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.

Things to Memorize - Memory Saves Time

I recently visited my brother.  As we were reminiscing, we started talking about all the phone numbers we used to know.  We recited numbers of customers and suppliers we had dealt with in the 1980's.  I likely knew 50 or even 100 phone numbers.  And the same number of part numbers, prices etc.

Now with electronic address books, I barely know my own number.

We did not deliberately memorize numbers but knowing them created an efficiency.  Now I think I could gain efficiency by memorizing a few things.  My list of things to memorize:

1 - passport number with expiry (saves time on check in for airlines)

2 - credit card numbers with CCV code and expiry (saves time for online purchases when buying from sites that do not "remember" - I actually think Amazon gets more business because they remember credit card information and make ordering faster and easier)

3 - Bank card number (for faster online banking)

And I am sure there must be other things.  Memory saves time.

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I am quite impressed by Organimi.    Functional.  Super easy to use.  Over 30,000 users already.

I think it will be one of my successful investments.

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I was speaking to my lovely daughter, Laura, who mentioned she had a friend over who said she had only read one book since university.   Laura said she could not count how many books she had read.

I suggested that perhaps she should take a math course.

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And a tidbit from one of the companies I have invested in:

“Hatsize is pleased to showcase our latest cloud-based training lab solution at ASTD,” said Guy Hummel, Hatsize CEO.  “Since the pace of change in learning and development is occurring at a rapid rate, this event is a great opportunity for industry professionals to gain valuable insights into new trends such as hands-on mobile training which is made possible by using Hatsize’s next generation cloud-based training lab solution that supports hands-on training delivery to any HTML5-enabled browser or device, such as a tablet.”  

Full details here.

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And from Seth Godin's blog:

Get rich (quick)

Enrich your world by creating value for others.
Enrich your health by walking twenty minutes a day.
Enrich your community by contributing to someone, without keeping score.
Enrich your relationships by saying what needs to be said.
Enrich your standing by trusting someone else.
Enrich your organization by doing more than you're asked.
Enrich your skills by learning something new, something scary.
Enrich your productivity by rejecting false shortcuts.
Enrich your peace of mind by being trusted.
The connection economy pays dividends in ways that the industrial one rarely did. 

Of course I am wondering how walking only 20 min per day is enough to get my fitbit steps in.

5 Why's and a How

At one of the boards I am on, discussion turned to efficiency.  I suggested the 5 Why's process.  Other board members wanted more information on it and as I was writing the reply email, I thought I would turn it into a blog entry (partly because I am suffering bloggers guilt - the guilt a blogger feels for not posting enough)

The 5 Why's process is time tested and has been in use by hundreds of companies for years.  It is a great and fairly simple way to figure out where companies can gain efficiencies. 

There is lots written about the 5 Why's process on the internet so I will not try to re-explain what it is (basically drilling into things and not accepting the first answer - really trying to figure out the issue). 

The 5 why's process is done by someone sitting with each employee and asking/seeing what they do and why.

The value I thought I could add here are some of my experiences on what outcomes are discovered by using the 5 Why's process:

1 - Training gaps.  Often the process uncovers that staff need more or better training.

2 - Don't Do.  Often people are doing things that no longer need to be done.  These are often rooted in something that happened in the past or something that has changed since the process was implemented.  For example, in my personal situation, I stopped keeping and filing bank statements about 4-5 years ago.  When I first implemented the process, online records were not the norm that they are now.

3 - Interaction Friction.  Often slowness and inefficiencies happen at the point of pass off or interaction with another person or department.  Eliminating these points and figuring out how to make them smoother can add efficiency.

4 - IT Systems.  Often efficiency is limited by IT.  People wait for the system or can only do part of what they need.  Often small tweaks by IT can save hours.

5 - Tools.  Often the process discovers simple tools that can greatly increase productivity.  I recall in our warehouses we implement the use of aprons (like nail aprons) that were stocked with pens, knives, a rag etc - things people used all the time but often did not have at their fingertips.

6 - Areas of research.  Sometimes a process looks cumbersome but no immediate solution is derived.  That is when research kicks in - talk to someone with similar issues, search the internet, tour other operations etc.

The biggest innovation that I add to the process is to not only ask the 5 Why's but to add the How question.  And I like the How question to be fairly big.  EG - if you ask a sales person how they can increase sales by 5%, they do not think of changing process, they just think they will work a bit harder/better.  But ask how to increase 50% and they need to radically rethink what they do.

Adding the How question also helps break "excuses" and false limits.  5 Why's can reinforce beliefs which can be limiting.  EG - in analyzing a shipping line, the 5 why's might determine that only 1,000 parcels per hour can be shipped per hour.  And repeated asking could drive people to really believe they are working as fast and as hard as they can, reinforcing a false belief. 

But ask "How can we ship 1,500 parcels per hour" might elicit creative responses like add a new line or do things differently.

5 Why's and a How is a great way to drive efficiency.

Elevate

Read a book by Rich Horwath called Elevate - the Three Disciplines of Advanced Strategic Thinking.

According the WSJ, strategic thinking is the most valued CEO skill.

Horwath starts with a discussion on why strategic thinking is critical.  And to usual list of reasons why it does not get the attention it needs.  He then quickly moves into his 3 disciplines.

First - Coalesce - fusing together insights to create an innovative business model.

Second - Compete.  Choose what strategies have competitive advantage (I am big on competitive advantage and view it as the cornerstone to success).

Third - Champion - Leading others to think and act strategically.  And execute the strategy.  (I have found often that implementation is what kills good strategy).

Good thought provoking book.

The main challenge I have with strategic thinking is dedicating the inspired time.  It is difficult to just say I will spend an hour on strategic thinking and come up with something brilliant.

But most of the problem with strategic thought happens because it is not urgent (although it is very important).  So like many important tasks, it can get pushed aside for the urgent.

Things I do to inspire strategic thought:

1 - read and research.  Without background, it is tough to come up with good strategies.

2 - Plant the seed.   I spend a 15-20 minutes trying to frame the challenge.  Then I leave it and go about my day, ideas come to me.  I often use this technique just before sleep as well.

3 - Log ideas.  I find ideas are sometimes lost but writing them down "saves" them.

4 - Set goals around doing it.  By setting goals and deadlines, I can artificially create urgency.

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I thought this article on how time could be used better was awesome.

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Interesting how colorful socks have "tipped" and seem to be the norm in the startup community.

See http://youtu.be/BtXH3shC5O8 - a company owned by friends of mine.
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Mark Fasciano's father was featured on CBS.  I have met Nick many times.  He is a true artist.
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Rain last night turned into snow this morning.  And it is March 31 in NY of all places.  An early April Fools joke perhaps?

And the New York Times had a cover story on climate change.  I wonder if they had the article prepared and waited for a day such as this to release it.

Victoria turned one.  And she is smart enough to write upside down in the snow (snow which is acceptable in Canada but in NY?...)