Can marketing be too efficient?

by Nigel Hollis | May 23, 2018

Can marketing be too efficient? It seems like a silly question, I know, but hold your judgement for a couple of minutes and read on. A review of a new book titled “The Efficiency Paradox: What Big Data Can’t Do” written by Edward Tenner raised a couple of important issues that apply to marketing as well as other disciplines.

As the article notes, Tenner is not dismissing the value of big data (just using the phrase will likely help sell more of his book) but proposes that big data cannot solve for everything. For instance, he praises the value of platform efficiency, where the internet brings buyers and sellers together with a minimum cost and maximum speed - think Uber, Amazon and eBay - but warns that analyzing the resultant sales data will focus too much on existing patterns, not looking for the next big thing.

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In a similar vein he cites the movie industry’s use of box office data which has resulted in a string of remakes and sequels. Yes, Disney can make a lot of money out of the Star Wars franchise or Marvel’s superheroes, but if the same principles had been applied we would not have enjoyed Little Miss Sunshine, Slumdog Millionaire or Paranormal Activity (reputed to be the most profitable movie ever made, but which, of course, then spawned a bunch of lesser sequels).

Tenner captures the basic proposition of his book as follows,

“Trying to be ultimately efficient at all times will succeed in the short run. But in the long run, you would be damaging your efficiency.”

This reminds me of a previous post I made about short versus long-term marketing. My conclusion was that marketers should optimize marketing spend whether it is designed to prime demand or activate sales but what I did not say is that this strategy will only get you so far. At some point all the competition will push back with their own optimization and the category will end up stuck a never-ending battle for incremental sales. The only way to break the deadlock is to come up with something new that consumers value more than the existing brands.

Before I close, I do also note Tenner’s defense of the value of tacit knowledge. He says that tacit knowledge is,

“The idea is that no matter how much information you feed into an intelligent system, there are many, many things that are tacit, meaning that they are not explicitly stated anywhere.”

For the marketer this means that over-reliance on big data is likely to lead to actions that are generally right but specifically wrong because individual people’s behavior is the product of far more than that which is reflected in their digital exhaust.

But what do you think? Can marketing be too efficient? Please share your thoughts. 

3 comments

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  1. Vinit Mahale, May 26, 2018
    Hi, I was recently asked in an Marketing interview that how can you apply TQM to Marketing? I understood the gravity of the question, which also reflects the same idea of this post. I gave them an answer but it was mostly vague. The problem was I did not know what they really wanted to improve on? How does the companies marketing work currently? And how are the customers response to their practise? This lead me to big data but also gave a chance to think how to maximize the brand impact which will eventually lead to bringing in new products and elevate sales.
  2. Ed C, May 23, 2018
    I think the term "efficient" might be a bit misleading here. If an ad, for example, has a goal of (just) maximizing short-term ROI, then I'd say let's break the record for efficiency. I think the point here is that there are often other objectives of marketing where efficiency might not be the only goal, namely in thinking outside of the box (the digital/computer-generated/AI box) to further a brand's standings. 
  3. David Friedman, May 23, 2018
    I think there is a balance to be had between efficiency and scale.  The most efficient marketing spend is great, however, what works for people who are really primed to be pulled into your brand may not be as efficient as a slightly skeptical individual who needs a bit more evidence.  If I only chase efficiency then I'll get the first, but might shy away from the second - which could result in an efficient campaign with great ROI, but only yielding a small handful of customers.

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