Quantipulation In Action: Inbound Vs. Outbound Marketing

Mashable (that highly reputable source of marketing theory and research) recently published an article called Inbound Marketing Vs. Outbound Marketing, which claimed:

“Thanks to the Internet, marketing has evolved over the years. Consumers no longer rely on billboards and TV spots — a.k.a. outbound marketing — to learn about new products, because the web has empowered them. It’s given them alternative methods for finding, buying and researching brands and products. The new marketing communication — inbound marketing — has become a two-way dialogue, much of which is facilitated by social media.

Another reason why inbound marketing is winning is because it costs less than traditional marketing. Why try to buy your way in when consumers aren’t even paying attention? Here are some stats from the infographic below.

–44% of direct mail is never opened. 
–84% of 25 to 34 year olds have clicked out of a website because of an “irrelevant or intrusive ad.”
–The cost per lead in outbound marketing is more than for inbound marketing.”

My take: Total garbage. This attempt on the part of people looking to differentiate the “new” marketing from “old” marketing completely misses the boat. 

Let’s look at this point by point:

“Consumers no longer rely on billboards and TV spots — a.k.a. outbound marketing — to learn about new products.” Who said that consumers relied on billboards and TV spots to learn about new products? Marketers relied on billboards and TV spots to make consumers aware of their products, to increase recall of their products, and create positive affinity. As long as people continue to drive along the highway (how’s the commute in your city? Yeah, sucks in mine, too) and watch TV, marketers will find that billboards and TV spots to be at least somewhat effective at those objectives. 

The new marketing communication — inbound marketing — has become a two-way dialogue, much of which is facilitated by social media. Got news for all the inbound marketing alarmists out there: Marketing has always been a two-way dialogue. It just wasn’t as easy to execute as it is today. Marketers have relied on various mechanisms — postcards, focus groups, toll-free phone numbers — to encourage feedback from consumers. Claiming that the “old” marketing was “one-way” is false.

44% of direct mail is never opened. First off, how do they know that? Think about how much direct mail you get. I challenge you to come up with even a reasonably accurate estimate of how much of it you open and how much you throw away before opening. Second, even if this were true, then I’d say: WOW! More than half of direct mail is opened. That’s pretty damn good in this marketing environment!

84% of 25 to 34 year olds have clicked out of a website because of an “irrelevant or intrusive ad.” What the hell is wrong with the other 16%?

The cost per lead in outbound is more than for inbound marketing. Stupidest claim I’ve heard all month. Just because there is no measurable media cost associated with this thing you call “inbound” marketing doesn’t mean there aren’t costs associated with the efforts. Somebody has to create and manage the social media site, right? Or, if the inbound marketing channel is the phone, do the costs of staffing the call center not count as part of inbound marketing efforts? And given the incredibly inexact science of attribution in the marketing world, how does anyone really determine that a generated “inbound’ lead wasn’t influenced by outbound marketing efforts?

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The infographic included in the Mashable goes on to claim that in the “old” way of marketing, marketers rarely sought to “entertain or educate.” Seriously? The ad industry has a RICH history of attempts at being funny and entertaining. Print ads have LONG been focused on education. 

The article also tries to differentiate “new” marketing from “old” marketing by claiming that in the new marketing, “customers come to you”, while in the old marketing, marketers sought out customers. 

Customers come to you? Really? And how do they find out about you? Simply by word-of-mouth? Good luck with that. Listen to what Groupon had t say:

“After a two-year holdout, we finally decided to run real television ads. In the past, we’ve depended mostly on word-of-mouth and limited our advertising to online search. This year, we realized that in spite of how much we’d grown, a ton of people still hadn’t heard of Groupon, so we decided to give in to our Napoleon complex and invade the rest of the world with a proper Super Bowl commercial.”

Bottom line: Trying to make inbound marketing sound like something superior and new is total BS. Marketing is a complex process. There are parts of the process that are inherently outbound and parts that are inherently inbound. There are new channels of communication that create new opportunities for both outbound and inbound communication.  Oh, and real marketers don’t take marketing advice from Mashable. 

Are You A Snarketer?

By my calculations, if I can sell 23.7 million copies of my new book, Snarketing 2.0, within the next two to three years, then I can retire.

That would require everyone who qualifies as a Snarketer to purchase 2,370 copies of the book, however. So it doesn’t looks like I’ll be quitting my day job any time soon.

This is the problem with trying to get rich writing business books: There’s a limited audience. There are only so many people who are even potentially interested in the topic.

I’ve got an even bigger problem: My audience is more narrow than the typical business audience. The target audience for my book is a group of business people known as Snarketers. Are you a Snarketer?

You are if you meet three qualifications: 1) You have an interest in marketing; 2) You have an unusually high degree of intelligence; and 3) You have a warped sense of humor.

For your friends who can’t process that intellectually, show them this picture to explain to them why they don’t qualify.

I’ve done the research, so I know that there are only 10,000 Snarketers in existence. If you’re in the club, you’re part of a dying breed. Our increasingly politically correct culture is stifling warped senses of humor. And thanks to our “everyone gets a gold star” educational system, there are fewer and fewer people who meet the intelligence hurdle. On the other hand, everyone and their mother thinks they’re good at marketing.

The challenge in trying to identify Snarketers is that it’s not visually obvious — it’s not like being tall, or having blond hair. So how do you, dear Snarketer, let the world know that you’re part of this elite and prestigious club?

You buy the book, moron.

And then read it on the train on your way to work, or when you’re on a plane, sitting in first class showing off how many frequent flyer miles you’ve run up because you don’t have a real life.

If you do buy it — and post a review online (I don’t care if it’s a positive or negative review) — then I will give you the next book for free (yes, there will be another book, the subject of which will be Quantipulation).

Here’s my game plan: Real Snarketers who post reviews might convince some Snarketer-wannabes to purchase the book. If you don’t think the “find a sucker” strategy works, just look at how many banks now charge customers a fee to use a debit card. 

Where do you get the book?

If you want the print copy (you show off), go here:

For an eBook version, you can get it from one of two sources: At Lulu.com, or click on the icon below for the Kindle version.

If you buy the book, thank you. If you buy and review the book, double thank you.

UPDATE: If you order from Lulu by October 20, you can get free shipping:

Update #2: Apparently, there’s a formatting problem with the Kindle version. I’ve pulled that “off the shelf” for now (and disabled the link above).

The CU Water Cooler Symposium 2011

If you’re a financial services professional trying to choose a conference to go to, you can flip a coin to make your choice.

Heads, you go to some large industry-wide boondoggle in Las Vegas with a thousand other attendees and see Sully (oops, I mean CAPTAIN Sullenberger) in the 43rd minute of his 15 minutes of fame. Tails, you go to a smaller functionally-focused conference with 150 other attendees and see your colleagues talk about what their firms are doing (if you can stay awake through their entire presentation, that is).

If you’re lucky, however, the coin will land on its edge. And then you can decide between Finovate and the CU Water Cooler Symposium.

I wasn’t able to attend Finovate last week, but I did get to go to the CU Water Cooler conference. Even better, I got to present there.

When Tim McAlpine told me a few months ago that he was selecting me to speak, I asked him what he wanted me talk about. He said “I don’t know. I like the way you bring humor to your blog, and want you to bring that to the Symposium.” I told Tim that I don’t do stand-up comedy, so he said “Do what you want.”

I chose to speak on Quantipulation, and tried to debunk a few marketing myths. CU Times wrote that I have a “simple message for credit unions, ‘Don’t believe any numbers without question.’”

Not to make a mountain out of a molehill here, but that’s not quite accurate. Instead, I told the conference attendees not to believe any number they heard over the course of the conference without questioning the number’s assumptions.  But I’m quibbling here.

With no intended disrepect to the speakers I’m not mentioning below (I didn’t actually get to hear all of the presentations), here are the three highlights for me, in no particular order:

1. Demystifying Creativity. Someday Charlie Trotter (the one living in Foat Wuth Texas, not the restaurant owner) is going to be well known, and I’m going to get to say “yeah, I know Charlie.” It’s OK if he doesn’t admit to knowing me. Charlie talked about what creativity really is. Charlie helped me (and I hope everyone else) to better see how creativity is not synonymous with imagination. Imagination is the ability to imagine. Creativity is about DOING something. According to Charlie, you aren’t creative until you’ve actually created something. The third concept Charlie hit upon was talent. Talent + Imagination + Creativity = Success. Charlie didn’t actually say that, I’m just quantipulating.

2. Boomification of Credit Unions. Damn, that Denise Wymore is a good speaker. I truly wish that I had her ability to connect with an audience. On the other hand, I’m glad that I’m not wrong about stuff like she is. Denise’s presentation truly was excellent — engaging and compelling. Problem is, her ideas are just simply wrong. Ideas like getting rid of FICO, and judging loan applicants based on their “character.” They have a name for that, Denise: Discrimination. And it’s illegal. Or the idea that profit-driven is somehow the antithesis of people-driven. A false dichotomy, Denise. Denise’s cumbaya makes for a great presentation, but cumbaya won’t sustain a credit union, nor the credit union industry.

3. Future of Payments. As I listened to Jeff Russell, CEO of The Members Group, a little voice inside my head was screaming “ARE YOU LISTENING TO THIS, PEOPLE?!” My perhaps skewed perspective on the things I hear from credit union professionals lead me to believe that too much of the conversation is about lending. Jeff’s message, if I’m interpreting it correctly, is that payments is where the focus should be. If I’m getting him right, I couldn’t agree more. There’s no better way to help a credit union member best manage his/her financial life than to help them make smart everyday spending decisions. You simply can’t do that if their primary spending account is a checking account or credit card held at some other financial institution. On top of that, the future of cross-sell marketing for banks and credit unions will come from payments-related and payments-triggered transactions. If your credit union is a payments laggard, good luck. You’re not going to make it up on car loans.

I do wish, though, that Jeff hadn’t said two things that he did. The first being that mobile payments will be the dominant form of payments in five years. I’m willing to bet a LOT OF MONEY that that won’t be the case. In the past 15 years, I’ve NEVER been wrong underestimating the rate of technology adoption.

Second, I’d argue with Jeff regarding his view that free checking is dead. Free checking isn’t — or shouldn’t be — dead, and for two reasons. First of all, unlike Jeff said, debit interchange doesn’t fund free checking accounts. Free checking accounts have been around for a lot longer than the increase in debit card activity.

The advent of free checking was born out of the the belief that getting someone’s checking account was the steppingstone to getting more of their financial accounts. If that belief is true — and it’s certainly a discussion for argument, since so few financial institutions have done a good job of successfully cross-selling — then a cut in debit interchange shouldn’t portend the complete death of free checking.

The other reason why is free checking isn’t dead is because it never really was alive. When we say “free checking” what we’re really saying is “no monthly fee” checking. Tell the people who don’t pay a monthly fee, but pay out hundreds of dollars in overdraft, foreign ATM, and safety deposit box fees that their checking account is “free.” I hope you don’t get punched in the face.

———-

Beyond the presentations themselves, the other thing that makes this conference top-notch is the attendees.

I wonder how it felt for first-time attendees who aren’t tied in to the credit union twittersphere. I wonder if they felt like this was some party they were crashing. I certainly hope not. But the conference really is a gathering for a lot of credit union professionals who actively engage with each other on a daily basis. And of course, some of the attendees have known each other for a long time. Denise Wymore and Janine McBee told me they’ve known each other for….

Oh, hey, did I tell you that I finally met Jimmy Marks in person? I’ve never hugged a man the first time I met him. But I gave Jimmy Marks a hug when I “met” him. (It’s OK, it was one of those male “shoulder bump” hugs). Although I had never met him in person before this week, I’ve been tweeting with him for at least two years. And I “know” him better than I know a lot of my colleagues at work.

It was also a treat to see Rob Rutkowski and Jeff Hardin at the conference. For two reasons: The first, because I had met the both of them at the Forum Symposium in 2007, and hadn’t seen either of them since; and second, because the two of them make me feel like I’m not the only “old” guy at the conference (even though both of them are younger than I am).

Bottom line: Love this conference. Thanks to the CU Water Cooler editors — Carla, Matt, Kelley, William, Gene, Doug, Brent, Christopher — for their time, effort, and brainpower on doing what they do. And huge thanks from me to Tim McAlpine for giving me the opportunity to present and attend the conference.

Improving Bank Customer Retention

Market research firm Yoosless Phuqing Research released the results of a study today, revealing important insights into improving bank customer retention.

According to the study, bank customers who turn right into parking spots in a bank’s parking lot have a 7% higher retention rate than left-turning customers. According to the firm’s founder and CEO, Aimso Yoosless:

“Just 18% of right-turning customers switched banks last year. In contrast, 23% of left-turning customers switched. Clearly, a quality parking experience creates greater customer retention than quality online banking or direct deposit services.”

First National Bank of Boar Tush (Alabama) has already acted on these findings by closing off left-side parking spots:

According to the banks’s SVP of Revenue, William Dumass: “By closing off half the parking lot, we expect to increase our overall retention rate by 2.5%, which translates to roughly $500,000 in annual profits. The ROI on this effort is huge.”

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If you’re wondering what motivated this blog post, it was an article titled Banks Ignore Customers, Waver on Mobile Engagement that reported the following:

“While only 13% of banking customers currently use mobile engagement, a recent survey of revealed that a quality mobile banking experience creates greater customer retention than quality online banking or direct deposit services. A financial services strategy consulting and research firm conducted a recent study showing that only 5% of [consumers] using mobile banking and payment services switched bands in the previous year. With no true standout bank in the mobile banking arena, the bank that drives innovation in the mobile field stands to gain a large advantage.”

[Note: The above is a cut and paste with some rearranging going on. I’ll assume the author meant “bank” and not “band.”]

It would be easy to chalk this up to a misunderstanding of causation versus correlation. But that doesn’t capture it in every case.

On the contrary, in a number of–if not many–cases, it’s a factor of the author’s desire to make a statement about innovation, technology, or maybe to be seen as a thought leader. The research simply gives the author the opportunity to reiterate something that they already believed.

Ironically, I’m  a big believer that the mobile channel will be a strong differentiator. But the business case won’t be justified by some simplistic impact on customer retention.

The retention argument has been used with every online technology that’s been introduced over the past 15 years: online banking, online bill pay, eStatements, PFM, etc.

At this point in the development of online banking technology, banks’ retention rate should be approaching 800%.

Stop The Banking SMadness

The “logic” behind the justification of social media as some new emerging “power” channel in banking is so twisted and misguided, that it just HAS TO STOP.

In an article titled Mobile and social to emerge as power channels for banking, Finextra recently wrote:

“Social networking is becoming more popular, with 57% of adult Internet users [in the UK] using online social networks in 2011, up from 43% in 2010. The UK data is in line with international trends. A just-published survey of 12,000+ Canadian consumers issued by JD Power & Associates finds social media emerging as an increasingly important alternative to traditional retail banking channels. More than 60% of retail banking customers responding to the poll say they use social media. Among customers who use social media for banking purposes, 24% indicate they use it to discuss their banking experience or inform their bank of a customer service issue.”

First off, the last sentence is completely misleading. Sixty percent may be using social media, but that doesn’t mean that all use if for banking purposes. So when the last sentence says that “among those who use SM for banking purposes,” we have no idea how many that actually is.

If it’s 10% of the 60%, then 24% of that means that only 1.5% of Canadians use social media to discuss their banking experiences or for service issues. Ooooh….1.5%!

More importantly, however, is the false logic behind the claims. Just because a large percentage of people use a technology doesn’t make that technology relevant to all applications. 

Using the logic from Finextra (yes, I’m singling them out, but let’s get real — they’re hardly the only ones singing this tune), the following would be true:

McDonald’s to become “power” channel for banking!

Everyday, 27 million Americans — nearly 10% of the total population — visit a McDonald’s location. And that number is growing by 1 million every year. Over the course of the year, on average, Americans visit McDonald’s 33 times! Among Americans who visit McDonald’s, 99.9% make a payment (some just use the restroom) while they’re there. 

But wait, you say, the two examples aren’t analogous. After all, banks can’t take a customer service question at a McDonald’s.

True enough, but they can leverage McDonald’s to influence consumers’ choice of payment mechanisms (and you better believe that, as a result of the recent interchange regulations, this is going to happen a lot more frequently).  And with 27 million Americans visiting McDonald’s every day (and making a payment there every day) which channel — social media or McDonald’s — is more likely to emerge as “an increasingly important alternative to traditional [marketing] channels”?

I’m not arguing that social media isn’t important. Just trying to bring a little perspective to the situation. And trying — probably in vain — to turn down the volume a notch or two on the social media hype.

More Likely To Purchase: Quantipulation In Action

How many times this week have you heard about some research study that found that one consumer segment is XX% more likely to purchase your products than another segment?

These studies and claims come out every day. And every one of them is a shining example of Quantipulation: The art and act of using unverifiable math and statistics to convince people of what you believe to be true.

The problem with these “more likely to purchase” claims is that they’re leading you to make bad marketing decisions.

For example, it’s popular these days to claim that Facebook fans are an important segment of your customer base because they’re “more likely to purchase” than other customers are. DDB (a very reputable advertising and marketing services firm) conducted a study last year and found that:

“Facebook users who like a brand’s page on the site are thirty-three percent more likely to buy a product, and 92 percent more likely to recommend a product to others. “Fan status is indicative of high purchase intent, especially when compared to any traditional form of advertising, and is an even greater predictor of advocacy with over 90% noting that being a fan has a positive impact on recommending a brand to friends,” said Catherine Lautier, Director of Business Intelligence at DDB.”

The implication of this is that: 1) If marketers can drive up their brands’ Facebook fan count, then more customers will become more likely to buy, and 2) Marketers should focus their marketing efforts on Facebook fans because of higher purchase likelihood.

But there are a few problems here:

1. What does “more likely to purchase” mean? If in a survey Customer A (Facebook fan) says he’s “very likely to purchase” and Customer B (non-Facebook fan) says he’s “somewhat likely to purchase”, what does this really tell you? How much more likely is “very likely” than “somewhat likely”? Isn’t timeframe important? Is that very likely to buy in the next 2 weeks or very likely to buy at some point in the future? Even if Customer B says “not likely”, does that mean we should give up on marketing to him? Really? People don’t change their opinions? After all, he’s already a customer — and isn’t the cost of acquisition 5x higher than the cost of retention?

2. The absolute numbers might not be compelling. In the DDB study, only 36% of Facebook fans said that they were very likely to purchase. Which means that 27% of non-Facebook fans were very likely to purchase (you do the math). Assume that your company has 10 million customers, of which 1 million are Facebook fans. That means you’ve got 360,00 Facebook fans who are very likely to purchase, and 2, 430,000 non-Facebook fans that are very likely to purchase. Which group do you want to market to?

3. Causation versus correlation. Do Facebook fans become “more likely to purchase” after becoming Facebook fans, or did the fact that they were already “more likely to purchase” lead them to become Facebook fans? Granted, their act of becoming a Facebook fan helps marketers better identify them out of the pack. But if — as the numbers above indicate — the differences in likelihood to purchase aren’t that compelling, then it’s simply not a very helpful segmentation tool.

Bottom line: Don’t be quantipulated into believing these “more likely to purchase” claims.

How To Reduce The U.S. Deficit

It’s a shame that my background couldn’t pass the media scrutiny I’d get if I ran for president (I got disciplinary probation in college for not leaving the dorm on a timely enough basis during a fire alarm). A shame, because I have an idea that could help reduce the U.S. deficit by billions, if not trillions, of dollars.

How? Through something I call the Decimal Tax.

It’s come to my attention that some of you are quite profligate in your use of decimal places in graphs and charts.

Take, for example, this chart from eMarketer:

Really, now. Is it important to know that fifty-eight POINT SEVEN percent of marketers measure clickthrough rates? If they had rounded it off to 59% would we have lost any critical information? I think not.

Then there’s this chart I pulled off the Internet:

Forget for a second that two slices of the pie appear to have the same color. Is it really important to know that James or Perez accounted for thirty POINT OH ONE percent of sales? No.

One more example: Toolbox.com reports that “IT professionals consumed social media at a rate of 6.77 hours per week, versus 4.29 for editorial content, and 4.16 for vendor content.” In case you’re not too good at math, IT pros spend 8 minutes more per week on editorial content than they do vendor content. If the Tools at Toolbox had rounded to one decimal place we might have underestimated this difference by 2 minutes.

———-

We have a problem in this country, my fellow citizens. We’re experiencing decimal inflation. And the only way to control this runaway inflation is by taxing the people responsible for this wasteful use of our precious decimal resources.

So I’m proposing the Decimal Tax. Every time you make inappropriate use of a decimal place in a graph or chart, you will have to pay a tax on that decimal place.

eMarketer, for example, would be charged $52 for the chart above. The guy who did the sales chart would need to pony up $100.

My inability to withstand the rigors of running for president preclude me from being able to implement this tax, however. Please help me make this a reality by electing a candidate who supports this tax.

Blinding Me With Science

Conventional wisdom holds that “if you can’t measure it, you can’t manage it,” so we have metrics to help us manage our businesses.

And then there are Twitter-related metrics.

Meeyoung Cha from the Max Planck Institute for Software Systems looked at data from all 52 million Twitter accounts and determined that:

“The number of followers a Tweeter has is largely meaningless. Popular users who have a high number of followers are not necessarily influential in terms of spawning retweets or mentions,” she said. The more interesting question is how should one measure influence, she continues. Unfortunately there is no one easy answer to that, she says. “One would have to take a combination of many metrics, including follower count, mentions, and re-tweets. However the hard part is figuring out the relative importance of the component metrics.”

Cha is spot on that follower count isn’t important. But she’s wrong when she says that the hard part of measuring influence is “figuring out the relative importance of the component metrics.”

The hard part is figuring out what influence is. When you figure that out, then you can start arguing about how to measure it.

Social media analytics firm Sysomos conveniently avoids defining what influence is, and has developed a metric it calls the authority ranking: A score between 0 to 10 – with 10 signifying someone with very high reach and influence.

Social media “heavyweights” Chris Brogan and Jeremiah Owyang have an average follower authority (an “AFA” if you want to sound cool) of 4.0 while Jason Falls’ AFA is 4.8, and Scott Stratten’s is 4.6.

I guess we’re to conclude that Jason and Scott are more influential than Chris and Jeremiah.

If they want to raise their AFA, Chris and Jeremiah can cull through their list of followers (139k for Chris, 65k for Jeremiah) and block those with a low AFA. And then, going forward, only allow people with a high AFA to follow them.  I can’t think of a bigger waste of time, or stupider thing to do.

I could be off-base here, but to me, influence is about shaping how people think and/or act, wouldn’t you agree?

If you do, then how in the world can you measure influence simply by looking at follower count or follower’s follower count, retweeting activity, or mentions? What does any of that have to with influence?

Answer: NOTHING. Those “metrics” have nothing to do with influence.

I can’t tell you how many times I’ve DMed someone who has tweeted a link and asked “You believe that load of crap?” only to receive the reply “oh, I don’t believe it — I was just passing on the link.” If they don’t believe it, then they really weren’t influenced, were they? Nor are they being influential, because, apparently, they’re not trying to shape anyone’s thoughts or behaviors.

Most of these Twitter metrics are just pseudo-scientific stabs at establishing a system for score-keeping.

Don’t get me wrong: I’m not suggesting that you stop bragging about your follower count, influence ranking, or AFA score. Anything that helps you deal with your personal insecurities is OK in my book. But don’t try to blind me with your science. It’s not working.

Technorati Tags: Twitter, Social Media

Multicultural Marketing Malfeasance

I heard one of those marketing claims the other day that sends the MarketingTeaParty-O-Meter into the red. Tweeting from a WOMMA conference, @chimoose related the following stat from a DePaul professor:

“Hispanics, African Americans and Asians represent 30% of the population and get about 2% of the marketing spend”

Two questions immediately came to mind: 1) How did the professor calculate that 2% of the “marketing spend” is directed at those ethnic groups? and 2) Why is she making this point in the first place?

The answer to the second question is potentially touchy, because there are times when someone makes a point like the one above with the intention of implying some kind of  bias or discriminatory behavior.

I’m pretty sure that’s not the case here — I think the professor is simply implying that marketers aren’t focusing on the right opportunities, or allocating their resources appropriately.

There’s a problem with that conclusion, though. Any categorical difference that you can define — whether it’s ethnic group, gender, age, income level, geography — is only a valid segmentation dimension if it is a strong (and better) predictor of needs and behaviors than other characteristics (which may include not just demographic factors, but attitudinal dimensions and other behaviors).

Is there any proof that ethnicity is a better predictor than other dimensions across a range of products (or even a single product category)? Don’t think so.

But I actually wouldn’t argue that some marketing targeted directly at specific ethnic groups is wrong. The more important question is: How much of the marketing budget should be allocated to ethnic-specific advertising or marketing? Should it be proportional to the ethnic group’s representation within the overall population?

I don’t see how you could create an argument to support a “yes” answer to the latter question. While the professor might not argue for that either, I don’t see how you can support an argument that any percentage of the total marketing spend is the right percentage.

But there’s a whole other issue we haven’t discussed here, and it relates to the first question I posed above: How does this professor know that 2% of marketing spending is directed towards the three ethnic groups listed?

Exactly what constitutes marketing or advertising directly to an ethnic group? Does an ad or commercial have to be in Spanish to be targeted to Hispanics? If a commercial includes a person of a particular ethnic background, is it — by definition — targeted at that ethnic group? If a commercial has a mix of ethnicities represented in the ad does that count in the 2% that the professor alludes to, or not?

Bottom line: Claiming that only 2% of the “marketing spend” is directed at Hispanics, African-Americans, and Asians is simply not a valid, provable statement. Even worse, implying that the number should be higher — without any guidance as to how much higher — is simply bad advice.

Wanamaker Was Wrong

I am soooo tired of seeing that Wanamaker quote about wasted advertising. Saw it twice yesterday (on a Sunday). Seems like every speaker at every marketing conference has to use it in his or her presentation.

It’s not just that it’s overused. It’s that Wanamaker was wrong.

First of all, if Wanamaker knew that half of his advertising was wasted, then he’d have to know which half. Otherwise, how did he know it was half, and not 80%, or 20%?

Or maybe 100% of it was wasted.

After all, no one deceives themselves into thinking they have an impact on sales — without any proof — like ad agencies do. (I’m not telling anybody anything they don’t already know. The CEO of creative boutique Droga5 believes that “all agency rhetoric blows — including ours.” He said it, not me.)

Oh sure, advertisers have measurement techniques to show that sales go up after an ad (or campaign) runs. But those techniques never seem to take into account things like competitors going out of business or raising prices, refund checks being sent out by the IRS, weather, or any other factors that just might have caused the increase in sales instead of some advertising effort.

On the other hand, it’s also possible that none of Wanamaker’s advertising was wasted. He might have thought that advertising that influenced consumers’ brand perceptions, likelihood to buy, and/or their likelihood to switch or not switch providers — but didn’t influence their immediate purchase decision — was wasted.

Any way you look at it, Wanamaker was wrong. So please: Stop quoting him in every one of your presentations, articles, and blog posts. He won’t mind, really he won’t. He’s been dead for 87 years. Maybe there’s a more recent quote you can cite. Like something David Ogilvy said 50 years ago.