4 Popular Marketing Concepts That Need to be Rethought
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.
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?