Beyond Advertising

Chapter 7Embrace Adaptive Experimentation

While John Wanamaker's notion of overspending on advertising was over 100 years ago, it is still the case that most companies do not have a good idea about their optimal advertising resource allocation.

— Russell Winer, Professor of Marketing, Stern School of Business, NYU (2012)

If there is one notion that those of us in the advertising and marketing world can agree on for the future, it would be that we could and should be—once and for all—unshackled from this oft-cited quote by Wannamaker. We believe that day has already dawned. The availability of relevant data and information, the technology to capture and process it, the focus and guidance from human insights and caring, and the creative sparks to bring it to life through all touchpoints of the product or service set the stage. The only missing ingredient: creating a pervasive culture and capability for adaptive experimentation. Here's why.

Imagine investing €10 million in an advertising campaign and at the end of the year, the return was a 30 percent increase in sales and a 10 percent increase in market share. How much should be spent on the next campaign? Increase expenditure, reduce it, or keep it the same? And how to justify this choice to the CFO?

For a long time, the only answer has been “I don't know.” Without additional data points, we can't identify what worked or why, so we can't make informed decisions for the future. This is not an enviable position, but unfortunately ...