Wednesday, January 16, 2013

Intelligent Marketing

The challenge of marketing comes from uncertainty. A businessman (possibly John Wanamaker) once said, "Half the money I spend on advertising is wasted; the trouble is I don't know which half."

Matthew Leitch credits David Ogilvy with pioneering an experimental approach to advertising.

"Something that distinguished his approach from most other advertising agencies was his focus on using solid research to help make marketing decisions. He loved direct mail (or 'junk' mail as most people call it) because with direct mail it is possible to measure the response to advertising accurately. He could send slightly different advertisements to different groups of people and see what difference it made. He applied the same idea using reply coupons on page advertisements in newspapers and magazines, and used other forms of testing too. ... He also codified his research discoveries into over 100 rules of thumb to be applied to future advertisements. "
Ogilvy's approach has now become a routine element of the marketing process. I found a page on the IBM website documenting a Marketing Experimentation process to be automated using Websphere Commerce, although maybe it lacks Ogilvy's flair.

Experimentation allows marketing activity to be differentiated for different categories of customer demand, and refined in order to satisfy marketing goals more cost-effectively. One of the critical success factors here is the speed of the feedback loop - the faster the better.

There are various opportunities here for software technology to facilitate this feedback, by deploying advanced marketing communication tools that allow near-real-time measurement and analysis of campaigns. For example, a company called Intelligent Marketing Solutions claims to give you

"the ability to track, trace and manage every click your customer makes be it on a PC, Mobile or Tablet, you will know exactly how a campaign is performing around the clock and have the ability to make changes along the way to react to trends in response."
Other marketing tools can be used to provide independent monitoring of the effects of a marketing campaign, such as Buzz. See my post From Buzz to Actionable Intelligence (May 2010). If today's Buzz can give us a reasonable estimate of future revenues, then the marketing team can use Buzz as a predictive surrogate metric for the actual commercial success of a campaign.

Faster feedback can support single-loop learning - getting better at achieving a given set of marketing goals. Michael Mainelli and Ian Harris use a simplified version of VSM to describe a marketing process with feedforward and double-loop learning. Their system includes monitoring, information sharing, sense-making, planning, and continuous improvement - in other words a form of organizational intelligence.

Dion Hinchcliffe, Advocacy: The New Currency of Marketing (15 January 2013)

Ira Horowitz, A Note on Advertising and Uncertainty. Journal of Industrial Economics, Vol. 18, No. 2 (April 1970), pp. 151-160

Michael Mainelli and Ian Harris, Is Your Organisation Viable? – Customer Relationship Management Systems, Conspectus, Prime Marketing Publications Ltd (October 1999) pages 26-27. via Matthew Leitch

David Ogilvy, Ogilvy on Advertising (Pan Books, 1983)

Places are still available on my forthcoming workshops Business Awareness (Jan 28), Business Architecture (Jan 29-31), Organizational Intelligence (Feb 1).

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