketing funnel with an engagement pyramid.

Engagement funnel

While “engagement funnel” is an unfortunate moniker (for reasons I’ll discuss in the next section), she has a point that is supported by science.  Network theory pioneer Duncan Watts recommends an idea he calls Big Seed Marketing that also points to flaws in the targeting mindset.

We need to stop targeting consumers and start building networks of advocates (who, by the way, do not have to be consumers at all) to promote branding.  Overtargeting simply limits a brand’s potential.

2. From Engagement to Value Exchange

When I was living overseas, I often had religious missionaries engaging me on the street. Alas, I remain the same despicable heathen I always was, so it seems they were wasting their time.  Marketers often fall into the same trap, trying to engage consumers with little to show for their efforts and, in the worst cases, even turning them off.

At the core of the problem is the term itself.  No one really knows what “engagement” really means, so they stipulate “engagement metrics” such as tweets, likes, video views and so on and then measure success by how they perform against them.  Of course, since only a few percent of consumers (at best) ever engage, these metrics are often suspect.

A much more sensible approach would be to throw out the term altogether and focus on value exchange, of which there are three types:

Product value exchange:

This is the most obvious form of value exchange and it’s easy to find examples.  Apple excels at it and so does Wal-Mart (especially when you consider that their logistics capability is a major component of everything they sell).

Content Value Exchange: Consumers increasingly expect brands to be partners by helping them get maximum utility and enjoyment out of their purchase.  Probably the oldest example is the Michelin Guides, which were originally conceived to help motorists get more out of driving to new places, but has become a brand in its own right.

Social Value Exchange: Every pub owner has long understood that we’ll pay a whole lot more to go to a place where we can meet people than we will to get drunk at home. Starbucks has built an enormous business on a similar concept and is investing heavily in digital to further their strategy and, let’s face it, the entire conference industry is based on the same principle.

While a simple change in terminology will not solve the entire problem, focusing on value exchange does help to direct action and provides a simple guide to help with defining metrics.  Babbling on about vague “engagement” gets us nowhere.

3. From Influentials to Tent Cities

Ever since Malcolm Gladwell explained his concepts of mavens and connectors in The Tipping Point, marketers have been crazy about the idea of influentials.  The idea that you could leverage a few, very special people into mass action had spin doctors salivating.  If you could just identify those magic few…

Unfortunately, influentials are a myth.  Not that some people aren’t more influential than others, but not enough to really matter, especially after you factor in transaction costs.. This has been proven scientifically in study after study.  Nevertheless, most people still seem to buy into it.  The influentials idea just seems too compelling not to be true.

So I have a simple question:  Who were the influentials in the Arab Spring?  Today, even years later, we don’t know who they are.  In fact, if you were to come up with a list of influential people before the events took place, you would find that each and every one was powerless during the uprising.  If a theory has no predictive power, what good is it?

It’s not just the Arab Spring either.  I found things very much the same in the Orange Revolution in Ukraine, where I was running the leading news organization.  Nobody, from the highest government official to the reichest Oligarchs, really knew what was going on.

What was obvious, however, was the immense power and influence emanating from the tent cities of ordinary protesters.  In truth, movements succeed through viral ideas propagated through peer networks and it is those that we need to understand and cultivate.  Stop looking for influentials and start looking for pockets of passion.

4. From Research to Simulation

The marketing industry spends tons of money on research.  Quantitative research, qualitative research, shopper research, ethnographic studies, focus groups, it never seems to end.  Once the results are in, we spend more time arguing over methodologies, sample sizes and the like.  In the end, there is so much conflicting information that most people just go with their gut.

Through it all, we can’t escape the feeling that our numbers are always wrong.  We don’t trust them.  They seem to lack soul.  It’s no wonder that so many marketers use research like a drunk uses a lamppost, for support rather than illumination.

Many marketers are learning to increase productivity through simulation.  Why waste time coming up with theories about who to target when we can just randomly sample a test group and let algorithms select higher performance groups?  Even after we scale up, as long as a small portion remains random, our machines will continue to learn as new information comes in.

This approach is becoming increasingly common, although it is mostly confined to e-mail and banner ad campaigns.  However, in the future, we’ll increasingly be working with agent-based models that can give us insights into real world environments.

A Call for Basic Skills

There is an underlying theme in all of this.  Marketing myths prevail largely to a lack of basic skills.  An idea goes from one person to another, from agency to client and on to the next agency as it proliferates  Once it gains momentum, it becomes incredibly difficult to call into question.

To be fair, this happens in every industry.  We just had a global financial crisis largely due to sophisticated models that didn’t work.  Even the scientific community, with their elaborate peer review process, often falls prey to unsubstantiated fads.  However, in marketing circles the problem seems especially widespread.

In my experience, very few people in the industry are proficient in basic statistical concepts (the kind you’re supposed to learn in an introductory course).  Writing skills are alarmingly poor.  With all the time and money spent on training, why is there no instruction available for basic skills?

In other words, with the trillion dollars spent on marketing every year and the millions invested in systems, what are we doing to equip people to think, rather than to merely propagate fads?

- Greg

16 Responses leave one →
  1. January 16, 2013

    You get me every time mate. Awesome post.

    My 2p?

    Fads are popular and often well-publicized. Fads get a lot of attention and, to your classic IBM idiom, make for great sound bytes in a meeting to show how “on the ball” you are.

    To your lament about statistics (mine are atrocious) and writing skills (marginally better), I’d add the ability to think critically versus subjectively. That’s a tough call but a skill all marketers need to acquire.

    Lastly, thank you for using David Ogilvy’s sublime quote about drunks & research. As an alumni, that one always tickled me.
    Hilton Barbour´s last blog post ..The inescapable rise of Social Marketing

    [Reply]

    Greg Reply:

    Hilton,

    I agree with your point about critical thinking being of primary importance, but feel strongly about the need for basic skills as a prerequisite. Further:

    - How can we be a “data driven” industry without basic quantitative skills?

    - How is content marketing supposed to develop without writing skills.

    - How can digital marketing efforts be successful if so few people know the basics of UX and design?

    I’m not saying that everyone has to be an expert, but it would seem that some rudimentary knowledge should be required before someone is given a multimillion dollar budget. No?

    - Greg

    [Reply]

    Marc Reply:

    Love the post, Greg, as usual. Paradoxically, even with all the skills you outline above, and then some, we often miss out on opportunities because the potential client has a pat version of marketing people, language, tactics, and tools that can not be shaken. All this may well be the result of the myths and legends you describe in your piece. Hard to “break the mold” when so many choose the POLR.

    [Reply]

    Greg Reply:

    Mark,

    There’s a lot of truth to that. However, I do think that closing the skills gap will help. If people have better analytical and communication capabilities, they’ll at least to have the tools to make their own conclusions instead of relying on the conventional wisom.

    - Greg

  2. January 16, 2013

    Greg – wholeheartedly agree.

    I’ve a simpler request. Are we curious or inquisitive enough as an industry? Your breadth of inputs suggests an incredible (or insane) level of curiosity. I’m not sure that is universal in the marketing field as it needs to be.
    Hilton Barbour´s last blog post ..The inescapable rise of Social Marketing

    [Reply]

    Greg Reply:

    Yes, I’m a bit extreme:-)

    - Greg

    [Reply]

  3. J. Nelson Leith permalink
    January 17, 2013

    “… with the trillion dollars spent on marketing every year and the millions invested in systems, what are we doing to equip people to think, rather than to merely propagate fads?”

    What if the problem is that you can’t “equip people to think”? Innate general intelligence can be honed by practice, but I’ve never seen evidence that you can teach someone to think better. Training simply provides new models and concepts (like the old fad models and concepts) upon which to apply the same intellect. If they fumbled the old ideas, they’ll fumble the new ones unless carefully following the lead of someone with greater innate intelligence.

    Giving someone a fancy new baseball may incrementally increase the speed of the pitch, but it cannot make a clutz into a shut-out pitcher; when it comes to the meticulous analysis and application of sophisticated ideas, Major League thinking is the only thing that will do. The real solution would be personnel-oriented, rather than training-oriented: make sure the right people (smart people) are the ones in charge, guiding others in the proper use of the models and concepts.

    [Reply]

    Greg Reply:

    I see your point. However, I think that the notion of the “right people” is problematic. Liberal arts majors might have great communication skills, technical graduates might have strong quantitative skills and some people are just natural client handlers. Everybody brings something and needs something.

    Many industries do give some training on basic skills, why not marketing?

    - Greg

    [Reply]

  4. Shane permalink
    January 19, 2013

    Your piece is compelling and reflects what I noticed of the training offered in marketing in the early 90′s – devoid of content and high on personal myth with little effort to ensure that basic stats were understood.

    About the Arab Spring – core motivators (always in the shadows, but core motivators nonetheless in each and every country) the Muslim Brotherhood. they were seen at every critical moment and used the results to sheer up their own political clout and vision.

    [Reply]

    Greg Reply:

    Thanks Shane.

    The Arab Spring is an interesting case, because the Muslim Brotherhood were caught as unaware as anyone. However, after the regime fell in Egypt, they were the only ones who had the organizational strength to form a government.

    - Greg

    [Reply]

  5. January 21, 2013

    Greg,

    Your thinking ties directly into a book I just finished, “Thinking, Fast…Slow” by Daniel Kahneman. He has several basic theses in this book that are reflected in your post.

    The first is that the human brain just isn’t wired to handle numbers–especially complexity in numbers (like statistics)–well. The fast part of our brain is too busy dealing with scoping out the environment for threats (and the like), and the (smart) new, slow brain is lazy and if the old brain provides an answer that seems reasonable, it’s hard to get the new brain to get off it’s bum (does a brain have one of those?) and actually do the thinking required to confirm or deny the quick answer supplied by the old brain.

    The second is that simple algorithms actually often perform better than our complex models of things–even in dealing with predictions in complex situations. For instance, a good model of whether a marriage will work is the simple calculation “number of times making love – number of arguments.” A negative number is bad.

    So, it seems that you may (once again) be right on, and that the conundrum you face is one of human nature, more than marketers (or financiers or whoever) falling into any particular trap.

    [Reply]

    Greg Reply:

    Thanks Adam. That was truly a great book. I wrote about it at length here: http://www.digitaltonto.com/2012/when-should-we-go-with-our-gut-and-when-should-we-look-before-we-leap/

    - Greg

    [Reply]

  6. Bruno Farias de Souza permalink
    January 25, 2013

    Hi Greg!

    I was reading this article and I found the Item 3 really interesting. I truly believe that what Malcon said must be part of something really bigger than it is, and crossing it with what you said, I found that the theory of Social archetypes groups are applicable on that. everybody has a consume pattern (personas) and this changes as we look for new products or ideas, If the influential are not a person, but a complete persona archetype, then I believe that the revolution will start.
    Sorry If it was confusing, but it still confusing for me.

    [Reply]

    Greg Reply:

    Thanks for your input Bruno, but I think you missed my point. Trying to target influence is mostly a waste of time, because everybody can be influential given the right circumstances (slightly more technically, those with more links are only moderately more likely to set off a viral chain, so search and transaction costs obviate any benefit).

    I hope that’s helpful.

    - Greg

    [Reply]

  7. February 16, 2013

    Another great post. I was really drawn into the read when you mentioned the Arab Spring and then the Orange Revolution?! Whoa! Love the connections and yet another area of overlap in our prof interets. Ukraine is always heavy on my mind, re: leaning East or West? Articulating its own identity that pulls from both but is distinct?

    Power and influence “emanating from tent cities of ordinary protesters” and “pockets of passion” = crowds in my world and I often think and write about this thru music, Second Line parades and such. Harnessing that power is crucial for progress and while so much time and so many resources are devoted to getting to specifics or identifying individuals, we lose a great deal bc the pulsing power center — the 800 lb gorilla — is ignored. A reassessment of value is needed.

    Skills… indeed! Need students who can apply knowledge gained from all fields of interest and use it to solve complex problems. Too many of us don’t teach practical application of knowledge.

    So back to your example of the Arab Spring and Orange Revolution — the skill in making such thematic connections is necessary. Too often we are stifled by disciplinary boundaries.

    http://www.theglobalroundhouse.com
    @GlobalJackie
    Jackie Modeste´s last blog post ..Skills Shortage on the Global Stage

    [Reply]

    Greg Reply:

    Thanks Jackie. The Orange Revolution in particular was interesting because protests are fairly unusual in Ukrainian culture (especially in comparison to Poland next door, where protest is a way of life.) I remember it was almost like a switched flipped somewhere and all of the sudden the entire country became a political hotbed. It was an amazing thing to see!

    - Greg

    [Reply]

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