Whichever way you look at it advertising, media and marketing are squarely grounded in economics.
In simple terms economics is the art or science of allocating scarce resources that have competing uses for the greatest possible return. Wikipedia defines it as “the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses”.
In terms of advertising and marketing it incorporates what level of investment is required or available at a campaign / product level and what are the alternate campaign strategies / responses / mechanics that can be deployed for the greatest impact on human behaviour.
At a simplistic level, clients spend money to create some sort of impact in financial terms whether it be directly correlated to immediate revenue, building brand recognition and recall, changing or owning different brand dimensions, or making a positive impact on society or social currency. Ultimately it all relates to driving an impact or change in consumers behaviors and beliefs that result in some sort of actions, now or in the relatively near future. Believing it is anything else is misguided and self serving.
I see well structured, effective advertising, media and marketing being composed of three elements:
Great advertising that moves minds, beliefs and behaviors is a combination of all elements with the right balances or each coming together to create impact and effectiveness.
- Psychology – understanding the consumer, societal trends, creativity, story telling. This is the human insight and emotional part of advertising, probably one the most valuable elements economically in creating disruption in the market. It is this element that speaks to the hearts and minds of an audience about a brand, product or service and distinguishes one brand from the next emotionally.
- Physics – the cause and effect analysis of a campaign. The physics of a campaign impact are what and how far have we moved the dial on hitting our objective and stimulating consumer behavior and response. Physics incorporate level of physical or emotional response a campaign has created. Understanding metrics or campaign performance whether it is people clicking, engaging, viewing content, subscribing, advocating, buying and remaining loyal to a brand, product or service or at the other extreme, how far we have moved recognition and recall, consideration, brand preference scores or individual brand dimensions. It also incorporates effort and impact, in simple terms how much force we need to put behind an idea or execution for it to create disruption and get traction amongst its competitor set and ultimately in consumers minds. Questions to be evaluated include, strength of idea required, degree of difficulty in market or against category incumbent, how to generate consumer momentum and the corresponding channel mix and right level of financial investment required to hit our goals.
- Economics – this is the cost benefit value equation that all advertising needs to answer. Questions we all need to ask and answer with a high degree of rigor and certainty include; why are we doing this, what value does it create, what are the other possible investment alternatives available to reach and exceed our target, what is the marginal cost and return from scaling a campaign, at what point is there no additional value to be created, what is the expected ROI from each combination, what is the net positive contribution made to a clients business. This is not merely a question of media investment or a channel plan, it is understanding that the sum of the three parts, planned and executed well create an outcome greater than the whole.
It is the goal of this blog to discuss the wide and varied array of advertising, digital and direct marketing topics that relate to these principals. It could be at a conceptual level, campaign level, mechanically level or technical level. From the outset the tone and intent of this blog is to debate and add value to the discussion of what is effective advertising today and into the future.
I’d love well informed, positively intentioned commentary where people can learn, share, collaborate together. Look forward to your participation.