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23 May 2024 19:07

Advertising & Marketing

Can marketing be too efficient?

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.

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. 

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