December 10, 2024 • 59 mins
What if your marketing campaigns could achieve more with less? Dr. Felipe Thomaz, Associate Professor of Marketing at Oxford's Saïd Business School, challenges the widespread belief that maximising reach guarantees success.
Drawing insights from his ground breaking peer-reviewed paper, Felipe reveals why overemphasising reach could be costing brands both money and effectiveness.
What you'll learn:
- Why maximising reach doesn't guarantee brand growth or profitability.
- How different channels uniquely impact consumer behaviour.
- The role of archetypes in creating effective marketing campaigns.
- Common mistakes marketers make in media buying and channel selection.
- Why differentiation drives growth while distinctiveness protects it.
Don't miss this essential conversation redefining modern marketing science!
About Felipe Thomaz
Felipe Thomaz is an Associate Professor of Marketing at the University of Oxford, where he is also Director of the Oxford Future of Marketing Initiative, and Director of the Diploma in Artificial Intelligence for Business. Felipe is a research faculty member, with published peer-reviewed works in Marketing, Mathematics, and Conservation Science. He is also Managing Director of Augmented Intelligence Labs, an Oxford spinout based on his research, specializing in long-range forecasting, trend analysis and anomaly detection algorithms.
His pioneering research on illicit markets has informed countries and international agencies on novel ways to counter everything from cyberweapons to wildlife trafficking. He has authored policy documents on the decarbonization of advertising with international industry bodies, on progressive advertising with the United Nations, and practical ethics in AI with the International Chamber of Commerce.
Links
Full show notes: Unicorny.co.uk
Watch the episode: https://youtu.be/0Nc_UPMnilA
LinkedIn: Felipe Thomaz | Dom Hawes
Website: Augmented Intelligence Labs
Sponsor: Selbey Anderson
Other items referenced in this episode:
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
We are too afraid to tell ourclients to do something different
because they want to hearreach and that's all they want to
see. If all I need to do ishave this reach always on, talk to
everybody. If that'ssufficient, all the other things
will be true and we've proventhat to be wrong. So that idea is
just false.
Right.
So it's just immediatelydisproven. It's rubbish. It's not
(00:22):
going to get you the thingthat you think it's going to get
you. This campaign, the singlecampaign, is going to create awareness
with the right people. It'sgoing to create associations with
those other people and I'mgoing to get sales and it's going
to go viral. It's actuallygoing to turn me into an iconic brand
and then Santa Claus is goingto come back with my entire budget
back. Like, it's just notgoing to happen.
(00:52):
If you're a marketer or youare interested in marketing effectiveness,
this could be both the mostcontroversial but also the most important
hour you spend on anythingthis month. No, this year. Because
Today I have Dr. FelipeThomaz. He is the associate professor
professor of marketing at thesaid business school in Oxford, among
(01:12):
other things. He's going tointroduce himself in a minute and
he has literally justpublished a research paper in one
of the best marketing journalsin the world. This is a peer reviewed
paper on why reach on its ownis not enough. That's what this podcast
is about. He will talk to youin detail about the findings of his
(01:33):
research and why some of theother academic institutions published
papers might not be all that.That's coming up right now.
Thanks for having me. Excitedto be here.
We're talking about somethingreally important today. We're talking
about science, how it's properly.
Done and how it can help us.
Because everyone always saysmarketing is a mixture between art
(01:54):
and science. We talk about theart a lot. We don't always talk about
the science. And often when wetalk about the science, it's not
actually very scientific.
I would say, I believe withthat split, right, there's aspect
of judgment, there's aspect ofrisk taking, which is that arts side
of can I stretch things or thecreativity of it. Although there's
a science behind thecreativity as well. But I think science,
(02:15):
when it's done well, when youdo a good job of it, gives you a
map so you can understand whythings are happening and you can
predict what your actions aregoing to do. That's my role.
And today we're talking abouteffectiveness specifically.
Right yeah, at times it willverge into some the efficiency side
of it as well. But yeah, twosides of that coin and how to, to
(02:40):
spend our budget, how to getmedia to do their job.
The reason that I was so keento get you in the studio today is
I saw some hullabaloo onlineabout a paper that you are about
to produce and Ritson, theGodfather in movie terms of marketing,
made some reasonably strongcomments too. We might come to those
(03:01):
later. But I saw your paperand instantly loved it and so I wanted
to get you here. Maybe youcould start by introducing you, telling
us a little bit about you andthen introducing the paper and why
you wanted to look into thatparticular area.
I'm a professor of marketingat Oxford. The foundation of my work
has usually been on marketingfinance interface. So I'm very, very
(03:25):
interested in making the bestuse of our capital and justifying
marketing activity in terms ofhow does this help the business.
So I tend to operate a lot atcompany level analysis. I understudy
or pay less attention atbehavioral effects. So what is the
consumer doing? What ispsychology? So I tend to operate
mostly on the economic,mathematics competitive landscape,
(03:49):
which I'm really passionateabout. And that's kind of where I
started and what motivates alot of my thinking, it's. I was in
industry before academia and Isaw a lot of waste. Okay. And in
parts, that's how I got intoacademia as well. It's just like
that, you know, we spent 5million on this campaign that had
(04:11):
zero lift. Oh no. Right. Solike how do I correct that? That
brought me to the side of, ofthe science fence and I've been working
on that ever since. Publishingin mathematics, publishing in marketing,
publishing in conservationscience, where it's needed. But so
it's this weird combination ofskill sets to try to address some
(04:32):
really, really important questions.
And what was the question,your current paper, what was the
question that you hadoriginally that made you want to
research this area?
This started from a series ofother papers and works that explore
the combination of channels.So if you just go back to the very,
very initial thought of why wecreate campaigns, right. Is this
(04:54):
idea that there's somecombinatorial power that if I put
two things together they mightwork better. And if you look at the
literature as it exists,everybody had this ability to measure
two channels, right. Sothere's a lot of the papers were
what happens if I turn onFacebook and TV at the same time
or TV and Twitter and I'm havejoint consumption and it's this Duality
(05:17):
and this dyadic relationshipsdominated the literature that just
said I can measure twochannels and they interact, they
have cross effects, all ofthose. And over time the literature
started dismissing this ideaof complementarity and said everything
is just synergies. Thesimplifying things of it just works
well together. And that was aworry because it started to move
(05:41):
away from the full picture ofhow channels are actually interacting
and combining. And because wehave a series of partners in industry
that actually had access toreally good data. So in this project
we had Kantar with tons ofdata on cross media effects and lift
studies we decided to startaddressing of what if you didn't
(06:02):
oversimplify what does thecombination of channels look like?
Is there an optimum, is thererecommendations we can make? Can
we fight against this channelsand channel combinations and integrated
marketing comms as puresynergy and have more fine grained
controls. That was the impetusfor the start of this.
(06:24):
And talk to me about theresearch because you looked at a
lot of campaigns with Kanto.
Yeah. So in this one I hadaccess to a bit over a thousand campaigns.
I think it's like 1081 orsomething like that. And these are
very large campaigns. So asyou can imagine it's a sort of company
that. So these are very wellknown global brands. I can't say
who their clients are and allthose things but as you can imagine
(06:46):
some brands that would spendmulti million in media buy alone
for these campaigns and wouldbe buying then additional services
to understand allocation ofbudgets and those things. So it's.
These are heavy lifters, veryheavy advertisers that we have. I
think the average campaignspent about $12 million for that
(07:09):
run. So it's, it's prettysignificant investment and we're
trying to understand then howmuch are you getting from that investment?
Is it proportionally, is itwell allocated and is there a better
way to allocate and can westart understanding how the channels
combine?
So and that's, I mean that'spretty fundamental stuff for marketers
because it, because as you, asyou say your interest is in where
(07:30):
marketing and finance reachand asset allocation is one of the
biggest challenges of every cmo.
Yep.
Understanding how to spendthat money better. It's not quite
going to answer the wanna makea principle a paradox. Sorry the
one but it's going to comesome way.
Yeah, but so that's the stuffthat we all like and excuse me for
injecting myself into the seatof the practitioners as well but
(07:51):
like that's. Everybodystruggles with this. Right. It's
spend it or lose it.Everybody's looking at marketing
as a cost center. So there'sno expectation of return. So it's
just toss money away, whichlowers the overall value of the function
and the CMO in practice. Soit's like this really weird, endogenous,
(08:11):
complicated system where weare undervalued because we don't
understand our stuff. Andthat's kind of that problem. If you
don't understand what you'redoing with it, then you can't ask
for more budget. Right. SoI've. Back in the day when I was
in practice, I went to financeand I said, what's my required rate
of return on my budget? Right.You've given. Personally, myself,
(08:32):
as Felipe, I had 5 million tospend a year on my brand.
Yeah.
And I wouldn't need approval,you know, if I needed more that required
approval. But I could tossaway $5 million. What's my required
rate of return? How much doyou need to see this back? Because
the company has a cost ofcapital. Let's say they had a 5%
cost to borrow that money. Iexpect that I'd need to show more
(08:56):
than 5% ROI. Right. Obviously,they look at me as like, you're a
marketing guy. What the hellare you doing in my office? Get out.
Right. Like, it's just theydidn't understand why marketing wanted
to have that information.
Yeah.
Right now, this is now acouple decades ago, but still, that
shouldn't be a controversial question.
Yeah.
And I should then just say,look, every dollar, every pound,
(09:17):
ever, whatever you give me, Igive X back. And through this, in
the short term, into the longterm, into this reduction of risk,
exposure, all of these thingsI'm accomplishing by my spend. But
right now, it's not managedthat way. Or actually a lot of it
is managed that way. But theway people talk about it and if you
just listened to the wisdom ofthe crowd, you would think that this
(09:41):
is science fiction.
What I thought was reallyinteresting also, when you and I
met before this recording, Iwasn't aware that at Oxford there
is this thing called theFuture Marketing Initiative, which
is where academia and commercekind of come together to look at
the future of marketing. Talkto me about that initiative a little
bit and your role in it.
I'm now co director of theOxford Future Marketing Initiative.
(10:03):
It predates me in Oxford byone year. So it was created by my
colleague Andrew Stephen, andit's one of the best mechanisms in
Oxford. It's one of the mainreasons I Came to Oxford and stayed
in Oxford. That might soundweird, but it is like it's a fundamental
drive to research. One of thebiggest threats to, I think marketing
(10:24):
researchers anywhere,especially from an academic background
or an effort threat toacademics, is that we can just sit
in a room by ourselves, readjournals, come up with questions,
often just by reading the backof the paper that says future research
questions and answering thosequestions and moving on with our
lives. If I just did that, Imight generate ideas and solutions
(10:49):
that have absolutely zerovalue to you or they're going to
be very incremental, veryminor, and don't address the reality
of lived practice of marketingas it is today. The Oxford Future
Marketing initiative is thisinterface with practice and we have
a lot of really good companiesthat serve as our council essentially.
So I won't name them all, butthis is the Google's a partner Meta
(11:13):
L'Oreal, Diageo, Kantar, hencethe joint partnership on this project,
WPP, et cetera, et cetera.Like, there's an amazing set of companies
where leadership comes in andwe have these private conversations
around what can they notsolve. They are all full of immensely
(11:35):
bright people. They don't lackfor data scientists, they don't lack
for data, they don't lack forcapabilities. But there are things
that are wicked problems,things that they can't solve because
they have a narrow view of the marketplace.
Yeah.
And we sit in the middle as anon commercial partner with everybody
having the understanding thatwe are going to publish whatever
(11:56):
the truth is and they have toaccept the risk. And that explains,
you know, the difficulty of apartner joining. Because if I have
something bad to say aboutthis part of the industry, they're
going to have to deal with theconsequence. Right. It's then a triangulation
of visibility of agencies,platforms, brand strategy that give
(12:21):
rise to the questions and thenthe ability to actually answer because
they have the data or theypose the question says, look, nobody
knows how to do marketing. Mixmodels with creative embedded in
a practical good way. Let'ssolve that. How do I do White space
forecast? Well, let's do that.Right. So they provide the challenges
(12:43):
and as long as it moves thescience forward and it's not just
pure consultancy, but it alsohas a commercial value, therefore
it has a relevance topractice, then we have a good project.
Because today I think whatwe've called this podcast reach is
not enough. And I think one ofthe dragons we're going to slay is
this sort of widely heldbelief that success in advertising
(13:04):
specifically is about Reachingas wide as an audience as possible.
And the paper you'republishing shows that it's not actually
just reach at all. Can youexplain to me maybe why just aiming
for maximum reach isn't themost effective strategy?
A little bit of background ofhow this started, because as you,
(13:25):
as we started ourconversation, this wasn't a part
of the project. Right. So theinitial question was how do channels
work together?
Yeah.
And not reach. Allocation,breadth of targeting, like none of
that was part of the corequestion. But in the process of peer
review, the other professorsthat are challenging all the findings
(13:48):
came to a question which wasprove to us that this is relevant
to practice.
Okay.
Right. They're like, prove tome that they don't already do this.
So it's like, can you show mein concrete, rigorous terms that
this is not just widely known,widely done, and you're wasting our
(14:10):
time. So that's where thatstudy on reach came, which was what
you alluded to is a stochasticfrontier analysis, which is if you
abstract away the idea ofmedia channels as investment opportunities.
So I'm saying I'm going toinvest in tv, I'm going to invest
a little bit into Facebook,I'm going to invest a little bit
(14:30):
into Twitter or X or whateverits name now. And I'm going to invest
into all these variouschannels and I expect some sort of
return from that investment byways of lift or whatever. But if
I look across all of thosecampaigns, those are not stable lifts,
there's variance. So it's aninvestment at risk. Right. So in
(14:52):
that way you can abstract thisidea of a financial instrument that
you invest into it and it'sgoing to come with some variance.
If you do that, then you havea portfolio campaign as a portfolio.
Right. So I can organize myvarious instruments to maximize my
lift and minimize my riskexposure so I get more money with
the lowest risk of that moneynot coming back. And then you just
(15:15):
have a risk trade offpreference of I will accept more
risk for a higher chance ofpay off. And that's the frontier,
the curve that you wouldaccept a fair trade off. So I did
the analysis on the sort ofoutcome that brands were getting.
One that commercial lift,brand metric, lift or just reach.
Are they actually getting thereach that they want with low risk?
(15:38):
And are they getting thesales, the motivation, the salience,
all of those things withoutrisk. And what we saw is like let's
say 80% of all campaigns, it'sa bit higher than that. But let's
say just, just to play withround numbers, 80% of all campaigns
have as high a reach as theycan get, right? So clearly shows
(16:01):
that there is a intentionaleffort for reach to be optimized,
maximized. But if you look atthe other graph and if you look at
the other efficiency trade offon lifts, none of them actually approach
the optimum. And there'sactually a normal distribution well
(16:23):
away from the optimum. Meaningyou kind of have a little bit of
a random allocation ofoutcomes despite maximizing reach.
So you have these differentsort of consequences of everybody's
doing what they're told, whichis go maximize reach, but they're
not realizing the actual goalbecause I don't think anybody here
or anywhere has reaches thefinancial KPI, right? Like they actually
(16:48):
want some, some monetary gainand they might have some intermediate
intermediary measures in termsof brand metrics. So the goal is
not just to talk to people,the goal is to get money in your
pocket. And what we're seeingis that you're maximizing the reach,
but you're not getting the sowhat on the end. And that was the
(17:09):
huge concern. There is quite afew reasons why that can start happening.
Part of that is you byovercasting the net, right? By going
too broad, what you get isleakage, which is an older term in
integrated marketing comms. Sowe're going back to the 60s here,
(17:30):
right? Imagine early days ofmedia buy and you had to buy the
whole distribution of amagazine, right? You put your ad
in that magazine and you hadno choice but to ride that wave.
And you're going to show thatto everybody that bought the magazine.
Now you don't want to talk toeverybody that buys the magazine,
but for whatever reason youwant to talk to a subset, so you've
(17:51):
overpaid for that exposure totalk to people that are never going
to matter to you, to talk tothe people that matter. And that
inefficiency, that leakage ispart of that loss inefficiency. You're
just talking to people thatdon't care. You're talking to people
that don't matter. You'retalking to people that will never
matter. The instances thatI've talked to anybody where there's
a strategic reason to talk tonon consumers is small to none, right?
(18:17):
And one good example of likethose counterintuitive that I have
found interesting is likeheavy luxury brands where the value
of the brand is for otherpeople to have the perception so
they're not going to buy it,but they're going to be jealous and
I need them to be jealous foryou to see the value in the brand.
(18:40):
Therefore I need to talk tosomebody that has a non commercial.
It's a strategic but noncommercial value. Yeah, on that immediate
but that network effect is avalue. The other arguments that I'm
sure you bring up is thislike, well, just in case, I don't
know when you're going to bein the diaper market, maybe never,
maybe you will or maybe you'regoing to recommend it to a friend.
(19:00):
So I'm going to do it anyhow.That's what leads to this.
Yeah. So two things strike meimmediately in business marketing.
We have the same effects inluxury brands in that we need to
influence people who areprobably not going to be consuming
the product, particularly inthings like software where the risk
is very high and everyonewants to buy safe. So you find software
(19:20):
companies marketing messagesabout trust and longevity and robustness
and redundancy to people whoare not customers because they're
part of an endorsing decision.And the other point is we are being
force fed this thing calledthe 95.5rule at the moment. As though
5% of people are in market atany one time. 95% of people are not.
(19:42):
And that's being used andapplied to, well, you must do brand
marketing to the 95%. You mustgo whole market in what you're doing.
And I think when I read thepaper, what it sold for me is some
of the received wisdom that wehave that you have to go whole market,
that it's all reach, it's allabout exposure. And that's just patently
(20:04):
not true, is it?
There's one immediate thingthis paper does is we labeled this
as in this reach sufficiencyhypothesis, right? So it says if
all I need to do is have thisreach always on talk to everybody,
if that's sufficient, all theother things will be true. And we've
proven that to be wrong. Sothat hypothesis does not hold. So
(20:26):
that idea is just false.Right. So it's just immediately disproven.
It's rubbish. It's not goingto get you the thing that you think
it's going to get you. It hasa lot of other implications along
with it. But I do worry aboutthose broad generalizations and percentages
and allocations that areperhaps untrue and not deceiving,
(20:51):
but dangerous for people totake at face value and ignore other
things that we've known, butwe try to simplify away from, right?
So never in thoseconversations do I hear available
addressable markets, time outof category and purchase journeys
and purchase patterns in yourcategory. Because if you're an auto
(21:13):
salesman or auto brand ownerand your time out of category is,
I don't know, three to fiveyears, to six years, to 10 years,
it's very different from me infast moving goods that has 16 choices
a year or more. Right. So likethose timing frameworks will lead
(21:34):
to completely differentstrategies. And if you're going through
like, oh, I must reach thewhole available market. So my definition
of growth is this wholeavailable market share of the entire
category, then you fall into amass market strategy which dictates
lower price premiums, whichdictates your entire cost structure
(21:54):
in some of your company, whichis true for one company that is going
to be a cost competitor onundifferentiated goods, but it's
not true for anybody else. Soyou have this really weird decomposition
of this complex strategy intosomething that is true for one person
and says go ahead and do thisthing because you worked for them.
And this is where the morecontroversial side, controversial
(22:16):
to some of the paper you'republishing now comes out because
it's, it's basicallydisproving something that is a very
widely held belief in themarket about how brands grow.
Right.
What was it Ritson said?
I believe he said, if you'regoing to take a shot at the king,
don't miss.
Okay.
(22:38):
Which is very interesting. Ihaven't seen a king in science yet.
But he's softening, he'schanging. Over the last few weeks
we were saying just before westarted recording that he seems to
be coming back towards differentiation.
Yeah. I saw two or threevideos of him talking about how marketers
had forgotten aboutdifferentiation and it matters which
is off the back of the some ofthe work I've shown a can like maybe
(22:59):
two years back now thatactually differentiation is a massive
driver of abnormal stockreturns. And salience and awareness
and distinctiveness of assetsdon't feature like. So a differentiation
drives about 17% of abnormalstock returns, distinctiveness drives
(23:21):
zero.
That's pretty cut and dried.
It's what it is, right. Youjust go look. Because if you look,
what is an abnormal stockreturn? Right. So getting more into
the finance side, like thoseare unexpected growth or if you can
look at downside, could beunexpected decrease as well. And
that's why I've in trying toexplain why that's the case is I
(23:43):
don't see. And with apologiesbecause I'm now driving back to that
lower level of analysis, notto company, but psychology and consumer
decision making, growth andChange in penetration. Like why does
somebody. How do you acquire anew customer? Right. How do you get
the next person? Is winning amoment of choice. Right. So you have
(24:04):
to convince somebody to eitherpick your thing or to go from a thing
that they picked before to anew thing that they're going to pick.
So you're either poachingsomebody or you're the point of entry
into the category or whateverit might be. And you have to win
on that basis. Ifdistinctiveness in that sense is
the alternative brandelements. So you're looking low level
(24:26):
construction of the brandwhich is the visual representation
of the brand. And this isagain a very old world on the shelf
mentality. Still mostpurchases tend to be physical, non
digital. But gets harder whenyou just have an empty search bar
and you have to entersomething. Right. But I challenge
you to find a time that youbought something because the box
was blue. Right. Did thatelement actually convince you to
(24:50):
buy this relative to somethingelse? What it does do is it defends
your market position from.From a purchase that has already
happened, which is a functionof brand. Right. Brand is supposed
to win the moment of choiceand keep people locked into that
choice so that when they'reback into their next purchase occasion,
(25:11):
they don't seep into acompetitor, they just recognize something
that they had at home and theyjust rebuy. And you don't want them
to revisit that moment ofchoice. So distinctiveness in terms
of the brand is a protectivedefensive mechanism that maintains
your share so it doesn't seepinto the other one. Therefore it
will never show an abnormalgrowth because it's in the maintenance
(25:34):
expectation.
Yeah.
It's in the perpetuityassumption. It is not in the growth.
Differentiation whichconvinces somebody to reevaluate
their choices is what driveschoice. It's what gets you the next
customer.
Distinctiveness is a defensivemechanism, effectively we're saying
to protect market share or toprotect choice. But differentiation
(25:56):
is what leads to that choicein the first place.
One drives growth and theother one keeps the growth that you've
attained and hopefullymaintains your existing user base.
Otherwise you're justconstantly fighting for higher and
higher churn inside of that.So if you talk about customer retention
and those the functionality ofbrand to maintain somebody is how
do you keep them in your walllike within your.
(26:19):
Yeah.
So defending your share.That's why like people thought I
was being kind of cheeky whenI said like this whole idea is not
how you grow but how you staybig. It's not just A reframing, it's
just like it's a defensivestrategy. It doesn't work. If you're
a new entrant in the marketand you have unique, just distinctive
assets, nobody cares. You haveto have another reason for choice.
(26:42):
After you have the choicemade, then you can start playing
off of that mechanism so thatmaintains your installed user base.
I don't see any logic thatwould make somebody go, yeah, I'll
pick the other one. The otherthing that does happen, which is
an old result, which is whypeople start using market share to
answer every sort of thing isif you know nothing, like it's a
(27:06):
social proof sort ofmechanism. Right? If you know nothing
about something. So if you gointo a country and you have a headache
and you've never been in thatcountry, you don't speak the language,
you can actually even read theAlphabet, let's say, right? But somebody
says, here's all the payments,good luck. And one product has 10
facings and the other producthas two facings. Which one do you
pick?
(27:26):
10 facings.
Exactly. Right. This is aknown thing. So aspect of facing
category management,distribution, that hasn't gone out
the window. Yeah, but ifyou're managing your whole multi
billion whatever brand off ofjust a social proof effect, I feel
bad for you.
I might buy the two facings.If it was priced high enough and
someone could tell me it wasthat because it was more effective,
(27:48):
I might do price then comesinto play as well.
Right, but then you're usinglike heuristics for search, right?
Search is costly. We're lazyhuman beings that we just want to
use. If a million other peoplehave made this choice, then it must
be a good choice for somereason. And if everything is equal
otherwise then this actuallygives me enough information to make
a choice. But it's like thateffect hasn't gone out the window,
(28:11):
right? Like, yeah, that'strue. That's why it's really hard
to get distribution and youknow, go get facings. I worked in
industries where facingsmattered. Every time we had a new
product, something had to goout. We didn't get another one for
free. And we were a massive brand.
I used to run a distributorand getting distribution is not easy.
Right? Getting people to listand categorize for you is not easy.
(28:32):
So that's one of my other funthings. Right, so what's. Especially
with the ongoing wisdom andoh, just go get distribution. All
right, so tell me, in yourexperience, what drove the choice
of who got distribution? Whywould you give somebody distribution
it.
Was really complicated,actually. It's about their own reach.
(28:53):
It's about margin structures,it's about capacity. It's about.
Actually, it's quite a. It'soften a financial decision because
you're.
Carrying a lot of risk as adistributor, you're carrying inventory
risk and all of those issues.But really, is that, will it sell?
Have they got the ability todeliver me volume?
Your distribution capabilityis a function of your ability to
(29:14):
sell that product.
Yeah.
So they will only distribute.They'll only give you that physical
distribution if you alreadyhave sales.
Yes.
And the more you sell, themore distribution you're going to
get. It's not an independentgift that if you're nothing, they're
just going to like, oh, it'san easily achievable thing. Just
go get more of it. It's this.It's an indogenous system. It all
(29:35):
depends on the other things.And if you just believe, I'm going
to go and get this without thereason, the good marketing, often
if it's a new entrant, youneed to convince them that you're
going to drive people to theshelf or you're going to drive them
to the store or there's areason for me to carry you, you're
not going to get that asset.It's an important relationship with
channel distributors and allthose. But you can't just manufacture
(29:59):
out of thin air. It'sdependent on the sale. So it's a
weird sort of belief andrecommendation, which inversely,
to sell more, you just need tosell more. It's what it often comes
back to. If you sell more, youwill sell more tanks. Like, yeah,
sure, it's tautological, it'scircular. Yeah, there's inertia,
there's all of those things.But tell me what actually I need
(30:22):
to change to sell more. Don'tjust tell me to sell more because
if I sell more, I will sellmore. Got it? Okay. Let's say, yeah,
the more you sell, the moreyou sell. I think we're on the same
page. What do I need to do inmy context, in my industry, in my
life stage to achieve thatmarginal sale? And I think that is
(30:42):
completely lacking in most ofthe conversation right now because
it's been reduced to thingslike this reach argument, which as
we've shown, is not true.
Yeah. Okay. So talking ofselling more, your paper and your
research found that differentchannels have their own unique strengths.
I wonder maybe you could givesome examples of how channels impact
(31:08):
consumers differently to kindof give some ideas to our listeners
of where they might dependingon what they want to achieve, what
they might want to be considering.
There's a little bit oftriangulation here. So there's only
so far one paper can go. SoI've actually been around and I've
shared results from a secondpaper that's not published yet that
dives into specifics. So justto warn folks that might go into
(31:31):
this paper and said, oh, whereexactly is the functionality of Facebook?
You will see some of thathere, but not a complete breakdown
of cross category regionalstrengths and relevances for each
specific channel that isforthcoming, let's put it that way.
So I have a really niceproject with Wavemaker at the moment
(31:54):
and they gave me a millioncustomer journeys. Wow. Yeah. So
you know data nerd in thecandy store, right. Like it's. So
imagine a million purchaseswith all of 72 touch points. Wow.
Okay.
Right. So like all of thatrichness to identify essentially
(32:16):
the power of each one of thosetouch points to influence and change
that navigation towardspurchase from change consideration
and then change purchaseinside of that ecosystem across categories.
So I can start to say actuallyin beauty this channel works better
(32:39):
than this too for purchaseintent. But that's not in this paper.
Maybe that's a future conversation.
Sorry, but the fourth thingyou just said for beauty in this
channel, because so, and I'mrowing back slightly, I should have
covered this probably already,but. But you talk about archetypes.
Yes.
Can you explain the concept ofarchetypes and maybe what they are?
An archetype is a bit like arecipe. Okay, right. So it's a combination
(33:02):
of here in the papers, it's acombination of probabilities. So
it's like what's thelikelihood that your campaign should
use tv? And everybody alwaysuse TV on every sort of campaign.
So it's going to have asomewhat high probability that you
should use it, but it'll showactually what's the likelihood then
that point of sale will helpyou in your category. What's likely
(33:26):
that radio actually shouldfeature and you're going to see either
very high probabilities orvery low probabilities. So they start
giving you kind of the senseof indication of strength or frequency
in which those channels havefeatured and combinations that have
been put in a way that drivesa given KPI. So that's part of the
(33:50):
mapping exercise that we did.And I think it's the most useful
to think of in terms of amapping of there's a huge surface
of variations that you can saymore tv less TV blend of old media,
new media and differentplatforms and different kind of consumption
occasions. All of those thingsare in this complex space of all
(34:14):
the possible alternatives thatyou can use. Right. So if you think
with 11 channels, I think thatwe had all the possible combinations
of on and off. If they werejust pure switches, it's like several
thousand. It's a couplethousand of different ways that you
can flip those switches on oroff. This just gives you a few clusters
(34:36):
that we identified that leadto best performance.
Is that for specific outcomesor for.
Specific problems or both forspecific brand mindset metrics. So
what we had is essentiallysalience divided in aided and unaided
(34:57):
sort of awareness becausedifferent brands and different business
problems required those intodifferent amounts. Right. So if you're
on the shelf in a veryphysical setting, then recognition
actually is very valuable toyou. But if you're a very digital
first, you don't have a visualcue most of the time when you're
(35:17):
shopping, you need to actuallyelicit that from top of mind without
recognition. So the other KPIis more valuable for you. So we try
to split on those associationin terms of can you connect the brand
to concepts. So again, mentalnetworks and those aspects of brand
and motivation or intent tobuy, purchase intent. So it's like
(35:39):
those are sort of the KPIsthat we kept in mind and that's mapping
of different. What wasinteresting then as a result, which
we set out to prove was wouldone combination actually meet all
of those requirements?
Right.
So that was the first thinglike, so the initial name of this
project was actually SilverBullet or no silver Bullet.
(36:00):
Is there an optimal mix thateverybody should use?
Because if imagine that, thatwould be ideal world, right? I've
said X percent this, Y percentthat, Z percent this other thing
and everybody's good wouldhave been delightful, but it's not
true.
Yeah.
Okay, so there's differentcombinations help different people
to achieve different things.And that's the wildest sort of thing.
(36:23):
It's scary, I guess, if youare a planner on some sense, because
there's no, oh, I just hit thesame button over and over again and
I'm going to get. There's abest for whatever you're trying to
do. There's just no universalbest. Regardless of who you are and
what you're trying to do,there's not a dominant strategy.
The issue that we found thatwas on the scary side is we talk
(36:47):
about dominant and dominatedstrategies. So a dominant is like
always best dominated isnever. There's always something Better.
Yeah. Okay. Right.
So he mentions like completelydominated strategy is you do this
and there was always a better choice.
Okay.
Right. So imagine like that's,that's a hurting moment. We see a
(37:10):
lot of those in, in the wild.In the wild and in our. Really.
Okay.
And that's kind of scarybecause like I said, I have massive
multimillion campaigns.
Yeah.
Using dominated strategies.Meaning that there was always money
left on the table.
Huge wasted, huge wastage.
Right. And that connects toour earlier conversation of they
(37:33):
might have been using what inthe papers described as this incorrect
lay theory so that that reachis sufficient. So if they believed
they probably optimized toscale but didn't hit any of their
targets. So they could havedone a number of things to improve
their performance and maintainscale. But they didn't. So they're
(37:54):
using that dominated strategy.There are contextual best. So we
found a really interestingspecific archetype that works really
well for CPGs across allcriteria. So if you are a CPG, there's
(38:16):
actually a really, reallycombination that will drive salience,
association motivation.Everybody else, multiple alternatives
are going to be adding thosecombinations. So just using lessons
from. Oh, but you know, Idon't know, pick, pick a brand that
everybody loves like oh, CocaCola does this. I'm going to do what
they do. Oops. No. The otherthing just to throw it out there
(38:40):
because it's very common ishedging your bet gets you towards
dominated.
Dominated.
So if you are like, oh, youknow, but I'm just going to start
throwing stuff on. I'm goingto do all the things is the lowest
performing architecture.
Okay.
So if you just go, oh, I havemy campaign. It's well structured.
It's, it's close to anarchetype that drives my outcome.
(39:04):
But I'm going to actually, Ihave extra budget, I'm going to throw
this other things on and youmove away from the archetype. You
lost money.
How does a marketer, how doesa CMO make sure that their strategy
is dominant, not dominated?What's the, what's the magic?
So one thing is for them torecognize. So our advantage here
(39:26):
and the reason why we're ableto do this is that unlike a brand,
we had data for every brandand across category. So we have variants
that brands would never see.
Okay.
Right. So they had blinders onof just historical information of
we always do this andexperimentation is difficult for
(39:48):
brands and costly. Right. Goask CMO to turn off tv.
Yeah.
And see how quickly you getrun out the door. Right. Like nobody's
going to turn that off for anyreason. But it's. So it's really
hard for you to prove what theright levels and those things are.
So for them they'll be lookingat their own personal, blindfolded,
sort of historical data andsee validation because they're MMMs
(40:12):
are saying the same thingbecause they're just in that inertia
mode. So the reason why we cansay different things is, but because
we had variants that nobodyelse had access to. So that's one
of the reasons why my viewmight be different from their internal
view. Right. Because of thosesort of blinders for them is a few
(40:34):
things, recognition of theirown context. So they need to understand
their category and location ina sense and strategy of the brand,
which is life stage kind ofthe path dependencies. What have
(40:55):
you done up to this point thatwould prevent you from doing something
else or requires you to keepdoing? So you have to respect those
constraints, right? So you'regoing to be constrained and you're
going to have budgetconstraints like everybody else in
the planet. Right. You have tooperate within those, but within
those boundaries. That's goingto give you a narrow range within
what these, what our modelsuggests. Right. And it's going to
(41:19):
be within a category specificdomain and requirements, whatever
that might be. So if it's atech company, it's going to have
a different set of weights ora different best goalpost or guideline.
And then once you have yourboundaries, is identifying your for
a specific outing into themarketplace, a campaign, something
(41:40):
that you're going to turn on.What is the goal? Right. So what
are you trying to do withthis? Are you just trying to generate
short term immediate sales?Are you trying to create some brand
connections, associations,create differentiation? Are you at
a stage that you actually doneed a heavy investment in salience
because you're entering themarket or you're, you're trying to
(42:03):
compete with somebody that'sreally loud at the moment and you're
trying to do those. So youhave to understand what are you trying
to do. So it's conditional ongoal, right? So two conditions is
who am I and what are myoperating conditions? What's my market,
what am I trying toaccomplish? Given those there is
a optimal allocation andthat's going to be a specific archetype,
(42:25):
might be number four, numbersix, number seven, whatever. We didn't
give them names, we're nottrying to be cute. But there's, there's
a map and says go to this bestallocation that's going to give you
a set percentages of channel,channels that you can use and kind
of a suggested budgetaryallocation. As you recognize by media,
(42:45):
there's discontinuities, TV isexpensive, you need to put a certain
amount of money. You're nevergoing to be quite as clean as what
we can be because we have thispure mathematical model off of the
data where everything isbeautifully continuous and you don't
have thresholds of purchase.So you're going to be close to whatever
that is. Right. Within thatpoint, you would be at your theoretical
(43:10):
best outcomes for whatever itis that you're trying to do. But
it might not be feasible andit might not scale well enough. Right.
But right now you're just inthe channel function construction.
Now I said, okay, how do Iscale this bad boy? Right. So I need
to talk. This is when Reachenters the room. Okay, okay. So he
says, I know what I need todo, I know what I need to turn on
(43:31):
to get that thing done. Nowhow do I get the most of my intended
audience to see this? And itmight be a slightly different allocation
within those channels thatgives you the right audience construction.
So just recognize that you'regoing to be moving away from a optimal
outcome to have a optimumscaled outcome. So you're moving
(43:52):
away from the best lift orbest return to get that lift multiplied
by the largest number ofpeople doesn't mean you go to a whole
different neighborhood tocreate a whole different audience.
You're taking steps away,seeing that you're. Think of it that
your margin per person isgoing down, but your number of people
is going up. Right. So you'retraveling away in that local neighborhood.
(44:15):
You're not switching planetsto a different sort of strategy until
you find a happy dualoptimization. I'm still very close
to my optimum lift with myprecise audience construction.
So in this case, the optimallift is the archetype, for example,
that's the reference data. Andthen the real world comes in. So
(44:36):
you then have to start makingsome changes to the archetype based
on your ability to spend, buyand or physically deliver.
Yeah, what can I afford? Wherecan I buy this? Do I have deals?
Do I have this? Those areconstraints that.
And by following thearchetype, statistically certainly
or scientifically, they'relooking at more effective outcomes.
(44:58):
Yes. So as long as you avoidthe other error, which is I'm going
to do all the outcomes at once.
Yeah, right.
Because that's the otherthing. You know what I'm going to
do this, this campaign thesingle campaign is going to create
awareness with the rightpeople. It's going to create associations
with those other people andI'm going to get sales and it's going
to go viral and then it'sactually going to turn me into an
(45:21):
iconic brand.
And by the way, I want toincrease my margin so it's going
to support my price rise.
Yeah, yeah. And you know, andthen Santa Claus is going to come
back with my entire budgetback. Like it's just not going to
happen. Right. But we see thatover and over because they over measure,
they measure everything. Theytry to get everything to shift with
once.
Yeah.
And it's just like look, thatagain gets you to the. It's the similar
(45:43):
dominated strategy. If youneed to do everything on one outing,
it's going to be very lowreturns. So you can think of it as
if this were a financialproduct. If you are the always on
everywhere, doing everythingall at once. It's kind of like the
(46:04):
bonds of financial market.It's probably going to do something
for you and it's probablygoing to be a 1% return or lift and
it's going to be very safebecause you will hit somebody that
cares. You will get someclicks, you will get some sales stuff
is going to shift, but in tinyamounts. Right. And then the person
(46:26):
with a better strategy thathas a portfolio of activities of
right now we're going to dothis and then we're going to do that.
Is the person that's going tobe hitting the 10% lifts, 15, 60%
lifts that we see in some ofthe optimizations. Right. Like these
are large leaps. Like in oneof the things that my colleagues
did sort of modeled what ifstatements with the real Data is
(46:49):
like 750% gain in outcomesfrom reorganizing. That's on the
extreme side. And this waslike with aided awareness I think
he calculated. So it's likemassive shifts. Like some of it will
come in with risk and thatmight be for a specific category
and on a specific thing. Soit's not like everybody gets that
sort of outcomes. But what wedid observe in that initial motivation
(47:15):
was that yes, the average liftthat those reach maximized campaigns
were getting was about a 1%, 11/2 percent. And that's, that's why
I keep saying like that'sreally sad. Like you know, if that's,
if you go to market, spend £10million and you see mindset metrics
shift 1%, you should cryinside. Right. Like this is not,
(47:40):
this is not what I wanted forme. And if you get those people that
disagree, I think what we seeoften is those well differentiated,
targeted brands that are smallso they don't do the overreach because
they don't have the budget tooverreach. They actually do better
(48:02):
and they grow faster and theystart eating away at the share of
this big behemoths that aredoing the safe bet. And like, I don't
understand how they're doingso much with so little.
Yeah, very, very targeted,very focused. Yeah, yeah. What are
some of the common mistakesthat you've seen when, when it comes
to channel selection amongmarketers other than like dialing
them all up?
So hedging is common. Doing.So hedging, meaning I'll turn on
(48:28):
everything because I can orI'll toss, I have extra budget and
I must spend everything or I'mgoing to lose my budget. So I'm going
to start turning on thingsthat won't help me in the least.
My personal experience thatled me to academia was something
like that. It was almost 100%leakage. They found a specific channel
(48:52):
that had Almost, I think 2% ofthe user base was of value to my
brand, but they still invested5 million to that. I was just like,
wow, nobody wants to use thisproduct. Why are we advertising here?
So it's like, so those aresignificant. There's a over reliance
(49:16):
on historical data. So this isreally hard to overcome because you're
doing data driven marketing,right? It's like, oh, I used yesterday's
values and I'm going to getthese different things, I'm going
to grow. It's very common tolook at. Well, that's how it was
done, that's how it's going toget done. And we always do this because
we have those relationships,we have those things and it's the
(49:38):
amount of inertia that I seein that is really, really high. And
then the, frankly, the otherthing is not listening or ignoring
advice in industry to ourconversation on the recommendations
and lay theories that exist inthe world right now, or even theories
(49:59):
that are suggested to bescientific. People in media buy,
people in agencies repeatedlycome back and said, we know this
is not how it works, but ourclients, we are too afraid to tell
our clients to do somethingdifferent because they want to hear,
(50:19):
reach and that's all they wantto see. So there's this perpetuity
of bad advice from people thatdo know better because they have
a commercial need to satisfytheir clients requests which just
want to see that number go upand at which point you don't need
a media buyer because you justdo a simple if then statement. Just
(50:41):
buy more eyeballs.
It's pretty scary that it is because.
Honestly, again my sampling isbiased because my view is fairly
well known as the at thispoint. So people that come to talk
to me tend to be non believersof the traditional practice. But
they come to me and said, youknow, I've known this for 10 years,
(51:01):
I've known this for 20 yearsor whatever, like at least 10. Right.
And but I can't tell this tomy client because they must see reach
go up and that's what I'mbeing measured on.
And we know specifically now,specifically scientifically that
reach is not enough.
Yeah. According to a peerreviewed paper published in one of
(51:23):
the best journals in the fieldin the Journal of Marketing.
How can people get hold of acopy of your paper then?
There's a couple places we'vekept throughout the review process.
The paper has been kept onSSRN Social Sciences Research Network.
So that link should stayavailable throughout. If you go to
the Journal of Marketingwebsite, they host accepted paper.
(51:46):
So right now it will be underthe accepted and then there's a full
copy there.
Yep.
As we speak it might still bebehind a paywall. But one more thing
to be proud of. So Oxfordbears the cost of destroying the
paywall. So Oxford is amazingin that way. They pay all of the
(52:09):
fees for publishers to removethe paywall. So Oxford papers are
always open science.
Wow.
So if you see a subscriptionrequirement when you go try to get
that paper, just wait a littlebit because it should be free any
day now.
My experience is journals canbe really expensive. Oh yeah, that's
(52:31):
good news. So we're going toput some links to both of those sites
on the show Notes for thisepisode. So if you're listening and
you want to find it, look inthe notes below and you'll find links
to those papers. Let's justtalk very, very quickly before we
end about practicalapplication because we talked about
this to start with and it'squite hard to make that leap between
(52:52):
academic and science intoaction. But some people have been
making their own efforts. Youtold me, talk to me about your experience
recently.
That's actually has beenpretty amazing as I think we were
chatting privately before isthe role of science and practice
and that interaction becausewe're here to help. But it's really
(53:12):
hard to then for me to createa product off the back of this and
I'm not going to create adashboard that's on people to absorb
and create. And take thismodel, everything is in print, you
can just go and use it today.But there's that translation step
that is difficult. As we'rediscussing, the last question was
(53:33):
can you inject your owncontext, your own situation and then
once you have those, can youbound and get good predictions from
this model, good outcomes? Andyeah, recently I had a few email
exchanges with a guy that gotin touch with me that said, hey,
really like this paper. I wantto make sure that I understand and
(53:55):
how it relates to other stuffthat we do. Here's how. I've created
my own kind of dashboard inExcel that uses these values to get
recommendations of channelconstruction by archetype for whatever
they're trying to do that wasto their context, like in alcohol.
And it was brilliant, reallynice work.
(54:16):
That's great.
And it was just this niceinteraction which he came to me just
for validation and just like,am I understanding this right that
I miss anything? And just afew email exchanges to get him to
use it and you know, he went,read the paper, deployed it in his
work and it's off and running.And for us, I mean it's amazing to
see because that's what youwant. You want people to not just
(54:37):
let this sit on the shelf andlike, okay, I'll keep that in mind.
But the money stays wasted,right? We want to see this turn into
money into people's pockets.
It must be amazing for you andyour team as well, because getting
the paper published is what atwo was, a two year or more process?
It was, yeah.
And so now that people aretaking it out into the wilds and
actually creating like realbusiness tools with it, it's fantastic.
(54:59):
Part of it is there's a lot inthis paper that I'm incredibly proud
of and it sets up a lot ofother very important questions about
media functionality and stuffthat addresses on even pricing of
media. Because if they all dodifferent things and they're not
fungible, the value of TV foryou is different than the value of
TV for me. So why are wepaying the same price? Right? Like
(55:20):
there's, there's amazinginteresting things inside of it and
those conversations alreadyhappening with channel owners and
all those things. So I thinkwe are in for a very interesting
development and evolution ofmedia buying organization and all
of those things. I like thatit deflates ideas that are hurtful
(55:47):
in the marketplace. So if wehad this lay hypothesis of just do
this, this simple thing, justif that guidance were true, this
paper wouldn't exist.
Yeah.
So we were able to show that.Yeah. Just death, saturation, overreach,
reach sufficiency is justabsolutely bonkers wrong. So I'm
(56:09):
delighted that we can movepast that now to better precision,
better flight controls forwhat we do with what is about a trillion
dollars a year of media buy.So I much rather have more than 1%
return on that. And then.Yeah, it's to see it then get into
practice and live and breatheis true to what Oxford wants to do,
(56:32):
which is not just academic foracademic sake, but academic in service
of the people that do it. Andthat's our job.
And it's going to spawn thenext paper which I can't wait to
see the study you're doingwith Wavemaker, the journeys. I mean,
so it's spawning other thingsthat for someone like me, that's,
that's gold dust.Understanding which specifically
(56:54):
which channels have whicheffects. Fantastic.
Yeah. And we've, we've alreadygotten amazing results. I was recently
in Sydney presenting some ofthat work early and we shown the
first passes of it actually incan this year.
Okay.
Okay. I'm sure we'll be backin can with even more complete results.
But it's showing some worryingthings like the value of word of
(57:17):
mouth is declining for everybody.
Oh, really?
Yeah. And it's the mostpowerful marketing kind of conduit
we have. Yeah. We've lostabout 15% of power in that channel
from 50% likelihood ofaffecting somebody's choice to 35%.
And that's across over threeyears. Across every category. It's
terrifying.
Are you looking at why?
(57:38):
That's still an open question.But because it's happening all across.
It points to societal change.
Yeah.
And it's not being replaced byinfluencers. It's not being impacted
by celebrities. It's. It's onits own, decaying. So people are
talking and listening andtaking advice from close family and
friends and family. Like a lot less.
Wow.
Which is mind blowing.
(57:59):
Right?
Yeah. So it's, it's one ofthose terrifying ones. But there's
other like super interestingthings like to generate sales across
every several categories. Goodold print does better than influencers,
really. Right. So you justlike things that we're tossing away
because they're old suddenlystill have huge amounts of relevance.
(58:20):
Brand owned is huge. Likebrand owned has a 36% chance of influence
somebody's purchase.
Wow.
Right. So just your own stuffthat you have control. So like. So
that's the sort of work that I love.
Yeah.
Because you can go, whatshould I do? Where should I put my
hard money? Like, you know, nobody's.
Yeah, yeah.
Has infinite budgets but thesethings will actually lead to better
(58:43):
functioning markets whichmakes me happy.
Well, there you go. Thank youvery much indeed to Dr. Thomaz. I
have to say, extraordinary guyand I'm very much looking forward
in a minute to popping out tolunch with Felipe to find out more
about his work, about Oxfordand about how they are trying advanced
marketing science. Now, I hopeyou enjoyed the show. If you did,
(59:05):
please let me know. I'd loveit. If you would subscribe or like
the show, give us a thumbs upjust below and we'll see you next
week. If you've got anyissues, complaints, queries or just
want to talk to us about thiscontent, you can reach me on LinkedIn.
My name is Dom Hawes and Dom HA W E S and I would be pleased to
connect to you. See you next time.
We are too afraid to tell ourclients to do something different
because they want to hearreach and that's all they want to
see. If all I need to do ishave this reach always on, talk to
everybody. If that'ssufficient, all the other things
will be true and we've proventhat to be wrong. So that idea is
just false.
Right.
So it's just immediatelydisproven. It's rubbish. It's not
(00:22):
going to get you the thingthat you think it's going to get
you. This campaign, the singlecampaign, is going to create awareness
with the right people. It'sgoing to create associations with
those other people and I'mgoing to get sales and it's going
to go viral. It's actuallygoing to turn me into an iconic brand
and then Santa Claus is goingto come back with my entire budget
back. Like, it's just notgoing to happen.
(00:52):
If you're a marketer or youare interested in marketing effectiveness,
this could be both the mostcontroversial but also the most important
hour you spend on anythingthis month. No, this year. Because
Today I have Dr. FelipeThomaz. He is the associate professor
professor of marketing at thesaid business school in Oxford, among
(01:12):
other things. He's going tointroduce himself in a minute and
he has literally justpublished a research paper in one
of the best marketing journalsin the world. This is a peer reviewed
paper on why reach on its ownis not enough. That's what this podcast
is about. He will talk to youin detail about the findings of his
(01:33):
research and why some of theother academic institutions published
papers might not be all that.That's coming up right now.
Thanks for having me. Excitedto be here.
We're talking about somethingreally important today. We're talking
about science, how it's properly.
Done and how it can help us.
Because everyone always saysmarketing is a mixture between art
(01:54):
and science. We talk about theart a lot. We don't always talk about
the science. And often when wetalk about the science, it's not
actually very scientific.
I would say, I believe withthat split, right, there's aspect
of judgment, there's aspect ofrisk taking, which is that arts side
of can I stretch things or thecreativity of it. Although there's
a science behind thecreativity as well. But I think science,
(02:15):
when it's done well, when youdo a good job of it, gives you a
map so you can understand whythings are happening and you can
predict what your actions aregoing to do. That's my role.
And today we're talking abouteffectiveness specifically.
Right yeah, at times it willverge into some the efficiency side
of it as well. But yeah, twosides of that coin and how to, to
(02:40):
spend our budget, how to getmedia to do their job.
The reason that I was so keento get you in the studio today is
I saw some hullabaloo onlineabout a paper that you are about
to produce and Ritson, theGodfather in movie terms of marketing,
made some reasonably strongcomments too. We might come to those
(03:01):
later. But I saw your paperand instantly loved it and so I wanted
to get you here. Maybe youcould start by introducing you, telling
us a little bit about you andthen introducing the paper and why
you wanted to look into thatparticular area.
I'm a professor of marketingat Oxford. The foundation of my work
has usually been on marketingfinance interface. So I'm very, very
(03:25):
interested in making the bestuse of our capital and justifying
marketing activity in terms ofhow does this help the business.
So I tend to operate a lot atcompany level analysis. I understudy
or pay less attention atbehavioral effects. So what is the
consumer doing? What ispsychology? So I tend to operate
mostly on the economic,mathematics competitive landscape,
(03:49):
which I'm really passionateabout. And that's kind of where I
started and what motivates alot of my thinking, it's. I was in
industry before academia and Isaw a lot of waste. Okay. And in
parts, that's how I got intoacademia as well. It's just like
that, you know, we spent 5million on this campaign that had
(04:11):
zero lift. Oh no. Right. Solike how do I correct that? That
brought me to the side of, ofthe science fence and I've been working
on that ever since. Publishingin mathematics, publishing in marketing,
publishing in conservationscience, where it's needed. But so
it's this weird combination ofskill sets to try to address some
(04:32):
really, really important questions.
And what was the question,your current paper, what was the
question that you hadoriginally that made you want to
research this area?
This started from a series ofother papers and works that explore
the combination of channels.So if you just go back to the very,
very initial thought of why wecreate campaigns, right. Is this
(04:54):
idea that there's somecombinatorial power that if I put
two things together they mightwork better. And if you look at the
literature as it exists,everybody had this ability to measure
two channels, right. Sothere's a lot of the papers were
what happens if I turn onFacebook and TV at the same time
or TV and Twitter and I'm havejoint consumption and it's this Duality
(05:17):
and this dyadic relationshipsdominated the literature that just
said I can measure twochannels and they interact, they
have cross effects, all ofthose. And over time the literature
started dismissing this ideaof complementarity and said everything
is just synergies. Thesimplifying things of it just works
well together. And that was aworry because it started to move
(05:41):
away from the full picture ofhow channels are actually interacting
and combining. And because wehave a series of partners in industry
that actually had access toreally good data. So in this project
we had Kantar with tons ofdata on cross media effects and lift
studies we decided to startaddressing of what if you didn't
(06:02):
oversimplify what does thecombination of channels look like?
Is there an optimum, is thererecommendations we can make? Can
we fight against this channelsand channel combinations and integrated
marketing comms as puresynergy and have more fine grained
controls. That was the impetusfor the start of this.
(06:24):
And talk to me about theresearch because you looked at a
lot of campaigns with Kanto.
Yeah. So in this one I hadaccess to a bit over a thousand campaigns.
I think it's like 1081 orsomething like that. And these are
very large campaigns. So asyou can imagine it's a sort of company
that. So these are very wellknown global brands. I can't say
who their clients are and allthose things but as you can imagine
(06:46):
some brands that would spendmulti million in media buy alone
for these campaigns and wouldbe buying then additional services
to understand allocation ofbudgets and those things. So it's.
These are heavy lifters, veryheavy advertisers that we have. I
think the average campaignspent about $12 million for that
(07:09):
run. So it's, it's prettysignificant investment and we're
trying to understand then howmuch are you getting from that investment?
Is it proportionally, is itwell allocated and is there a better
way to allocate and can westart understanding how the channels
combine?
So and that's, I mean that'spretty fundamental stuff for marketers
because it, because as you, asyou say your interest is in where
(07:30):
marketing and finance reachand asset allocation is one of the
biggest challenges of every cmo.
Yep.
Understanding how to spendthat money better. It's not quite
going to answer the wanna makea principle a paradox. Sorry the
one but it's going to comesome way.
Yeah, but so that's the stuffthat we all like and excuse me for
injecting myself into the seatof the practitioners as well but
(07:51):
like that's. Everybodystruggles with this. Right. It's
spend it or lose it.Everybody's looking at marketing
as a cost center. So there'sno expectation of return. So it's
just toss money away, whichlowers the overall value of the function
and the CMO in practice. Soit's like this really weird, endogenous,
(08:11):
complicated system where weare undervalued because we don't
understand our stuff. Andthat's kind of that problem. If you
don't understand what you'redoing with it, then you can't ask
for more budget. Right. SoI've. Back in the day when I was
in practice, I went to financeand I said, what's my required rate
of return on my budget? Right.You've given. Personally, myself,
(08:32):
as Felipe, I had 5 million tospend a year on my brand.
Yeah.
And I wouldn't need approval,you know, if I needed more that required
approval. But I could tossaway $5 million. What's my required
rate of return? How much doyou need to see this back? Because
the company has a cost ofcapital. Let's say they had a 5%
cost to borrow that money. Iexpect that I'd need to show more
(08:56):
than 5% ROI. Right. Obviously,they look at me as like, you're a
marketing guy. What the hellare you doing in my office? Get out.
Right. Like, it's just theydidn't understand why marketing wanted
to have that information.
Yeah.
Right now, this is now acouple decades ago, but still, that
shouldn't be a controversial question.
Yeah.
And I should then just say,look, every dollar, every pound,
(09:17):
ever, whatever you give me, Igive X back. And through this, in
the short term, into the longterm, into this reduction of risk,
exposure, all of these thingsI'm accomplishing by my spend. But
right now, it's not managedthat way. Or actually a lot of it
is managed that way. But theway people talk about it and if you
just listened to the wisdom ofthe crowd, you would think that this
(09:41):
is science fiction.
What I thought was reallyinteresting also, when you and I
met before this recording, Iwasn't aware that at Oxford there
is this thing called theFuture Marketing Initiative, which
is where academia and commercekind of come together to look at
the future of marketing. Talkto me about that initiative a little
bit and your role in it.
I'm now co director of theOxford Future Marketing Initiative.
(10:03):
It predates me in Oxford byone year. So it was created by my
colleague Andrew Stephen, andit's one of the best mechanisms in
Oxford. It's one of the mainreasons I Came to Oxford and stayed
in Oxford. That might soundweird, but it is like it's a fundamental
drive to research. One of thebiggest threats to, I think marketing
(10:24):
researchers anywhere,especially from an academic background
or an effort threat toacademics, is that we can just sit
in a room by ourselves, readjournals, come up with questions,
often just by reading the backof the paper that says future research
questions and answering thosequestions and moving on with our
lives. If I just did that, Imight generate ideas and solutions
(10:49):
that have absolutely zerovalue to you or they're going to
be very incremental, veryminor, and don't address the reality
of lived practice of marketingas it is today. The Oxford Future
Marketing initiative is thisinterface with practice and we have
a lot of really good companiesthat serve as our council essentially.
So I won't name them all, butthis is the Google's a partner Meta
(11:13):
L'Oreal, Diageo, Kantar, hencethe joint partnership on this project,
WPP, et cetera, et cetera.Like, there's an amazing set of companies
where leadership comes in andwe have these private conversations
around what can they notsolve. They are all full of immensely
(11:35):
bright people. They don't lackfor data scientists, they don't lack
for data, they don't lack forcapabilities. But there are things
that are wicked problems,things that they can't solve because
they have a narrow view of the marketplace.
Yeah.
And we sit in the middle as anon commercial partner with everybody
having the understanding thatwe are going to publish whatever
(11:56):
the truth is and they have toaccept the risk. And that explains,
you know, the difficulty of apartner joining. Because if I have
something bad to say aboutthis part of the industry, they're
going to have to deal with theconsequence. Right. It's then a triangulation
of visibility of agencies,platforms, brand strategy that give
(12:21):
rise to the questions and thenthe ability to actually answer because
they have the data or theypose the question says, look, nobody
knows how to do marketing. Mixmodels with creative embedded in
a practical good way. Let'ssolve that. How do I do White space
forecast? Well, let's do that.Right. So they provide the challenges
(12:43):
and as long as it moves thescience forward and it's not just
pure consultancy, but it alsohas a commercial value, therefore
it has a relevance topractice, then we have a good project.
Because today I think whatwe've called this podcast reach is
not enough. And I think one ofthe dragons we're going to slay is
this sort of widely heldbelief that success in advertising
(13:04):
specifically is about Reachingas wide as an audience as possible.
And the paper you'republishing shows that it's not actually
just reach at all. Can youexplain to me maybe why just aiming
for maximum reach isn't themost effective strategy?
A little bit of background ofhow this started, because as you,
(13:25):
as we started ourconversation, this wasn't a part
of the project. Right. So theinitial question was how do channels
work together?
Yeah.
And not reach. Allocation,breadth of targeting, like none of
that was part of the corequestion. But in the process of peer
review, the other professorsthat are challenging all the findings
(13:48):
came to a question which wasprove to us that this is relevant
to practice.
Okay.
Right. They're like, prove tome that they don't already do this.
So it's like, can you show mein concrete, rigorous terms that
this is not just widely known,widely done, and you're wasting our
(14:10):
time. So that's where thatstudy on reach came, which was what
you alluded to is a stochasticfrontier analysis, which is if you
abstract away the idea ofmedia channels as investment opportunities.
So I'm saying I'm going toinvest in tv, I'm going to invest
a little bit into Facebook,I'm going to invest a little bit
(14:30):
into Twitter or X or whateverits name now. And I'm going to invest
into all these variouschannels and I expect some sort of
return from that investment byways of lift or whatever. But if
I look across all of thosecampaigns, those are not stable lifts,
there's variance. So it's aninvestment at risk. Right. So in
(14:52):
that way you can abstract thisidea of a financial instrument that
you invest into it and it'sgoing to come with some variance.
If you do that, then you havea portfolio campaign as a portfolio.
Right. So I can organize myvarious instruments to maximize my
lift and minimize my riskexposure so I get more money with
the lowest risk of that moneynot coming back. And then you just
(15:15):
have a risk trade offpreference of I will accept more
risk for a higher chance ofpay off. And that's the frontier,
the curve that you wouldaccept a fair trade off. So I did
the analysis on the sort ofoutcome that brands were getting.
One that commercial lift,brand metric, lift or just reach.
Are they actually getting thereach that they want with low risk?
(15:38):
And are they getting thesales, the motivation, the salience,
all of those things withoutrisk. And what we saw is like let's
say 80% of all campaigns, it'sa bit higher than that. But let's
say just, just to play withround numbers, 80% of all campaigns
have as high a reach as theycan get, right? So clearly shows
(16:01):
that there is a intentionaleffort for reach to be optimized,
maximized. But if you look atthe other graph and if you look at
the other efficiency trade offon lifts, none of them actually approach
the optimum. And there'sactually a normal distribution well
(16:23):
away from the optimum. Meaningyou kind of have a little bit of
a random allocation ofoutcomes despite maximizing reach.
So you have these differentsort of consequences of everybody's
doing what they're told, whichis go maximize reach, but they're
not realizing the actual goalbecause I don't think anybody here
or anywhere has reaches thefinancial KPI, right? Like they actually
(16:48):
want some, some monetary gainand they might have some intermediate
intermediary measures in termsof brand metrics. So the goal is
not just to talk to people,the goal is to get money in your
pocket. And what we're seeingis that you're maximizing the reach,
but you're not getting the sowhat on the end. And that was the
(17:09):
huge concern. There is quite afew reasons why that can start happening.
Part of that is you byovercasting the net, right? By going
too broad, what you get isleakage, which is an older term in
integrated marketing comms. Sowe're going back to the 60s here,
(17:30):
right? Imagine early days ofmedia buy and you had to buy the
whole distribution of amagazine, right? You put your ad
in that magazine and you hadno choice but to ride that wave.
And you're going to show thatto everybody that bought the magazine.
Now you don't want to talk toeverybody that buys the magazine,
but for whatever reason youwant to talk to a subset, so you've
(17:51):
overpaid for that exposure totalk to people that are never going
to matter to you, to talk tothe people that matter. And that
inefficiency, that leakage ispart of that loss inefficiency. You're
just talking to people thatdon't care. You're talking to people
that don't matter. You'retalking to people that will never
matter. The instances thatI've talked to anybody where there's
a strategic reason to talk tonon consumers is small to none, right?
(18:17):
And one good example of likethose counterintuitive that I have
found interesting is likeheavy luxury brands where the value
of the brand is for otherpeople to have the perception so
they're not going to buy it,but they're going to be jealous and
I need them to be jealous foryou to see the value in the brand.
(18:40):
Therefore I need to talk tosomebody that has a non commercial.
It's a strategic but noncommercial value. Yeah, on that immediate
but that network effect is avalue. The other arguments that I'm
sure you bring up is thislike, well, just in case, I don't
know when you're going to bein the diaper market, maybe never,
maybe you will or maybe you'regoing to recommend it to a friend.
(19:00):
So I'm going to do it anyhow.That's what leads to this.
Yeah. So two things strike meimmediately in business marketing.
We have the same effects inluxury brands in that we need to
influence people who areprobably not going to be consuming
the product, particularly inthings like software where the risk
is very high and everyonewants to buy safe. So you find software
(19:20):
companies marketing messagesabout trust and longevity and robustness
and redundancy to people whoare not customers because they're
part of an endorsing decision.And the other point is we are being
force fed this thing calledthe 95.5rule at the moment. As though
5% of people are in market atany one time. 95% of people are not.
(19:42):
And that's being used andapplied to, well, you must do brand
marketing to the 95%. You mustgo whole market in what you're doing.
And I think when I read thepaper, what it sold for me is some
of the received wisdom that wehave that you have to go whole market,
that it's all reach, it's allabout exposure. And that's just patently
(20:04):
not true, is it?
There's one immediate thingthis paper does is we labeled this
as in this reach sufficiencyhypothesis, right? So it says if
all I need to do is have thisreach always on talk to everybody,
if that's sufficient, all theother things will be true. And we've
proven that to be wrong. Sothat hypothesis does not hold. So
(20:26):
that idea is just false.Right. So it's just immediately disproven.
It's rubbish. It's not goingto get you the thing that you think
it's going to get you. It hasa lot of other implications along
with it. But I do worry aboutthose broad generalizations and percentages
and allocations that areperhaps untrue and not deceiving,
(20:51):
but dangerous for people totake at face value and ignore other
things that we've known, butwe try to simplify away from, right?
So never in thoseconversations do I hear available
addressable markets, time outof category and purchase journeys
and purchase patterns in yourcategory. Because if you're an auto
(21:13):
salesman or auto brand ownerand your time out of category is,
I don't know, three to fiveyears, to six years, to 10 years,
it's very different from me infast moving goods that has 16 choices
a year or more. Right. So likethose timing frameworks will lead
(21:34):
to completely differentstrategies. And if you're going through
like, oh, I must reach thewhole available market. So my definition
of growth is this wholeavailable market share of the entire
category, then you fall into amass market strategy which dictates
lower price premiums, whichdictates your entire cost structure
(21:54):
in some of your company, whichis true for one company that is going
to be a cost competitor onundifferentiated goods, but it's
not true for anybody else. Soyou have this really weird decomposition
of this complex strategy intosomething that is true for one person
and says go ahead and do thisthing because you worked for them.
And this is where the morecontroversial side, controversial
(22:16):
to some of the paper you'republishing now comes out because
it's, it's basicallydisproving something that is a very
widely held belief in themarket about how brands grow.
Right.
What was it Ritson said?
I believe he said, if you'regoing to take a shot at the king,
don't miss.
Okay.
(22:38):
Which is very interesting. Ihaven't seen a king in science yet.
But he's softening, he'schanging. Over the last few weeks
we were saying just before westarted recording that he seems to
be coming back towards differentiation.
Yeah. I saw two or threevideos of him talking about how marketers
had forgotten aboutdifferentiation and it matters which
is off the back of the some ofthe work I've shown a can like maybe
(22:59):
two years back now thatactually differentiation is a massive
driver of abnormal stockreturns. And salience and awareness
and distinctiveness of assetsdon't feature like. So a differentiation
drives about 17% of abnormalstock returns, distinctiveness drives
(23:21):
zero.
That's pretty cut and dried.
It's what it is, right. Youjust go look. Because if you look,
what is an abnormal stockreturn? Right. So getting more into
the finance side, like thoseare unexpected growth or if you can
look at downside, could beunexpected decrease as well. And
that's why I've in trying toexplain why that's the case is I
(23:43):
don't see. And with apologiesbecause I'm now driving back to that
lower level of analysis, notto company, but psychology and consumer
decision making, growth andChange in penetration. Like why does
somebody. How do you acquire anew customer? Right. How do you get
the next person? Is winning amoment of choice. Right. So you have
(24:04):
to convince somebody to eitherpick your thing or to go from a thing
that they picked before to anew thing that they're going to pick.
So you're either poachingsomebody or you're the point of entry
into the category or whateverit might be. And you have to win
on that basis. Ifdistinctiveness in that sense is
the alternative brandelements. So you're looking low level
(24:26):
construction of the brandwhich is the visual representation
of the brand. And this isagain a very old world on the shelf
mentality. Still mostpurchases tend to be physical, non
digital. But gets harder whenyou just have an empty search bar
and you have to entersomething. Right. But I challenge
you to find a time that youbought something because the box
was blue. Right. Did thatelement actually convince you to
(24:50):
buy this relative to somethingelse? What it does do is it defends
your market position from.From a purchase that has already
happened, which is a functionof brand. Right. Brand is supposed
to win the moment of choiceand keep people locked into that
choice so that when they'reback into their next purchase occasion,
(25:11):
they don't seep into acompetitor, they just recognize something
that they had at home and theyjust rebuy. And you don't want them
to revisit that moment ofchoice. So distinctiveness in terms
of the brand is a protectivedefensive mechanism that maintains
your share so it doesn't seepinto the other one. Therefore it
will never show an abnormalgrowth because it's in the maintenance
(25:34):
expectation.
Yeah.
It's in the perpetuityassumption. It is not in the growth.
Differentiation whichconvinces somebody to reevaluate
their choices is what driveschoice. It's what gets you the next
customer.
Distinctiveness is a defensivemechanism, effectively we're saying
to protect market share or toprotect choice. But differentiation
(25:56):
is what leads to that choicein the first place.
One drives growth and theother one keeps the growth that you've
attained and hopefullymaintains your existing user base.
Otherwise you're justconstantly fighting for higher and
higher churn inside of that.So if you talk about customer retention
and those the functionality ofbrand to maintain somebody is how
do you keep them in your walllike within your.
(26:19):
Yeah.
So defending your share.That's why like people thought I
was being kind of cheeky whenI said like this whole idea is not
how you grow but how you staybig. It's not just A reframing, it's
just like it's a defensivestrategy. It doesn't work. If you're
a new entrant in the marketand you have unique, just distinctive
assets, nobody cares. You haveto have another reason for choice.
(26:42):
After you have the choicemade, then you can start playing
off of that mechanism so thatmaintains your installed user base.
I don't see any logic thatwould make somebody go, yeah, I'll
pick the other one. The otherthing that does happen, which is
an old result, which is whypeople start using market share to
answer every sort of thing isif you know nothing, like it's a
(27:06):
social proof sort ofmechanism. Right? If you know nothing
about something. So if you gointo a country and you have a headache
and you've never been in thatcountry, you don't speak the language,
you can actually even read theAlphabet, let's say, right? But somebody
says, here's all the payments,good luck. And one product has 10
facings and the other producthas two facings. Which one do you
pick?
(27:26):
10 facings.
Exactly. Right. This is aknown thing. So aspect of facing
category management,distribution, that hasn't gone out
the window. Yeah, but ifyou're managing your whole multi
billion whatever brand off ofjust a social proof effect, I feel
bad for you.
I might buy the two facings.If it was priced high enough and
someone could tell me it wasthat because it was more effective,
(27:48):
I might do price then comesinto play as well.
Right, but then you're usinglike heuristics for search, right?
Search is costly. We're lazyhuman beings that we just want to
use. If a million other peoplehave made this choice, then it must
be a good choice for somereason. And if everything is equal
otherwise then this actuallygives me enough information to make
a choice. But it's like thateffect hasn't gone out the window,
(28:11):
right? Like, yeah, that'strue. That's why it's really hard
to get distribution and youknow, go get facings. I worked in
industries where facingsmattered. Every time we had a new
product, something had to goout. We didn't get another one for
free. And we were a massive brand.
I used to run a distributorand getting distribution is not easy.
Right? Getting people to listand categorize for you is not easy.
(28:32):
So that's one of my other funthings. Right, so what's. Especially
with the ongoing wisdom andoh, just go get distribution. All
right, so tell me, in yourexperience, what drove the choice
of who got distribution? Whywould you give somebody distribution
it.
Was really complicated,actually. It's about their own reach.
(28:53):
It's about margin structures,it's about capacity. It's about.
Actually, it's quite a. It'soften a financial decision because
you're.
Carrying a lot of risk as adistributor, you're carrying inventory
risk and all of those issues.But really, is that, will it sell?
Have they got the ability todeliver me volume?
Your distribution capabilityis a function of your ability to
(29:14):
sell that product.
Yeah.
So they will only distribute.They'll only give you that physical
distribution if you alreadyhave sales.
Yes.
And the more you sell, themore distribution you're going to
get. It's not an independentgift that if you're nothing, they're
just going to like, oh, it'san easily achievable thing. Just
go get more of it. It's this.It's an indogenous system. It all
(29:35):
depends on the other things.And if you just believe, I'm going
to go and get this without thereason, the good marketing, often
if it's a new entrant, youneed to convince them that you're
going to drive people to theshelf or you're going to drive them
to the store or there's areason for me to carry you, you're
not going to get that asset.It's an important relationship with
channel distributors and allthose. But you can't just manufacture
(29:59):
out of thin air. It'sdependent on the sale. So it's a
weird sort of belief andrecommendation, which inversely,
to sell more, you just need tosell more. It's what it often comes
back to. If you sell more, youwill sell more tanks. Like, yeah,
sure, it's tautological, it'scircular. Yeah, there's inertia,
there's all of those things.But tell me what actually I need
(30:22):
to change to sell more. Don'tjust tell me to sell more because
if I sell more, I will sellmore. Got it? Okay. Let's say, yeah,
the more you sell, the moreyou sell. I think we're on the same
page. What do I need to do inmy context, in my industry, in my
life stage to achieve thatmarginal sale? And I think that is
(30:42):
completely lacking in most ofthe conversation right now because
it's been reduced to thingslike this reach argument, which as
we've shown, is not true.
Yeah. Okay. So talking ofselling more, your paper and your
research found that differentchannels have their own unique strengths.
I wonder maybe you could givesome examples of how channels impact
(31:08):
consumers differently to kindof give some ideas to our listeners
of where they might dependingon what they want to achieve, what
they might want to be considering.
There's a little bit oftriangulation here. So there's only
so far one paper can go. SoI've actually been around and I've
shared results from a secondpaper that's not published yet that
dives into specifics. So justto warn folks that might go into
(31:31):
this paper and said, oh, whereexactly is the functionality of Facebook?
You will see some of thathere, but not a complete breakdown
of cross category regionalstrengths and relevances for each
specific channel that isforthcoming, let's put it that way.
So I have a really niceproject with Wavemaker at the moment
(31:54):
and they gave me a millioncustomer journeys. Wow. Yeah. So
you know data nerd in thecandy store, right. Like it's. So
imagine a million purchaseswith all of 72 touch points. Wow.
Okay.
Right. So like all of thatrichness to identify essentially
(32:16):
the power of each one of thosetouch points to influence and change
that navigation towardspurchase from change consideration
and then change purchaseinside of that ecosystem across categories.
So I can start to say actuallyin beauty this channel works better
(32:39):
than this too for purchaseintent. But that's not in this paper.
Maybe that's a future conversation.
Sorry, but the fourth thingyou just said for beauty in this
channel, because so, and I'mrowing back slightly, I should have
covered this probably already,but. But you talk about archetypes.
Yes.
Can you explain the concept ofarchetypes and maybe what they are?
An archetype is a bit like arecipe. Okay, right. So it's a combination
(33:02):
of here in the papers, it's acombination of probabilities. So
it's like what's thelikelihood that your campaign should
use tv? And everybody alwaysuse TV on every sort of campaign.
So it's going to have asomewhat high probability that you
should use it, but it'll showactually what's the likelihood then
that point of sale will helpyou in your category. What's likely
(33:26):
that radio actually shouldfeature and you're going to see either
very high probabilities orvery low probabilities. So they start
giving you kind of the senseof indication of strength or frequency
in which those channels havefeatured and combinations that have
been put in a way that drivesa given KPI. So that's part of the
(33:50):
mapping exercise that we did.And I think it's the most useful
to think of in terms of amapping of there's a huge surface
of variations that you can saymore tv less TV blend of old media,
new media and differentplatforms and different kind of consumption
occasions. All of those thingsare in this complex space of all
(34:14):
the possible alternatives thatyou can use. Right. So if you think
with 11 channels, I think thatwe had all the possible combinations
of on and off. If they werejust pure switches, it's like several
thousand. It's a couplethousand of different ways that you
can flip those switches on oroff. This just gives you a few clusters
(34:36):
that we identified that leadto best performance.
Is that for specific outcomesor for.
Specific problems or both forspecific brand mindset metrics. So
what we had is essentiallysalience divided in aided and unaided
(34:57):
sort of awareness becausedifferent brands and different business
problems required those intodifferent amounts. Right. So if you're
on the shelf in a veryphysical setting, then recognition
actually is very valuable toyou. But if you're a very digital
first, you don't have a visualcue most of the time when you're
(35:17):
shopping, you need to actuallyelicit that from top of mind without
recognition. So the other KPIis more valuable for you. So we try
to split on those associationin terms of can you connect the brand
to concepts. So again, mentalnetworks and those aspects of brand
and motivation or intent tobuy, purchase intent. So it's like
(35:39):
those are sort of the KPIsthat we kept in mind and that's mapping
of different. What wasinteresting then as a result, which
we set out to prove was wouldone combination actually meet all
of those requirements?
Right.
So that was the first thinglike, so the initial name of this
project was actually SilverBullet or no silver Bullet.
(36:00):
Is there an optimal mix thateverybody should use?
Because if imagine that, thatwould be ideal world, right? I've
said X percent this, Y percentthat, Z percent this other thing
and everybody's good wouldhave been delightful, but it's not
true.
Yeah.
Okay, so there's differentcombinations help different people
to achieve different things.And that's the wildest sort of thing.
(36:23):
It's scary, I guess, if youare a planner on some sense, because
there's no, oh, I just hit thesame button over and over again and
I'm going to get. There's abest for whatever you're trying to
do. There's just no universalbest. Regardless of who you are and
what you're trying to do,there's not a dominant strategy.
The issue that we found thatwas on the scary side is we talk
(36:47):
about dominant and dominatedstrategies. So a dominant is like
always best dominated isnever. There's always something Better.
Yeah. Okay. Right.
So he mentions like completelydominated strategy is you do this
and there was always a better choice.
Okay.
Right. So imagine like that's,that's a hurting moment. We see a
(37:10):
lot of those in, in the wild.In the wild and in our. Really.
Okay.
And that's kind of scarybecause like I said, I have massive
multimillion campaigns.
Yeah.
Using dominated strategies.Meaning that there was always money
left on the table.
Huge wasted, huge wastage.
Right. And that connects toour earlier conversation of they
(37:33):
might have been using what inthe papers described as this incorrect
lay theory so that that reachis sufficient. So if they believed
they probably optimized toscale but didn't hit any of their
targets. So they could havedone a number of things to improve
their performance and maintainscale. But they didn't. So they're
(37:54):
using that dominated strategy.There are contextual best. So we
found a really interestingspecific archetype that works really
well for CPGs across allcriteria. So if you are a CPG, there's
(38:16):
actually a really, reallycombination that will drive salience,
association motivation.Everybody else, multiple alternatives
are going to be adding thosecombinations. So just using lessons
from. Oh, but you know, Idon't know, pick, pick a brand that
everybody loves like oh, CocaCola does this. I'm going to do what
they do. Oops. No. The otherthing just to throw it out there
(38:40):
because it's very common ishedging your bet gets you towards
dominated.
Dominated.
So if you are like, oh, youknow, but I'm just going to start
throwing stuff on. I'm goingto do all the things is the lowest
performing architecture.
Okay.
So if you just go, oh, I havemy campaign. It's well structured.
It's, it's close to anarchetype that drives my outcome.
(39:04):
But I'm going to actually, Ihave extra budget, I'm going to throw
this other things on and youmove away from the archetype. You
lost money.
How does a marketer, how doesa CMO make sure that their strategy
is dominant, not dominated?What's the, what's the magic?
So one thing is for them torecognize. So our advantage here
(39:26):
and the reason why we're ableto do this is that unlike a brand,
we had data for every brandand across category. So we have variants
that brands would never see.
Okay.
Right. So they had blinders onof just historical information of
we always do this andexperimentation is difficult for
(39:48):
brands and costly. Right. Goask CMO to turn off tv.
Yeah.
And see how quickly you getrun out the door. Right. Like nobody's
going to turn that off for anyreason. But it's. So it's really
hard for you to prove what theright levels and those things are.
So for them they'll be lookingat their own personal, blindfolded,
sort of historical data andsee validation because they're MMMs
(40:12):
are saying the same thingbecause they're just in that inertia
mode. So the reason why we cansay different things is, but because
we had variants that nobodyelse had access to. So that's one
of the reasons why my viewmight be different from their internal
view. Right. Because of thosesort of blinders for them is a few
(40:34):
things, recognition of theirown context. So they need to understand
their category and location ina sense and strategy of the brand,
which is life stage kind ofthe path dependencies. What have
(40:55):
you done up to this point thatwould prevent you from doing something
else or requires you to keepdoing? So you have to respect those
constraints, right? So you'regoing to be constrained and you're
going to have budgetconstraints like everybody else in
the planet. Right. You have tooperate within those, but within
those boundaries. That's goingto give you a narrow range within
what these, what our modelsuggests. Right. And it's going to
(41:19):
be within a category specificdomain and requirements, whatever
that might be. So if it's atech company, it's going to have
a different set of weights ora different best goalpost or guideline.
And then once you have yourboundaries, is identifying your for
a specific outing into themarketplace, a campaign, something
(41:40):
that you're going to turn on.What is the goal? Right. So what
are you trying to do withthis? Are you just trying to generate
short term immediate sales?Are you trying to create some brand
connections, associations,create differentiation? Are you at
a stage that you actually doneed a heavy investment in salience
because you're entering themarket or you're, you're trying to
(42:03):
compete with somebody that'sreally loud at the moment and you're
trying to do those. So youhave to understand what are you trying
to do. So it's conditional ongoal, right? So two conditions is
who am I and what are myoperating conditions? What's my market,
what am I trying toaccomplish? Given those there is
a optimal allocation andthat's going to be a specific archetype,
(42:25):
might be number four, numbersix, number seven, whatever. We didn't
give them names, we're nottrying to be cute. But there's, there's
a map and says go to this bestallocation that's going to give you
a set percentages of channel,channels that you can use and kind
of a suggested budgetaryallocation. As you recognize by media,
(42:45):
there's discontinuities, TV isexpensive, you need to put a certain
amount of money. You're nevergoing to be quite as clean as what
we can be because we have thispure mathematical model off of the
data where everything isbeautifully continuous and you don't
have thresholds of purchase.So you're going to be close to whatever
that is. Right. Within thatpoint, you would be at your theoretical
(43:10):
best outcomes for whatever itis that you're trying to do. But
it might not be feasible andit might not scale well enough. Right.
But right now you're just inthe channel function construction.
Now I said, okay, how do Iscale this bad boy? Right. So I need
to talk. This is when Reachenters the room. Okay, okay. So he
says, I know what I need todo, I know what I need to turn on
(43:31):
to get that thing done. Nowhow do I get the most of my intended
audience to see this? And itmight be a slightly different allocation
within those channels thatgives you the right audience construction.
So just recognize that you'regoing to be moving away from a optimal
outcome to have a optimumscaled outcome. So you're moving
(43:52):
away from the best lift orbest return to get that lift multiplied
by the largest number ofpeople doesn't mean you go to a whole
different neighborhood tocreate a whole different audience.
You're taking steps away,seeing that you're. Think of it that
your margin per person isgoing down, but your number of people
is going up. Right. So you'retraveling away in that local neighborhood.
(44:15):
You're not switching planetsto a different sort of strategy until
you find a happy dualoptimization. I'm still very close
to my optimum lift with myprecise audience construction.
So in this case, the optimallift is the archetype, for example,
that's the reference data. Andthen the real world comes in. So
(44:36):
you then have to start makingsome changes to the archetype based
on your ability to spend, buyand or physically deliver.
Yeah, what can I afford? Wherecan I buy this? Do I have deals?
Do I have this? Those areconstraints that.
And by following thearchetype, statistically certainly
or scientifically, they'relooking at more effective outcomes.
(44:58):
Yes. So as long as you avoidthe other error, which is I'm going
to do all the outcomes at once.
Yeah, right.
Because that's the otherthing. You know what I'm going to
do this, this campaign thesingle campaign is going to create
awareness with the rightpeople. It's going to create associations
with those other people andI'm going to get sales and it's going
to go viral and then it'sactually going to turn me into an
(45:21):
iconic brand.
And by the way, I want toincrease my margin so it's going
to support my price rise.
Yeah, yeah. And you know, andthen Santa Claus is going to come
back with my entire budgetback. Like it's just not going to
happen. Right. But we see thatover and over because they over measure,
they measure everything. Theytry to get everything to shift with
once.
Yeah.
And it's just like look, thatagain gets you to the. It's the similar
(45:43):
dominated strategy. If youneed to do everything on one outing,
it's going to be very lowreturns. So you can think of it as
if this were a financialproduct. If you are the always on
everywhere, doing everythingall at once. It's kind of like the
(46:04):
bonds of financial market.It's probably going to do something
for you and it's probablygoing to be a 1% return or lift and
it's going to be very safebecause you will hit somebody that
cares. You will get someclicks, you will get some sales stuff
is going to shift, but in tinyamounts. Right. And then the person
(46:26):
with a better strategy thathas a portfolio of activities of
right now we're going to dothis and then we're going to do that.
Is the person that's going tobe hitting the 10% lifts, 15, 60%
lifts that we see in some ofthe optimizations. Right. Like these
are large leaps. Like in oneof the things that my colleagues
did sort of modeled what ifstatements with the real Data is
(46:49):
like 750% gain in outcomesfrom reorganizing. That's on the
extreme side. And this waslike with aided awareness I think
he calculated. So it's likemassive shifts. Like some of it will
come in with risk and thatmight be for a specific category
and on a specific thing. Soit's not like everybody gets that
sort of outcomes. But what wedid observe in that initial motivation
(47:15):
was that yes, the average liftthat those reach maximized campaigns
were getting was about a 1%, 11/2 percent. And that's, that's why
I keep saying like that'sreally sad. Like you know, if that's,
if you go to market, spend £10million and you see mindset metrics
shift 1%, you should cryinside. Right. Like this is not,
(47:40):
this is not what I wanted forme. And if you get those people that
disagree, I think what we seeoften is those well differentiated,
targeted brands that are smallso they don't do the overreach because
they don't have the budget tooverreach. They actually do better
(48:02):
and they grow faster and theystart eating away at the share of
this big behemoths that aredoing the safe bet. And like, I don't
understand how they're doingso much with so little.
Yeah, very, very targeted,very focused. Yeah, yeah. What are
some of the common mistakesthat you've seen when, when it comes
to channel selection amongmarketers other than like dialing
them all up?
So hedging is common. Doing.So hedging, meaning I'll turn on
(48:28):
everything because I can orI'll toss, I have extra budget and
I must spend everything or I'mgoing to lose my budget. So I'm going
to start turning on thingsthat won't help me in the least.
My personal experience thatled me to academia was something
like that. It was almost 100%leakage. They found a specific channel
(48:52):
that had Almost, I think 2% ofthe user base was of value to my
brand, but they still invested5 million to that. I was just like,
wow, nobody wants to use thisproduct. Why are we advertising here?
So it's like, so those aresignificant. There's a over reliance
(49:16):
on historical data. So this isreally hard to overcome because you're
doing data driven marketing,right? It's like, oh, I used yesterday's
values and I'm going to getthese different things, I'm going
to grow. It's very common tolook at. Well, that's how it was
done, that's how it's going toget done. And we always do this because
we have those relationships,we have those things and it's the
(49:38):
amount of inertia that I seein that is really, really high. And
then the, frankly, the otherthing is not listening or ignoring
advice in industry to ourconversation on the recommendations
and lay theories that exist inthe world right now, or even theories
(49:59):
that are suggested to bescientific. People in media buy,
people in agencies repeatedlycome back and said, we know this
is not how it works, but ourclients, we are too afraid to tell
our clients to do somethingdifferent because they want to hear,
(50:19):
reach and that's all they wantto see. So there's this perpetuity
of bad advice from people thatdo know better because they have
a commercial need to satisfytheir clients requests which just
want to see that number go upand at which point you don't need
a media buyer because you justdo a simple if then statement. Just
(50:41):
buy more eyeballs.
It's pretty scary that it is because.
Honestly, again my sampling isbiased because my view is fairly
well known as the at thispoint. So people that come to talk
to me tend to be non believersof the traditional practice. But
they come to me and said, youknow, I've known this for 10 years,
(51:01):
I've known this for 20 yearsor whatever, like at least 10. Right.
And but I can't tell this tomy client because they must see reach
go up and that's what I'mbeing measured on.
And we know specifically now,specifically scientifically that
reach is not enough.
Yeah. According to a peerreviewed paper published in one of
(51:23):
the best journals in the fieldin the Journal of Marketing.
How can people get hold of acopy of your paper then?
There's a couple places we'vekept throughout the review process.
The paper has been kept onSSRN Social Sciences Research Network.
So that link should stayavailable throughout. If you go to
the Journal of Marketingwebsite, they host accepted paper.
(51:46):
So right now it will be underthe accepted and then there's a full
copy there.
Yep.
As we speak it might still bebehind a paywall. But one more thing
to be proud of. So Oxfordbears the cost of destroying the
paywall. So Oxford is amazingin that way. They pay all of the
(52:09):
fees for publishers to removethe paywall. So Oxford papers are
always open science.
Wow.
So if you see a subscriptionrequirement when you go try to get
that paper, just wait a littlebit because it should be free any
day now.
My experience is journals canbe really expensive. Oh yeah, that's
(52:31):
good news. So we're going toput some links to both of those sites
on the show Notes for thisepisode. So if you're listening and
you want to find it, look inthe notes below and you'll find links
to those papers. Let's justtalk very, very quickly before we
end about practicalapplication because we talked about
this to start with and it'squite hard to make that leap between
(52:52):
academic and science intoaction. But some people have been
making their own efforts. Youtold me, talk to me about your experience
recently.
That's actually has beenpretty amazing as I think we were
chatting privately before isthe role of science and practice
and that interaction becausewe're here to help. But it's really
(53:12):
hard to then for me to createa product off the back of this and
I'm not going to create adashboard that's on people to absorb
and create. And take thismodel, everything is in print, you
can just go and use it today.But there's that translation step
that is difficult. As we'rediscussing, the last question was
(53:33):
can you inject your owncontext, your own situation and then
once you have those, can youbound and get good predictions from
this model, good outcomes? Andyeah, recently I had a few email
exchanges with a guy that gotin touch with me that said, hey,
really like this paper. I wantto make sure that I understand and
(53:55):
how it relates to other stuffthat we do. Here's how. I've created
my own kind of dashboard inExcel that uses these values to get
recommendations of channelconstruction by archetype for whatever
they're trying to do that wasto their context, like in alcohol.
And it was brilliant, reallynice work.
(54:16):
That's great.
And it was just this niceinteraction which he came to me just
for validation and just like,am I understanding this right that
I miss anything? And just afew email exchanges to get him to
use it and you know, he went,read the paper, deployed it in his
work and it's off and running.And for us, I mean it's amazing to
see because that's what youwant. You want people to not just
(54:37):
let this sit on the shelf andlike, okay, I'll keep that in mind.
But the money stays wasted,right? We want to see this turn into
money into people's pockets.
It must be amazing for you andyour team as well, because getting
the paper published is what atwo was, a two year or more process?
It was, yeah.
And so now that people aretaking it out into the wilds and
actually creating like realbusiness tools with it, it's fantastic.
(54:59):
Part of it is there's a lot inthis paper that I'm incredibly proud
of and it sets up a lot ofother very important questions about
media functionality and stuffthat addresses on even pricing of
media. Because if they all dodifferent things and they're not
fungible, the value of TV foryou is different than the value of
TV for me. So why are wepaying the same price? Right? Like
(55:20):
there's, there's amazinginteresting things inside of it and
those conversations alreadyhappening with channel owners and
all those things. So I thinkwe are in for a very interesting
development and evolution ofmedia buying organization and all
of those things. I like thatit deflates ideas that are hurtful
(55:47):
in the marketplace. So if wehad this lay hypothesis of just do
this, this simple thing, justif that guidance were true, this
paper wouldn't exist.
Yeah.
So we were able to show that.Yeah. Just death, saturation, overreach,
reach sufficiency is justabsolutely bonkers wrong. So I'm
(56:09):
delighted that we can movepast that now to better precision,
better flight controls forwhat we do with what is about a trillion
dollars a year of media buy.So I much rather have more than 1%
return on that. And then.Yeah, it's to see it then get into
practice and live and breatheis true to what Oxford wants to do,
(56:32):
which is not just academic foracademic sake, but academic in service
of the people that do it. Andthat's our job.
And it's going to spawn thenext paper which I can't wait to
see the study you're doingwith Wavemaker, the journeys. I mean,
so it's spawning other thingsthat for someone like me, that's,
that's gold dust.Understanding which specifically
(56:54):
which channels have whicheffects. Fantastic.
Yeah. And we've, we've alreadygotten amazing results. I was recently
in Sydney presenting some ofthat work early and we shown the
first passes of it actually incan this year.
Okay.
Okay. I'm sure we'll be backin can with even more complete results.
But it's showing some worryingthings like the value of word of
(57:17):
mouth is declining for everybody.
Oh, really?
Yeah. And it's the mostpowerful marketing kind of conduit
we have. Yeah. We've lostabout 15% of power in that channel
from 50% likelihood ofaffecting somebody's choice to 35%.
And that's across over threeyears. Across every category. It's
terrifying.
Are you looking at why?
(57:38):
That's still an open question.But because it's happening all across.
It points to societal change.
Yeah.
And it's not being replaced byinfluencers. It's not being impacted
by celebrities. It's. It's onits own, decaying. So people are
talking and listening andtaking advice from close family and
friends and family. Like a lot less.
Wow.
Which is mind blowing.
(57:59):
Right?
Yeah. So it's, it's one ofthose terrifying ones. But there's
other like super interestingthings like to generate sales across
every several categories. Goodold print does better than influencers,
really. Right. So you justlike things that we're tossing away
because they're old suddenlystill have huge amounts of relevance.
(58:20):
Brand owned is huge. Likebrand owned has a 36% chance of influence
somebody's purchase.
Wow.
Right. So just your own stuffthat you have control. So like. So
that's the sort of work that I love.
Yeah.
Because you can go, whatshould I do? Where should I put my
hard money? Like, you know, nobody's.
Yeah, yeah.
Has infinite budgets but thesethings will actually lead to better
(58:43):
functioning markets whichmakes me happy.
Well, there you go. Thank youvery much indeed to Dr. Thomaz. I
have to say, extraordinary guyand I'm very much looking forward
in a minute to popping out tolunch with Felipe to find out more
about his work, about Oxfordand about how they are trying advanced
marketing science. Now, I hopeyou enjoyed the show. If you did,
(59:05):
please let me know. I'd loveit. If you would subscribe or like
the show, give us a thumbs upjust below and we'll see you next
week. If you've got anyissues, complaints, queries or just
want to talk to us about thiscontent, you can reach me on LinkedIn.
My name is Dom Hawes and Dom HA W E S and I would be pleased to
connect to you. See you next time.
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