How the insight industry can finally end marketing waste in 2018

Adopt a test-and-learn philosophy - and make sure that the testing happens at scale, is affordable and rapid, writes John Kearon, the founder and chief executive of System1 Group.

The tectonic plates of the insight industry are in motion. Budgets are being cut, old buying habits questioned and traditional methods discarded. Despite the cutbacks, I feel the changes are a good thing. There’s more demand for insight to deliver demonstrable business impact, faster turnaround and, most heartening, there’s large-scale adoption of behavioural science-based methods to more accurately predict marketing that makes a difference and eliminates waste.

The old adage "half my marketing is wasted, I just don’t know which half" needn’t be the case any more. Behavioural science-based testing can predict with a high degree of accuracy which marketing will deliver profitable growth and which will be an absolute waste of money. Coupled with a greater degree of automation, these predictions can be delivered faster and cheaper than ever before, allowing earlier and more frequent testing to identify and guide ideas with most potential. The impact of these changes is potentially enormous. 

If the job of research is to accurately predict which marketing efforts will drive growth, why not go further and improve the work that doesn’t quite get there?

When you consider that every year about $660bn is spent globally on advertising, imagine what might happen if we could strip out waste from this budget. According to our figures from 10,000 ads tested globally, only 5% are ads like John Lewis’ "Monty the Penguin" that make a brand famous and make a really big difference. About a third achieve precisely nothing. That’s $220bn that may as well have been set on fire for all the good it’s doing.

With marketing budgets under such pressure, what marketers need more than ever before is accurate prediction. They need to know which new product ideas will succeed, which ads are worthy of media spend, which pack and promotional choices will boost sales, and where their brands are headed. Sometimes a launch-and-learn philosophy is tempting, but more often the guiding principle should be test-and-learn: aim for zero waste by accurately predicting which pieces of marketing are going to drive profitable growth, rather than throwing stuff at the wall and seeing what sticks.

Because marketers today are operating at such high speed, in so many markets, and through so many channels, testing needs to happen at scale, and it needs to be both affordable and rapid. Otherwise the advantage you gain from accurate prediction can be offset by slow decision cycles or expensive research. It’s been possible for a while to get next-day or same-day results on testing.

The trade-off for researchers looking to increase speed is a loss of detail. Most research work today includes a lot of legacy questions and "nice to have" data. That has to go. But that doesn’t mean all research will be quantitative and without diagnostics. From our conversations with insight buyers, we know there’s still a vast hunger for meaning and strategic insight, as well as an urgent need not just to filter and sort new product ideas, communications and brands, but to improve them. If the job of research is to accurately predict which marketing efforts will drive growth, why not go further and improve the work that doesn’t quite get there? This requires collaboration, creativity and specialist insight – increasing research costs. But the good news is it’s less expensive and faster than developing a new idea, ad or brand positioning from scratch.

To predict response to marketing accurately, you have to understand how people make decisions. Wrong assumptions will lead to wrong predictions. Behavioural science allows us to understand human decision-making. Researchers and marketers need to be guided by behavioural science when building their predictive models, and they have to apply these lessons when undertaking consultancy work. 

The most positive trend for 2018 is this growing acceptance that understanding real behaviour and real decision-making is central to effective marketing

This sometimes means embracing ideas and results that seem counterintuitive. When Les Binet and Peter Field published their findings about emotion being the driver of advertising effectiveness in The Long & the Short of It, they faced pushback from marketers worried about message, persuasion and other rational measures they’d become used to monitoring. In the decade since then, almost every copy-testing supplier has embraced emotional measurement. What used to be a dangerous idea has become standard thinking thanks to a better understanding of behavioural science.

The most positive trend for 2018 is this growing acceptance that understanding real behaviour and real decision-making is central to effective marketing. Tools and methods that take behavioural science as their foundation will be more accurate in their predictions and more valuable to marketers as they become faster, more cost-effective and able to work at scale.

The year ahead in insight will see the plates keep shifting and we’ll all feel the tremors. More old methods scrapped, more budgets cut and – sadly – more money thrown on that burning pile of wasted marketing cash. But that doesn’t have to be the case. Behavioural science applied at scale can secure the future of insights – and finally end marketing waste. 

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