Why digital marketers are the rat farmers of marketing.
Paul Doumer arrived 1897 in Hanoi, Vietnam, as a man still sore from the sting of defeat. The 40-year old French government worker’s recently failed income tax scheme had forced him to resign as minister of finance. Now the Governor-General of French Indochina, he had been tasked with setting up an infrastructure befitting France in the colonies.
Adamant to make up for his failure, he started an ambitious project – to lay more than nine miles of sewage pipes beneath the French parts of the city. Unfortunately, at the completion of the venture, the results were not what he had hoped. Rather than a sanitary system of Parisian perfection, he had inadvertently created miles and miles of cool and dark rodent paradise, a veritable rat haven where the critters could breed without fear of predators. Under the streets of French Hanoi, they multiplied exponentially.
Not only did the rats break the desired illusion of a tranquil French colony, the furry invaders brought with them the bubonic plague. Clearly, something had to be done.
Monsieur Doumer’s first attempt at a solution was to enlist professional rat hunters. In the Great Hanoi Rat Massacre that followed, as many as 20,000 rats were killed daily. However, he noticed that even with his small army of paid exterminators, they were failing to make a dent in the rat population. And so, Doumer’s second attempt was to offer any enterprising civilian the opportunity to get in on the hunt. A bounty was set at one cent per rat. All one had to do to claim it was submit a rat’s tail to the municipal offices.
In France, the idea was met with applause. Such a logical, not to mention entrepreneurial, solution to the problem. And indeed, it seemed to work. Tails were pouring in. French ingenuity had triumphed again.
Yet the rat population didn’t go down. Rather, it was by all accounts going up. After a brief investigation, it turned out the hunters would rather amputate a live animal’s tail than take the life of a healthy rat, capable of breeding and creating offspring with more valuable tails. In the outskirts of the city, entire rat farms were popping up.
In a swift stroke, the bounty was scrapped and the people forced to coexist with the carriers of the plague. At least 263 people died, most of them Vietnamese. Doumer, on the other hand, went back home to France, where he was celebrated as the most effective Governor-General of Indochina to date. He later went on to become president.
What the bounty turned to be, then, was a perverse incentive – an incentive that has an unintended and undesirable result which is contrary to the interests of the incentive makers. Doumer had come up with what was deemed a logical solution to the rat infestation, yet the result was the opposite of the one sought.
In modern marketing, the same perverse incentive can often be said to apply to short-term tactics.
In the headlong rush for short-term results, marketers have become obsessed with activation, meanwhile forgetting the fundamental role of brands – to make consumers want to buy them to the extent that they don’t have to use discounts. In other words, to create brand equity in the mind of the customer and separate the product or service from the generic equivalent.
Of course, brand and activation work in synergy. As BBH’s Tom Roach recently wrote in a brilliant piece, getting the balance right between long-term brand-building and short-term sales activation, between creating memories and activating them, is important for maximum commercial effectiveness. Spend too little on brand building and the results from activation will be less than stellar. Spend too little on activation and your brand, as strong as it may be, will never been exploited to the full. The optimum balance between the two is, according to Les Binet and Peter Fields’ “The Long and the Short of it” study, around 60 % on brand and 40 % on activation. That’s 60 % long-term and 40 % short-term. Every brand is unique, naturally, but as general rules of thumb go it’s a good one, created from proper research.
Yet it’s not even close to what most brands do. For a multitude of reasons – CMO tenure (or lack thereof), VC ROI demands, strategic shortcomings, to name but a few – they are instead overinvesting in immediate returns and bottom-funnel conversions. The problem with the approach is that while long-term strategies always provide short-term results, short-term tactics never have long-term benefits. In fact, due to their nature, they tend to erode brand equity. This means that in the quest for sales uplifts, the very foundation of long-term sales growth is screwed and the very point of the brand itself lost.
Nowhere is this more clearly on display (dreadfully bad pun intended) than in the world of digital. No matter what you think of it, it’s impossible to deny the activation potential of digital channels.
Big data allows brands and agencies to target potential customers with greater precision than ever. The internet is, by and large, a perfect channel for delivering information on products and prices, and combined with mobile it can drastically hasten the customer journey. With purchases only a click away and a smartphone practically in every pocket, activation has never been more efficient. Surprise to probably no-one, purely online brands are almost twice as likely to be short-term focused as purely offline brands.
But, as the most recent Binet and Field study “Media in Focus” shows, measuring success in the short-term leads to numerous important false conclusions about effectiveness. Very large market share effects were reported in only 3 % of the analyzed short-term cases. For cases exceeding 30 months, it was 38 %. Long-term cases (6 months or more) drove a whopping 460 % more market share growth than short-term cases did.
This weakness in short-term campaigns, Binet and Field argue, is ignored because of activation effects. 65 % of short-term cases generated very large activation effects, as compared to 33 % of 3+ year cases. If one, for reasons explained above, measures success in the short-term by activation effects, it would appear as if short-term campaigns are highly effective. However, look at the bigger, long-term picture and they are revealed to be highly ineffective. Put differently, the solution has increased the number of tails coming in, but against the overall problem the efforts remain ineffective at best and detrimental at worst.
Columnists frequently blame digital marketing agencies, but to be fair they are merely the rat farmers of the analogy. With few exceptions, media fall to one side or the other of the short-long divide, i.e. their addition to a campaign schedule promotes either long-term effects or short-term effects, rarely both. When it comes to digital, short-term is its forte. Digital metrics are, as we all know, strongly oriented to the short-term.
Yet, as Binet and Field point out, while attempts to “project forward” short-term effects to long-term growth show an alarming misunderstanding of the very different nature of long-term advertising effects, agencies are working off of briefs. Badly constructed briefs, but briefs nonetheless. As destructive to brand equity as the digital agency efforts may be, they are simply offering supply. It is on us as brand side marketers, either via position or consultancy, to change the demand.
If our brands are going to survive, let alone thrive, we have to.