Managing Marketing: Dealing with the rapidly increasing complexity of the media market

Managing Marketing is a podcast hosted by TrinityP3 Founder and Global CEO, Darren Woolley. Each podcast is a conversation with a thought-leader, professional or practitioner of marketing and communications on the issues, insights and opportunities in the marketing management category. Ideal for marketers, advertisers, media and commercial communications professionals.

Scott Hagedorn, CEO of the world’s fastest growing agency, Hearts & Science talks with Darren on the important relationship between science and intuition in advertising, especially for marketers dealing with an increasingly complex world. The similarities and differences between agile marketing and the scientific method and role data play in decision-making.

Scott Hagedorn Media market podcast

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Transcription:

Darren:

Welcome to Managing Marketing and today we are at Mumbrella360 in Sydney, and I have the opportunity of chatting with Scott Hagedorn, CEO of Hearts and Sciences. Welcome, Scott.

Scott:

Hi, How’re you doing?

Darren:

Thanks for doing the trip across the big pond from the U.S.

Scott:

It’s been a very warm reception here in Australia. It’s been actually nice to see all the lights and the vivid stuff all set up.

Darren:

And I also think it’s a warm reception apart from Australians supposedly being very open hearted, what you’ve come to talk about and share is something I think people are really interested in hearing and that’s because there is a lot of confusion for marketers.

The world is incredibly complex; marketing is becoming more complex all the time. It’s not so much the answer that I hear but at least an approach to finding solutions.

The complexity and chaos of the media market

Scott:

Absolutely, and what we are trying to do right now I think is capitalise a little bit on the chaos and complexity that exist in the market. As we see things that are happening right now there are some pretty severe holes in the syndicated data sets especially around mobile and over the top and in some in-app formats where the data is just not there for the planners to utilise.

Then on top of that there’s concerns about digital brand safety and digital efficacy and whether or not it really works, and have we pushed the digital vendors too far down with procurement to where their CPM’s are actually generating a lot of the fraud and viewability issues.

Then you have some pretty complex supply and demand issues happening in the TV – traditional linear TV market places – where the actual inventory themselves, the pools are drying up and the costs are going up.

So it’s very complex for the marketers now to try and sort all that out and at the same time, you have a whole new kit of tools, with audience-based planning and data and data management platforms and all the technology that’s now seeking to automate what has been historically IO based buying and just all of that swirling around must be complicated for today’s marketer.

Darren:

So it is interesting that the reaction for many marketers is that human instinct to want to pull back, it’s almost like they have hit this confusion and there’s people like Professor Mark Ritson who’s been very vocal about saying let’s get back to fundamentals and let’s focus on television only because digital has to sort itself out. Beyond the sort of natural human reaction there is some danger in that, isn’t there?

Scott:

There is a lot of danger in that. There is a limited supply of the traditional television out there at least in some of the markets that I work in. If you follow the award shows and the award shows actually can be litmus tested if you will for the quality of content that is being produced, there are more shows up for awards that are on Amazon and Netflix and those providers than there are on traditional terrestrial television networks.

I think that trying to revert back or put our heads in the sand thinking that TV is going to be the answer and that the TV marketplace hasn’t fundamentally changed is a dangerous way of thinking, but for some clients I think they recognise that there is an opportunity to lean in a little bit and try to find opportunity in the chaos of digital and making it work really hard for them.

Darren:

Yeah, because absolutely if everyone says “it’s all too hard”, that’s the time when there’s going to be opportunities in there, isn’t there?

Scott:

Absolutely, when it seems like it is too hard, that’s where you have to move from being a marketer into thinking more like a hacker, and try to figure out how you are going to hack your way into a solution and especially with what is happening right now with some of the big digital ecosystems you start to recognise that digital is really an amalgamation of hacks and that you can find and capitalise on potential data sets that haven’t been considered as a potential planning currency.

So for instance, looking at any virus software on mobile devices is a potential source of currency for marketing because people have installed it. They persistently install it. They update it so it becomes an untapped opportunity to create identity and something that exists as a ubiquitous form or asset across mobile devices.

I think there are marketers that are recognising it or some of them are just frankly in the space and they see it. They know that currently they have an OTT product that is part of their portfolio that currently is not rated by Nielson or by other syndicated providers.

I tell you what drives me crazy; near and dear to the format that we are doing right now is that podcasts aren’t currently rated by a lot of the syndicated research providers that are out there.

Darren:

Crazy , isn’t it?

Scott:

It’s crazy and if you look across millennial audiences especially in North America, they are really tuned into podcast. It is one of their preferred ways of content consumption because the editorial content is really good, they are efficient to produce and that they have broken the rules on distribution channels, to where it could be iHeart, it could be Spotify, it could be Apple.

Developing new more meaningful media metrics

Darren:

This is the problem and you mentioned it in your presentation today, about setting up new currencies for audience, this idea of impressions. There’s a big difference between something being served to me and me actually engaging, or even paying any attention to it at all, and I love that book a few years ago “The Attention Economy”.

Scott:

Sure.

Darren:

You know this idea that there is a real shortage of people’s attention. That is what we are competing for. I think a lot of people in media, because they have stuck with the traditional paradigms, have forgotten that ultimately that’s what we want: it’s their attention.

Scott Hagedorn Podcast on the media market

Scott:

Right, and when is that lean-in or lean-back moment when you get to relax and maybe get a little more persuaded. Is it during the hyper-fragmented work day when you are doing five or six different things at the same time? Can you really get a message to sink in, or is it when you sit down and listen to a thirty minute podcast and you are tuning into the content and tuning out the rest of the world?

I think that competing for attention and understanding when we can get attention versus just driving additionally more clutter, is something that, we’ve got to get better at and that kind of gets I think a little bit to the hearts of what we are trying to do.

In terms of assembling all the digital ecosystems and putting the technology pieces together, that is all done. But then understanding how people now interact with all these new forms of media, and which ones are inappropriate for advertising and which ones actually work is the job of the future.

Hearts & Science: Analytics and Intuition in a name?

Darren:

So that gets me to a good segue into the name of the agency, ‘Hearts and Science’, because I remember first reading about the agency and yourself almost a year ago, because it was just after P&G, suddenly they had appointed this agency supposedly out of nowhere. But ‘Hearts and Science’, is it as literal as the idea of bringing science to intuition or winning the hearts of people or is there more to it?

Scott:

You know it’s funny; we didn’t have an agency name. We didn’t want it to be an acronym and our working title for our approach to the P&G pitch was Heart and Science. It is very hard to clear a name globally as well so we ended up going with Hearts and Science.

And the science side of it, I get asked this question a lot, I think we have it legged. We have a lot of data science resources; they understand how to build stuff in Auron and Python. We have a great data environment for them to work in. We’ve done the right things with what I consider to be intelligent scale of linking that all up with the big digital ecosystems.

My first fifteen years of my career, I was a brand planner, so I am a qualitatively trained, you know, tap people on the shoulder, M&M eating, focus group moderator, ethnographer, and we have to get better at understanding, I think, the complex relationships that consumers now have with mobile devices and how we can be relevant there and that is not going to come out of data.

Darren:

Yeah, this is the thing I find that a lot of people think data gives you answers. Data gives you a view of someone’s behaviour. It still needs that quantum leap that comes from intuition and interpretation that you can then go back and test, which is not that far away from the scientific method.

I know you have an interest in science, we have a mutual interest in experimenting in the backyard, for another day, but that is one of the issues, is really bringing that scientific method which does, contrary to what a lot of people believe, use analytics but it also uses insights and intuition. They are not mutually exclusive.

Scott:

Absolutely not. We could be very informed about the number of times somebody’s interacting with a piece of content that we put in front of them getting access to an application on their mobile phone. And we could have all the times it was touched or clicked on but not know if it was done in anger or malice or in joy and engagement.

We have got to be looking over the shoulder of the mobile device user and making our own conclusions about what is appropriate on mobile. I am obsessed with mobile and looking at mobile devices, looking how also and this gets into the qualitative side of it or the anthropological side of it, what or how are they changing people and what is appropriate for marketing on mobile devices given the complex relationship humans have with them?

Darren:

It’s an intimate relationship. As a piece of technology, it’s as close as you will get to having something implanted in you because it is always within hand’s reach.

Scott:

It is, and how is it appropriate to market on it. I think that’s the challenge for us over the next five years, because I don’t see that same intimacy happening with the television in your house but certainly with your phone. More and more the study we did with millennials was that in the US, 70% of the time they preferred content on the mobile device and 80% of the time they wanted it in app.

Zero percent of the time is that rated by Neilson by the way right now, so that’s a problem, but I stretch the truth a little bit but it is pretty accurate because getting into the STK’s on mobile devices is tricky, or in apps. That complex relationship you have with your phone, that’s where I think the heart is really going to need to kick for us because I think we really need to understand it.

Understand if that is going to be the number one marketing channel in the future, we have got to crack the code for that. And it’s also going to be cracking the code for how we show up creatively, and how we reach across the aisle to our creative agency partners to help them think about new formats because it’s very intimidating for them to let go of the thirty and the sixty or heaven forbid the two minute, you know slow anthemic build up, but that is not how people consume content any more.

Test, learn, optimise – Agile Marketing

Darren:

That’s right. Being a creative copy writer and creative director for fifteen years, one of the things is what can I enter this in? One of the challenges we’re finding, and again it goes to the science of test and learn, the agile marketing approach, is explaining to creatives, why there’s a need to create iterations or variations to actually test propositions and yet these are the same people that hate it when a client will put their concept into research testing, copy testing and yet they could actually test it real time.

Scott:

What I think is fascinating and potentially liberating and could redefine advertising, which has been on a downward trajectory relative to compensation, is thinking through how all these new unique applications or formats that require custom creative to be resonant to get through, is a huge production opportunity for creative agencies, to set up small studios around all the different apps and what those apps mean from a utility perspective in the lives in the consumers.

I see it as a massive opportunity. Right now we are trying to force-fit pieces back together again and it’s clunky but starting to get to the ethnography or the anthropology of what some of these applications mean in the lives of the consumers and then when is it appropriate for us to do marketing in that environment and how contextually do we need to show up is really important?

I’ll tell you a fascinating sort of anecdote, I was a Grand Effy judge last week and the table was split with two really excellent campaigns. One of them was for the Martin agency for organ donation, and it was the ‘be an asshole’ campaign–I don’t know if you’ve seen that, it was a great viral video.

Darren:

Yes, I’ve seen it.

Scott:

The other one was the Burger King McWhoppa and the two sides of the table, one was debating a really nice long form piece of film, distributed virally, and the other half of the table was debating the sophistication of the scenario-planning associated with doing the Burger King campaign.

One side of the table was like yeah this is a non-profit and they don’t have any money and the other side of the table was like the Burger King campaign only had one newspaper ad and two outdoor ads

It was all based on the call and response between all the other players that they were trying to draw out. And they had two scenario plans in detail, like some really sophisticated stuff that was on a multi-channel basis and the Burger King one ultimately won across the finish line.

They were both with merit but I thought that the one (just my personal opinion) that solved for the complexity and thought through how all the channels needed to integrate to me felt, more breakthrough. But that’s just an opinion of mine.

Darren:

It is a big issue because part of what we do has to be evaluated. There’s so much that you see and I still see this behaviour; working on the strategy from the insides, coming up with the brief, executing that linear approach. Then when they execute into market a lot of marketers and agencies are moving onto the next piece rather than taking the time to learn from the existing piece.

Scott:

Totally, totally.

Darren:

If Lord Lever-Hulme or John Wanamaker for the U.S said half their advertising is wasted, isn’t 100 % of that wasted?

Scott:

Potentially yeah, I think in the environment too where it is interesting to think that especially media agencies, think about the pre and the post and not the during and they pre plan, they launch, and then they post whether or not it worked, verses tweaking the controls on the during or planning for what incremental things are going to happen during the campaign that we can control for to amplify it and make it more successful.

I think it gets down to the need to do a lot more situational planning and a lot of what I think is important is that in the programmatic era we have lost visibility onto the context of media and again what speaks to the proliferation of the fragmentation of all these different channels is that they can all play very unique contextual roles if you take the time to have the debate on what you want to have them do.

That’s huge opportunity and that is also what some of our future model looks like is now that we’ve established the connective tissue and the plumbing and electronics to all these channels, it is like okay now, how do we define what their context should be in the role of the campaign and how to we get it to work together?

Darren:

Previously I shared with you around the Cynefin framework and the idea that there is the simple domain, the complex domain, the complicated complex and then chaotic right? So, we have to admit that we operate entirely in the complex going onto chaotic, but let’s stick with complex.

The only way of dealing with it according to the Cynefin framework is that you can’t possibly know cause and effect. It’s too complicated, but you can do things and then monitor the change in the ecosystem to see if it is positive or negative.

Scott:

Correct.

Darren:

On that basis, admitting that we are in complexity isn’t the only approach to test and learn? Isn’t Agile Marketing the only way forward?

Scott:

It is, it is a great framework for that. That’s why we went really heavy on marketing science resources embedded in the strategy teams because doing sophisticated and high volume test designs almost always testing some variation on marketing and trying to find ways to hack testing digital where match market test might not work, but you might not be able to pin it to ecommerce as the KPI becomes really important.

Understanding how to write the sprint, in agile for who is participating in the test, what are their roles and responsibilities, and how are we going to evaluate after the test whether it was successful, it’s the only way to do it. That is how we are currently doing it.

The interesting thing now is that we have adapted agile from a software development practise into an agency services model and on a global basis now we are able to look at those library of sprints of test designs that we have going in the thirteen markets that we have going across all the clients and look at the sprints that were successful and those that weren’t.

We haven’t taken it so far as to looking at the individuals that were responsible for the successful sprints and starting to tie it to their actual performance within the agency as a meritocracy perspective but I could see us getting there.

It is certainly interesting to consider you get your ten thousand sprints and the two thousand that were ultimately successful become scalable as sprints as we proliferate or add additional markets, so that is core to our ethos right now.

Turning hypothesis into theories into knowledge

Darren:

That path that you’re going down is absolutely core to the way scientific theories are developed. There’s been a number of articles and because of climate change there becomes a tipping point and the reason for the tipping point is that there are multiple sources of evidence for a particular theory. So, when Darwin first arrived back from the Beagle and wrote The Origin of Species, he was absolutely shouted down, that was a heresy.

When the Earth was moved from the centre of the solar system out to surrounding the Sun; that was a heresy as well. We’ve seen the same thing happening with climate change because there are still some people that deny the theory. Where do you see this approach to testing markets?

Scott:

Sure. This might be a bit of heresy so I am glad you landed on that word especially coming from someone that has been a digital native for his whole career. As an industry, it could have been the effect of procurement or cost or recession where we starting looking at being able to transfer advertising between digital and traditional television.

We lost the narrative on brand equity building and there is a part of me, especially in the wake of some of the stuff that has been happening lately in digital, that is concerned that digital hasn’t been solved for on how we effectively build brand equity from a digital perspective and how we drive it.

One of the things I have that concerns me is that, we might be driving the reach but we might be having the opposite effect of what we want to do and that is something that I want to test down and prove.

I think if we are in a world where the traditional TV supply is drying up but there are people in the industry saying ‘go back, go back. We have to solve for the mathematical equation of moving from TV to digital and how is it a change in frequency, a change in exposure, a change in engagement? Are there other ways to do it to where it is not seen as just a video neutral approach, you can move back and forward between the two? I just don’t believe it.

I think we have to do more research, and this is getting more into the heart side of it, we have to do more research into understanding what digital is appropriate for engagement and how we pull that together and pool enough reach so it can be an effective transfer vehicle from television.

But right now my personal jury is still out on digital brand building. I think it deserves more discussion and not in a negative way– there should be more people talking about it.

Darren:

There is something anthropological about sharing a brand statement like a TV ad or a piece of video in a way that is mass exposure and is done in a way that starts conversations.

They can certainly happen on a one on one and we have seen in the last few years, the Super Bowl. People releasing their videos on line as a way of seeding it but there is still something about everyone sitting down at the same time across the country, watching these and having conversations.

The thing that has never been tested; are the conversations only happening in the echo chamber of the industry or does it go outside of that and we can certainly monitor that with social media?

Scott:

On the social media front relative to that, there is still that shared experience of really great marketing and people saying wow and getting together and being around sort of the digital camp fire if you will to talk about it.

I kind of agree with you that when we are releasing stuff and maybe we are aggregating it together in AdWeek but it is pushing back into YouTube again and YouTube is the distribution platform.

That could be a little bit self-serving echo chamber type stuff verses looking at the mass experience of marketing and live television, which I do still have a lot of heart for live television and live events. I think you can do some really excellent work in those environments but those are fewer and further between and more expensive to get on.

I don’t have the answer but looking for the what’s next in terms of building reach but at the same time building engagement and equity.

The importance of Test and Learn

Darren:

The great thing about a science approach is you never need the answer; you just need the question and a way to test it.

Scott:

Absolutely.

Darren:

Then you will be closer to the answer. To change tack a bit, one of the things I was really personally impressed about is the fact that, unlike a lot of people that have come to either media or technology you also came through a direct marketing stream.

My personal experience has been that direct marketers who have embraced technology are actually better than the tech pure players.

And I am a big fan of Lester Wunderman and the stuff he wrote back in the sixties, maybe earlier. The way you treat data, as getting insights into people and doing tests, because that was what Lester was doing back in those days.

Scott:

Yeah, it is interesting because the use cases for doing direct marketing on a mass media level are just coming to be. But seven or eight years ago there were some technologies, Tumeri and Teracent, DoubleClick bought Teracent and Tumeri to just dissolve, that were going to get into being able to do more sophisticated multi-variant stuff.

Where we’ve seen some success is pulling people over from Wunderman or Merkle or Rapp where a lot of our folks that are with Annalect and then giving them the keys to the mass media kingdom and saying, ‘o.k. let’s do something interesting. Let’s take all the audience data that we have and do a next likely purchase model based off that’.

So, for dealing with a retail client we can say, ‘they bought an iPhone but their next logical purchase is actually going to be a camera’. You might think it’s going to be iPhone accessories but it’s not.

Our activation touch points used to be email for doing something like that but now it can be the entirety of all addressable communications. And I think we’re just at the precipice of starting to think through some of the more interesting stuff like sequencing different types of messaging and format on things that are more longitudinal and considered purchases.

Having the tech in place is one thing but then having the expertise to be able to write the business rules to test this out. This is something that is more sophisticated than has been done in the past but I’ve got experience doing this in direct mail but I’m going to try and do this in mass media and see if it works.

There’s all kinds of interesting stuff we could be testing like dayparts and formats or looking at somebody’s personal media ecosystem and how you activate it with different types of content or something that’s more considered.

If I’m in the automotive business is it more appropriate or less appropriate for me to see a brand ad in the morning, afternoon or evening or features, styling or offers? What’s the right format for all those?

Darren:

And the right environment.

Scott:

The right environment yeah.

Darren:

There are so many variables but we can actually test them.

Scott:

We should test them. We should get into it.

Darren:

On our website we do a lot of owned and content in-bound marketing and we were sending out a weekly email, which is like the best of what we’ve published and what we’ve seen in the marketplace and we noticed in the data that on a Saturday morning and a Sunday afternoon marketers were coming to our website.

So, that’s the piece of data. What’s the insight? This is the only time all week. I got the email on Wednesday. They’ve saved it. Now they’re actually coming because they’ve got time. The visual of them sitting on their phone or tablet or watching the kids play sport on a Saturday morning.

So, we thought we’d do a test. What if we sent it to them when they’re looking at it so it’s fresh? No, rejected. Did the test–because it was just out of context, because it was, ‘what are you doing interrupting my weekend?’

Scott:

Exactly. It’s almost like they are curating the content they want to review over the weekend during the week, which could be just as much of an insight, right? So the scientific method might be hey we found that this failed miserably but the insight that came out of this was that maybe we could set it up for better curation during the week?

Those types of things, those happy accidents that you find in doing tests like that can often times be just as effective and insightful and drive better marketing as anything else.

Darren:

Well, I always like to use Edison’s quote about the filament for the light—about 5600 different pieces of material. And he said, ‘every failure was one step closer to success’. If only we could build that into the way that businesses and marketers think because they all want innovation but no one wants to fail.

Scott:

The other thing that would be helpful too on that front is preparing for the institutional knowledge transfer that is required with the pace of marketers moving around because oftentimes I think the agency relationships outlast the marketing turnover.

The staff turnover within marketing departments and that we have to do a better job with winding the tape and getting up to speed with all of the tests that have been done in the past.

That’s a tricky loop to be in but if we find ourselves in that right now it’s like ‘no, this may not have worked but let us explain to you the reasons why it didn’t work’ and we have to be pretty good on the documentation to get that.

Darren:

Absolutely understand that, Scott, and the only way of seeing it overcome is not relying on an agency or anyone but to actually change the culture. Again, using a scientific approach, which is every insight, all of those tests that you’ve done actually can’t just sit there as pieces of knowledge. They have to have a constant process of collating those individual results into a piece of wisdom or knowledge.

Then that has to become the meme of internal communication so that the organisation starts to learn and benefit from the past.

Scott:

That’s a great insight.

Darren:

It’s the one thing that I think marketers are often really distracted from two things; one is selling in what they do and the other is communicating culture within their own organisations because they’re so busy being outward focused.

Scott:

For sure. We have many times been told by clients that we don’t give enough job marketing ourselves.

Darren:

I think everyone’s guilty of that. If you ask people around Mumbrella here, I’m probably personally guilty of over-marketing myself but I want to thank you for joining me and I’ve loved catching up.

Scott:

Anytime and we can talk backyard chemistry next time.

Darren:

Exactly—that would be a much more interesting one especially if we still have all our fingers and toes. Thanks a lot, Scott.

Scott:

Thank you.

Media continues to be the single largest budget item for most advertisers. But media has changed significantly. Find out about our media solutions here

About Darren Woolley

Darren is considered a thought leader on all aspects of marketing management. A Problem Solver, Negotiator, Founder & Global CEO of TrinityP3 - Marketing Management Consultants, founding member of the Marketing FIRST Forum and Author. He is also a Past-Chair of the Australian Marketing Institute, Ex-Medical Scientist and Ex-Creative Director. And in his spare time he sleeps. Darren's Bio Here Email: darren@trinityp3.com

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