This post is by Darren Woolley, Founder of TrinityP3. With his background as analytical scientist and creative problem solver, Darren brings unique insights and learnings to the marketing process. He is considered a global thought leader on agency remuneration, search and selection and relationship optimisation.
“Half my advertising spend is wasted; the trouble is I don’t know which half.”
This quote is regularly attributed to either the US retail magnate, John Wanamaker (above), or to the UK industrialist, Lord Leverhulme (below), depending on which side of the Atlantic you were trained. The quote has become a cliché for the uncertainty about the effectiveness (or ineffectiveness) of advertising.
When you Google the phrase “half my advertising is wasted” you end up with 21,700,000 results, showing that even in the age of internet advertising, “half is wasted” is vividly real.
Every time the quote is trotted out at an industry event, half the audience groans while the other half giggles nervously, eyes down, averting contact. It is unclear if this reaction comes from those who are ashamed to be caught at an advertising conference or from a belief that the 50% figure is ridiculously low or ridiculously high. What seems to be acknowledged, though, is the belief that advertising is an unaccountable cost of business. Unaccountable is not a good place to be in an era that worships increased shareholder value.
Why does the industry do little to prove John Wanamaker (or Lord Leverhulme) wrong?
Imagine any other profession, and I use the term advisedly, tolerating the belief that half of its effort is wasted? Who would work with an accountant who files tax returns that are right only half the time? Who would work with a lawyer who loses half of his / her cases? Who would seek out a doctor whose diagnostic hit-rate is only 50% right? (Dead and buried does not mean forgotten!).
The advertising industry loves to perpetuate the myth that half of its spend is wasted, and that’s just how it is. You can’t win all the time. Is the click real or fraudulent? Human or bot? Who cares? It’s a flip of a coin, heads or tails, wasted or not. It’s the 50% rule!
Researchers Rex Briggs and Greg Stuart took on the myth directly in 2006, publishing their book “What Sticks: Why Most Advertising Fails and How to Guarantee Your’s Succeeds.” After examining more than $1 billion of marketing spend for 1 million consumers by 30 major corporations, they discovered that the marketing spend in question had an overall effectiveness rate of no more than 37%.
If marketers said “63% of my adverting spend is wasted,” this would not have quite the same ring as John Wanamaker’s 50% phrase, but it would be more accurate. Briggs and Stuart figured out why nearly 2/3rds of marketing expenditures were wasted, concluding that the waste came from a poor understanding of consumer motivations coupled with inaccurate messaging delivered with an inappropriate media mix. Bingo. Target missed.
This is worse than the flip of a coin. Getting consumer motivations wrong is a serious problem. So is inaccurate messaging. So is an inappropriate media mix. If this is the best that marketing can do, it’s a sad commentary on the professionalism of its marketing practitioners.
The Briggs and Stuart results were from 2006, at about the time that marketers pivoted to deal with the challenges of digital and social marketing. Digital and social challenges added complexity and may have distracted marketers from correcting the underlying consumer, messaging and media mix mistakes identified by Briggs and Stuart. Digital and social adds fraud to waste levels. Recent analyses show fraud levels of 23% for social display ads and 31% for news video ads on iPhones. Fraud levels simply increase waste levels, probably above the original 63% level calculated by Briggs and Stuart.
Fifty years of Effectiveness Awards demonstrates that advertisers and their agencies have an interest in becoming more effective, and we have recently seen an increased desire of marketers to drive brand growth for their organisations. This is both good and important.
Equally important, then, is the need to be more honest, and to declare that Wanamaker and Lord Leverhulme were hopeless optimists who left us with the unrealistic belief that we were wasting only 50% of our marketing spend.
An updated version of Wanamaker’s phrase is now required.
“Nearly two thirds of our advertising spend is wasted
— and we are trying very hard to fix it.”
This article was first published in Media Village on September 4, 2019
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