Adapt or die? Three data analyses that improve the performance of media campaigns
Adapt or Die is a scene from the movie Moneyball (2011). I refer to this movie frequently in presentations to explain clients the potential impact of (marketing) data on (marketing) ROI.
For the ones who did not see the movie or read the book: Moneyball is about baseball coach Billy Bean who takes up a challenge by assembling a baseball team using statistics rather than the accepted gut feeling. A must see for anyone with an interest in data analytics and how this has up-ended not only baseball management but general business models as well. This scene shows the clash between traditional “gut feeling” sports expertise and modern data analytics.
The moneyball principle does not limit itself to baseball. When Matthew Benham bought the Danish soccer club FC Midtjylland in 2014, he assembled the team using “moneyball” statistics. The next year the club won the Danish super league title, their first major trophy. Since April 2015 Billy Bean became professional advisor of the Dutch soccer club AZ to improve their scouting using data analytics.
Back to the scene Adapt or Die: where two worlds collide, the new world (of data/algorythms) and the old world (decisions based on traditional values and gut feelings). What do you think? As far as I see, this could just as well be a conversation between an online marketeer and an offline marketeer.
Why should we use our own moneyball principle in marketing?
It’s quite simple: it makes your every marketing-dollar work harder and it saves money. McKinsey published a striking article on the subject in 2014. It highlights the case of an insurance company who, with the help of marketing analytics, managed a 15% improvement of MROI 4 years in a row.
Where do these 15% come from? Here are the top three areas for savings:
- Reach versus effective reach
Synergy: Is online effective without offline?
Positive synergy is an indicator of the reinforcement between different media channels. A trending topic between advertisers is: how does offline effect online? During years of research, we have seen that offline media can increase the effect of email newsletters by 37%. Combined with some smart planning this makes a nice bonus. Synergetic effects differ per branch and brand, but they can generate 10% -20% efficiency improvement when used optimally.
Creation: Where the brain meets the data
In data-driven marketing analyses the actual advertisement is often left out of the calculation. Understandable, since this requires leaving excel behind and starting an extreme complex calculation (food for econometricians). But leaving out the statistics of your creation is risky, to say the least, since over 50% of your ROI can be assigned to the power of the advertisement. A billboard that does not attract attention can lose 90% of its impact (such as web visits or sales). By measuring and testing implicit KPI’s (such as: emotion, salience, proposition and brand) efficiencies of 10% can be achieved. Moreover, “flops” can be avoided.
Reach versus effective reach:
Large multimedia campaigns (too) often demonstrate a high cost per order. On the other hand small campaigns are less effective in securely establishing themselves in the mindset of the consumer. By better balancing your effective reach you can achieve more than 10% overall efficiency. We often hear marketeers (especially directors) argue for a wide broadcast to guarantee the brand to be seen. And we see why CEO’s like to see their brand (and themselves) displayed in prime media real estate. Certainly understandable, but rarely efficient.
Marketing executives leave billions of euros behind
By using relevant data analytics to scout and invest in the right players the Oakland A’s reached second place in their division. But moreover they achieved this using only one tenth of the budget of the number one (Boston Red Sox). If we project the McKinsey figures to the Dutch market we see a possible 1 billion Euros of improving its profitability on a total spend of 5,2 billion Euros. The execution of marketing strategies based on gut feeling and traditional tactics is costing Dutch advertisers a small fortune.
Returning to the scene Adapt to Die: We realize that the road to a data driven marketing organization is a bumpy one. Managing and gathering data is a challenge. But quite frankly: will there be a place for marketeers who determine strategies based on experience and gut feeling in tomorrow’s organizations? All while the competition is progressing by using data driven insights? My mind is made up: The marketeer who is going to use data driven insights will win the battle. In that sense marketing is just like baseball: ADAPT OR DIE.