Partner Article

Marketers wasting money?

Glenn Granger, CEO of marketingQED, looks at the decision making processes in marketing a business.

Famously, John Wanamaker noted that “half the money I spend on advertising is wasted. The trouble is, I don’t know which half”. In the years since, things seem to have got slightly better – according to marketers themselves, the proportion wasted has dropped to 15.8 per cent.

The figure is an average of estimates given by 459 UK marketers, who were surveyed on behalf of my firm, marketingQED. For sake of argument, if we assume that the marketers were right, then applied to an industry-wide level, the money wasted on marketing would equate to more than £2.5 billion annually. Unfortunately, they are almost certainly wrong, and the figure is likely to be far higher.

The problem is that marketers have a habit of relying on gut instinct and guesswork rather than data. As a result, it is likely that very few have an accurate idea of what the outcome of a planned campaign will be, or why past campaigns achieved the results they did.

When asked what most influences their marketing decisions, the survey’s respondents were more likely to simply follow what their firm has tended to do in the past (39.4 per cent) or what seems to be the commonly accepted practice in the industry (34.9 per cent) rather than seek advice (just 6.8 per cent sought advice from colleagues, 6.1 per cent from outside agencies).

Unfortunately, gut instinct seldom works. Marketing is fiendishly complicated: most single purchases are the result of many messages received through many channels, in many places, over a period of time, and this is too much data for our brains to process. To solve this problem, you need to fire up the computer.

The technology now exists for marketers to forecast and evaluate campaigns with a high degree of accuracy. You don’t even need a good knowledge of maths – several solutions are aimed at the non-specialist, and work on a desktop.

Unfortunately, very few companies use data. Three quarters (75.6 per cent) had never employed a data professional. Even of firms with marketing budgets in excess of £1m, nearly two-fifths (37.2 per cent) did not report using any analytics tools whatsoever. Overall, the proportion of respondents who reported basing their decisions primarily on algorithmic forecasts was just 2.6 per cent.

This needn’t happen. In my experience, marketers who have used data intelligently have raised their profits by as much as a fifth.

However, these are the exceptions. Unfortunately, most marketers remain raindancers when they could and should have evolved into meteorologists.

This was posted in Bdaily's Members' News section by Glenn Granger .