99% of Marketing Spending is Wasted

John Wannamaker is credited with saying "50% of the advertising spending is wasted - the problem is I do not know which half".  But he was wrong.  99% or even more of the advertising $ that are spent are wasted but the 1% more than pays for the advertising.

The Atlantic printed an article that basically says internet advertising does not work.  See the article here.  They used examples of people searching for a product who already had decided what to buy.  I agree, this is a high % of the people.  What they did not use as examples of people who had non-buying intent but were good targets.

For example, if I type buy Nike shoes - I have likely decided to buy Nike's.  If I Google good running shoes, I am open to suggestions.  Or if I Google 10K races, I am also likely a buyer.  And advertisers use retargeting so I may get a running shoe ad the next day when I am searching something completely different.

I wrote an article a while ago on "The Fallacy of ROI on Marketing" and reused the concept in my book "Zero to $2 Billion - The Marketing and Branding Story Behind the Growth".  The gist of it is - consumers buy for a variety of reasons.  It might be because they saw the billboard or the truck or the Superbowl ad or the internet ad.  It is rarely just one impression - it is the "accumulation" effect.

Marketing success really is about math but you never know some of the variables.  In its simplest.  Spend $1,000 that is viewed (or presented) to 1,000 people and get 100 leads that turn into 3 buyers that generate $500 in margin each and you have a profitable business that can scale.   In this example, only 3 people in the 1,000 bought so it could be argued that 99.7% of the advertising spend was wasted.

Marketing is a bit like sales as far as success rates goes.   Great sales people have abysmal closing rates.  Many sales people can make good money for themselves and their companies by only closing 1 in 10 or 1 in 15 prospects.  It is about numbers.

And speaking of advertising, there is an interesting blog post on deception in advertising that has a cute infographic (now you see why I try to avoid fast food)

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There is another interesting article in the Atlantic that says that people lie about what they read.  They do not really want hard news.  What they really watch is sports and entertainment.  I can sort of see this.  People want to be thought of as being thoughtful and informed and would not want everyone to know they follow more shallow topics mostly.

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And in keeping with the Time Management theme.  This is an article on 40 ways to stop procrastinating.   I am concerned that posting the link will reduce my blog readership though.

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And a shout out for one of my investments that made Profit Magazines fastest growing companies (#54) - Iotum (they do freeconference.com)

Simplicity

“Simplicity is prerequisite for reliability.”

Edsger W. Dijkstra  

He wrote an all time classic book on programming called "A Discipline of Programming".

I have not done much programming for a long time but most of the same principles apply today as applied when Dijkstra wrote his book.  In his book he emphasizes common sense.

Programming is one area that complexity kills.  The greater the complexity, the greater the chance of error, the more difficulty to make changes and the less scalable things become.

The biggest mistake most companies and programmers make that I see is programming before planning.  I have a huge sense of urgency and want to get things done.  But in product development, it is best to plan more and better and program less.

I also see a failure of many companies to sell.  Many tech start ups are lead by founders who are strong on tech and product management but lack sales interest.  Nothing like sales to real customers to keep a product relevant.

I can see some of the programming principles can apply to my life organization.  Simplify to live easier.

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I saw an interesting TED talk on athletic performance.  People are not getting faster and stronger but technology is improving.

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And my new favorite website for marketing and startup tips is growthhackers.com.

Accomplishment Guilt

I suffer from accomplishment guilt - or perhaps better said - lack of accomplishment guilt.  I feel bad if I do not get enough done.  Some of this is good - it can drive great things.  It helps my self discipline.  It helps my productivity and efficiency since I know I need to be efficient to accomplish things.

Part of it is bad - it can lead to feeling unsettled and stressed.

One of my favourite sayings is "people tend to over estimate what they can accomplish in a day and underestimate what they can accomplish in a decade".  I have seen this to be true.

One way to be more zen or at peace is to list your blessing.  And list what has been accomplished (as opposed to listing what has not been which I often seem to do.

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For serious stats driven chess geeks - I found this article interesting.

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One of the Canrock investments - Pumpup seems to be getting great traction.  Their tweet:

PumpUp passes 1M users and introduces health & fitness social network. Join the community and download @PumpUp today! http://techcrunch.com/2014/05/21/pumpup-exits-beta/

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One of the things I love about Canada is the weather.  I took this today driving to the Calgary airport from Canmore.  Yes - that is snow.  And the northern latitude means it is light late and early.  This was taken about 5:30 AM.

With Love and Quiches

I read an awesome and inspirational book by Susan Axelrod - With Love and Quiches - A Long Island Housewife's Surprising Journey from Kitchen to Boardroom.  

Susan calls herself and "accidental success".  She simply had some time on her hands and started reading recipe books and gourmet magazine.  And she cooked and baked.  And she shared some of what she made with friends who complimented her.  So she baked some more.

She joined a gourmet cooking club.   She started to teach some cooking as a volunteer and then paid.

The book starts with her childhood and works all through her life from there.  It tells of her marriage.  Where she lived and the life she lead.

She had a friend, Jill, who she talked to and they decided "lets start a food business".  So they did.  They started making quiches and quickly moved to desserts like cheesecake.  Her company name - Love and Quiches.

Part of what makes the book interesting are the many of the stories tell of early selling  and baking catastrophes.  The naivety that made for interesting times.  The huge order she got then trying to fill the order.

Susan is obviously a determined sales person.  She would successfully call on restaurants and pedal her wares.  And she also started selling to airlines.

All was going well and business was growing bit by bit.  Then 9/11.  People stopped eating out.  Airlines did not fly.  Economic hard times hit and most of what she sold was "optional".  So the business almost went bankrupt.  It tells of her fighting through that and re-establishing and growing again.  Exciting.

I am always inspired by people who build great businesses from scratch.  I am doubly inspired that Susan built her business in a time when few other women were doing this.   I like stories of success against odds.

The book reminded me that business plans are good but often just listening to customers also works.

I know Susan and have toured her company and heard her speak.  She is modest and even slightly shy about her success.  For example, when I was moderating a panel at a Golden Seeds event, I asked her in front of the audience if she could share some statistics like "how much flour do you buy or how many cheesecakes do you make".  Her response was "we are a private company and do not share our details".  I thought the audience would have liked to know she buys by the train car and stores it in silos etc.

Great read.  Exciting, entertaining and inspirational.