In the latest Mad Reality Check column, Mark Leone, partner at MadClarity, argues that the marketing industry has become too quick to embrace every new capability without stopping to ask whether it actually delivers better outcomes. Drawing on lessons from economics, decades of media evolution and a painful childhood encounter with a cactus, Leone explains why marketers need to spend less time chasing optimisation for optimisation’s sake and more time weighing the true opportunity cost of their decisions.
I can grab a cactus barehanded from the spikey end. Thankfully, I learnt I shouldn’t.
A lesson learned the hard way as a curious little fella over 40 years ago. That wouldn’t surprise most who know me. Maybe if there was a less painful way of learning… it may not have lasted.
As an industry, we aren’t good at knowing the difference between ‘can’ and ‘should’.
We have been fortunate to work in media across a period of immense change, more than ever before.
The endless possibilities promised by the tech gang, even if some of it was only that, baseless promises. The result… are we infinitely better at marketing and advertising than we were 20, 30 or even 40 years ago? Only the delusional will argue the affirmative in that debate.
Some of you will have seen my past ranting about the fact we don’t seem to learn lessons all that well.
A lot of what is positioned as testing, to learn these lessons, is way too often just dabbling. We have no real means of understanding the tactic’s impact. At best we add some MMM and claim to know the impact of the 2 per cent spent, as implausible as that might be.
Whilst this remains a big problem, it isn’t what I am talking about this time, although closely related.
Way too much time and money is spent on things that we can do, that in hindsight don’t seem to make a whole lot of sense after the fact. They also shouldn’t have made sense beforehand, but we fail to ask the important questions. I wasn’t a stellar scholar, my record shows that. But Year 1 Economics and Marketing taught me a valuable lesson.
The importance of understanding the opportunity cost
We find way too often that marketers do not know this until way after the event. And many times, only when we are helping them review campaigns and quantify it for them.
What am I talking about?
The targeting layer applied to help better reach 0.5% of the target audience, when in truth your target audience should be everyone with a mouth. By the way, it cost you 50 per cent more.
The tech you used to strictly cap frequency across platforms to maximise reach… that resulted in less reach than you otherwise had been getting. How is this possible when it costs you nearly twice as much to implement?
Effectively it’s paying for the privilege of potential customers not seeing your ads more often.
Knowing this beforehand, hopefully we still wouldn’t do it. But why didn’t we know?
It is all seemingly fuelled by the modern obsession to optimise. An obsession to seek out waste, to the point where anything and everything is becoming considered waste. Often the effective parts of campaigns are collateral damage.
We are old enough to have seen it all before when econometric modelling first became popular.
Advertisers were encouraged to reduce their advertising weights to levels that were ineffective. They all became invisible.
In the short term, ROI improved. It is a simple formula, less “I” with the same “R” means it must improve.
Until the “R” falls because of a lack of “I”. And let me tell you, it regularly did, until they realised they needed to make a change.
Being data led has become code for mindlessly following no matter what the cos – at the expense of sound reasoning, strategy and experience.
The experience and knowledge of what leads to improved business performance. Asking the questions to understand the opportunity cost and making sound judgement.
I have mentioned before some of the great writers that exist in our industry. Those that unfortunately don’t have the followings of the well-known cults. Many of them speak of the trajectory of marketing now being more about finding people who are about to buy to claim credit, than creating new demand.
If only, as marketers, we are as alert when metaphorically grabbing the cactus from the spikey end barehanded… with our budgets. Knowing that just because we can, doesn’t mean we should.
