Jan 82013

2013 Strategic Imperative: Marketing as Applied Science

The new year brings new opportunities for marketers. As we explore the ever increasing array of marketing vehicles available it is critically important that we also re-think some of the fundamentals of our core marketing efforts. Companies that learn how to apply the scientific method to every aspect of marketing will find business success in 2013.

Francis Bacon

Francis Bacon knew the value of making decisions based on empirical evidence.

We must all become marketing scientists

We must reject Wannamaker's conundrum as an immutable truth. We have more tools at our disposal than ever to answer the hard questions about what marketing activities and combinations of activities drive our businesses.

The scientific method brings practices and mindsets that are tremendously valuable to marketers. In 2013 we must all resolve to:

  1. Let empirical evidence not faith, habit, or aesthetics drive decisions. Scientists do not "believe in" theories, they accept that which evidence supports until evidence is discovered that challenges that theory. Too often marketing budgets are set through habit and personal persuasion rather than rigorous examination of what works and what doesn't. Sacred cows are dangerous. The best marketers must be above vested interests and seek to put money where it is best used, not simply where it's always gone.
  2. Encourage curiosity, creativity and innovation. We cannot allow the day to day grind to prevent us from exploring new frontiers, pushing the envelope and developing new ways to test and re-test our assumptions. Developing hypotheses, creating a methodology, conducting tests carefully, reading results and implementing the findings all take time, time that must be protected from punching through task lists.
  3. Apply the same rigor to brand advertising and offline media as we do direct marketing. Biology and Chemistry may be different disciplines, but courses in biochemistry wouldn't exist if the distinction weren't pretty blurry at some level. Why would offline media and brand advertising (online and off) be exempt from rigorous testing and optimization? The payoff time frames and success metrics may be different, but what can be measured should be, and moving marketing dollars towards the media that produces better metrics has to be beneficial.
  4. Abolish silos and institutional barriers that prevent teams from working for the good of the company as a whole. Science has a way of breaking down doors. Statistical analysis has turned on its head 100 years of baseball wisdom as Michael Lewis documented in Moneyball. This has been a long drawn out battle between conventional wisdom and math, which math is slowly winning through demonstrable performance differences. Those same types of institutional barriers and unwillingness to have long standing practices challenged have made the birth of marketing as applied science a more difficult delivery than it should have been. The baby isn't waiting any longer.

There will be howls of protests to wit: "Marketing is both science and art!"

We respectfully disagree.

The difference between science and art isn't creativity. Scientists must be tremendously creative to be successful. Edison famously quipped that "I've not failed. I've just found 10,000 ways that don't work" when inventing sustainable electric lighting. He even tried a hair from his assistant's beard as a filament before hitting on the need for an oxygen-free environment.

Instead, the real difference between science and art is how success is judged. Art is judged by popularity, by the opinion of critics, by individual aesthetic taste, by the degree to which it influences other art, or any combination of them. There is no consensus on what is good art or bad art, and different experts will reach different conclusions as a result.

Science is judged by concrete evidence that supports or rejects its claims. All scientists may not reach the same conclusion from complex data sets and complex problems, but every scientist recognizes that ultimately their view will be guided by data, not by opinion, tradition or vested interests. Architecture is art. People will have different opinions about whether a building is interesting, beautiful, fitting, etc. Engineering is science. That the building withstands an earthquake, has consistent heating and cooling, is energy efficient are objectively measurable facts with which it is difficult to disagree.

We, as marketers, must pledge to be judged as scientists are judged: by the outcomes we control, not by opinions. Ultimately we must be accountable to the corporate P & L statement. This perspective cannot just apply to paid search, but must equally apply to SEO, display advertising, social media marketing, print, TV, radio and the intersections between them all.

Fundamental changes have occurred in many online marketing channels that require us to revise our thinking and more importantly our practices.

Measuring Success

We MUST get smarter about how we measure marketing success in 2013.

Too many marketers:

  • evaluate orders or leads rather than the value of those orders and leads;
  • give 100% credit to the last touch regardless of preceding touch paths;
  • ignore display impressions rather than measuring their non-zero value;
  • measure SEO success/failure by keyword ranking reports rather than the value SEO contributes. Ranking reports have their uses as diagnostic tools, but ranking isn't the goal revenue is the goal.

Too few marketers:

  • create feedback loops to understand the types of customers driven by different marketing channels;
  • recognize and incorporate smart phone success metrics like "click to call" and "get directions";
  • track call-center spillover value back to the ad;
  • consider lifetime value of customers in their efficiency targets.

We cannot maximize effectiveness if we aren't measuring performance well to begin with. Imagine for example measuring a baseball pitcher's performance by the total number of pitches thrown in a season. It might have some directional validity -- to throw a great many pitches you have to pitch in a great many innings, and likely the manager wouldn't let a lousy pitcher do that -- but there are much better success metrics to use (ERA, strikeouts per nine innings, walks per nine innings, home runs allowed per batters faced). The manager who uses the wrong metrics will optimize for the wrong performance; the ones that use smarter metrics will make smarter trades and end up with greater success.

Marketers are strapped for time and stretched across too many disparate activities. Changing the metrics used to measure success is hard. It involves learning new ways to think about data, it requires connecting dots in ways that haven't been done before, it involves dumping those keyword rank reports in favor of URL traffic reports, and finding smart ways to shed light into new blind spots (think iOS6). Most importantly it involves education throughout the organization of what is changing and why. That education is crucial because changing the scorecard torques the YOY comparisons leading to confusion and resistance.

We cannot let the difficulties stand in the way of the benefits of getting this right.

We must adapt our practices to new realities

Just to tick off a few of the key changes to core programs that must be addressed:

  • Paid Search: PLAs cannot be an after-thought, they are a huge piece of the game in ecommerce and must be treated as such. Device targeting isn't a 'best practice' it's a fundamental requirement. Search re-targeting is here, and is awesome. Are you on it?
  • SEO: Things not strings: entities and aspects are the future of Google's ranking algorithms. The Knowledge Graph and authorship have already changed the fundamentals of SEO, and you can bet those changes will only accelerate. It isn't about keyword ranking reports, laborious keyword research, and the number of indexed pages and backlinks a site has anymore. It's about providing truly compelling content and creating value, and doing smart outreach to give it eyeballs.
  • Social Media: it isn't just buying ads on Facebook or promoted Tweets; updates can't solely focus on promotions. The game is not counting fans, it's measuring engagement. Your brand is no longer what you say about yourself, it's what your customers say about you to their friends.
  • Display: Keyword targeting on the GDN matters. All visitors should not be retargeted the same way. In any audience buying medium the game is won by those who segment smartly and execute based on the measured performance of those segments. How people get to your site (brand search? Non-brand search? email?), how many times they've been to your site, and what they did when they were there should impact how you target. The Facebook Exchange opens up a whole new arena of opportunity. Does your AOR pay attention to this or do any more than spend all the budget and ask for more? Are all the lines on your display media plan coordinated?
  • Comparison Shopping Engines: The quality of the feed makes a huge difference in performance, yet many treat this channel as set it and forget it. Google shopping is no longer free, c'est la vie. Amazon, Sears and other marketplaces are increasingly important. Managing these well is the new imperative.
  • Mobile websites: Responsive design helps, but smartphone users have fundamentally different needs and only a site designed to meet those unique needs will produce the best outcome for the user and for the business. The chicken and egg discussion of "I'll build a mobile site when mobile matters" is over. It matters, invest now.

In 2013 RKG will develop and produce a number of white papers -- lab reports if you will -- on the above themes as well as others highlighting how the application of marketing science positively impacts results.

2013 will be the year of marketing as science. Are you ready for it?


8 Responses to "2013 Strategic Imperative: Marketing as Applied Science"
George - Happy New Year to you as well. I am completely supportive of your comment on analyzing lifetime value of customers. In fact, we took your advice from a conversation in 2012, and assisted 2 clients with "Near Term Value": the net value of a customer after their first year. The Near Term Value calculation reduces gross sales by keyword charges and COGS. The clients can now determine whether bidding for keywords is too low (or too high), based on these results.
Steven says:
Nice post, very informative. You guys are really setting some high standards.. I however disagree with the “Marketing is science!” and "Marketing is both science and art!” Marketing is based solely on communication. The execution of marketing is a science but unless marketing is a real communication to possible customers on different touch points it will fail. Just as the best sales men win based on the communication skills, marketing wins and fails here. Marketing is sales, sales is communication. You can have wonderful landing pages with wonderful ads on all channels delivering the wrong message because no proper survey was done before creation. As a matter of fact, high conversion rates will never get high (selling to all potential buyers) unless marketing addresses all the needs of prospective customers with exact and right communication. Even sites like Amazon fail here. Whether you buy a coffee machine or a high-end fitness machine, the site structure is pretty much the same. However when I buy a coffee machine I have questions regarding: pads, quality or what not, while with fitness machines I want to know which machine is the right fit for my training needs a. will it ripe my abs? or b. is it a good fit for beginners or c. what is the difference with all these treadmills? Just yesterday, I completed a simple survey for a real estate customer which revealed interesting insights into the thoughts of prospects. Very basic questions, yet most real estate websites don't address these questions. Once you get into high-volume advertising, you can only really improve by working on the communication quality.
Bruce, thanks so much for your comment. We see a number of folks using One-Year Value as an investment benchmark for investing in growth. Steven, thanks for your very interesting perspective. We may be saying the same thing but in different words. We'd argue there is a science to measuring communication efficacy, and that marketers need to apply more rigor to testing copy, look, feel. I believe in the general direct marketing value system which holds that 70% of the game is speaking to the right audience, 20% is having a compelling offer for that audience and 10% is how the offer is presented. It's a mistake to ignore that last 10%, for sure, but it's equally a mistake to make it the whole focus.
Sheila Roy says:
Yes....I completely agree that Marketing is applied Science.....but I would like to extend it as ' Marketing is applied Social Science' . Science is not subject in itself but one of the many processes of discovery of knowledge and a process of studying any phenomenon. As practitioners of marketing and HR, we are expected to inform managements about our understanding of human behaviour as individuals and social groups ( especially in todays context) and more importantly predict the outcomes of our various initiatives and actions in the markets. Will not our understanding of human behaviour be strengthened by going back and understanding the basics of these core social sciences first. Should not our strategy for SEO should be guided and informed more from human behaviour of search and cognition. The input to the study is the various theories of psychology and sociology, the outcome is an SEO strategy. Engineers ( and engineering as applied natural science)are not allowed to be practice without a thorough knowledge of physics and chemistry. How do we allow marketers to practice with out a similar background in social sciences?
Sheila, thanks for your comment. A very interesting perspective. I think at the highest level marketing requires an understanding of human motivation and a creative spark to understand how best to trigger a desired response. Being able to anticipate what is likely to work is hugely important. At the same time, understanding what actually works in the field requires an ability to extract knowledge from data using quantitative methods that sometimes go beyond what is taught in the "softer" sciences. Today's marketer needs to be a well-rounded beast :-)


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