Economists have long been disparaged as dismal scientists, with one quip famously suggesting they predicted nine of the last five recessions.
But there’s nothing dismal about economist Grace Kite’s approach. The founder of Magic Numbers, a provider of practical training and people-friendly analytics to help marketers drive growth, is crystal clear about what data can and cannot do.
“For marketing, data isn’t a silver bullet. It’s not going to solve marketing on its own, but what it can do is help people to do the right thing,” she explains.
“If you have an idea, you can use data to test whether it’s a good idea, whether it applies widely, and whether, if you act on it, the outcomes are going to be good.”
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A tested idea is much easier to act on, not just because “it makes your idea feel more solid and more secure”, but because it also “helps people to get behind it”, she says. Her course, Data Works, teaches how to do this and starts in April.
Much of her work involves using econometrics and market mix modelling to determine the optimal allocation of resources across various advertising channels or media platforms, to maximise return on investment and improve the efficiency.
Finding the right mix
But statistical analysis is only the half of it. “We work with our clients really closely to use the findings to actually action them, so we’re working with people as much as we work with numbers,” she says.
The main reason clients use her company is to figure out where ad budget should go. “You get a really robust and reliable answer to that, something you can take to the chief financial officer, and which he or she will be all right with,” she explains.
“You’ll also get the right mix across media channels, which work best for you, which are not so good, and therefore which ones should be in your media plan and in what amounts.”
The result is a clear cost benefit framework. “But actually, with econometrics, and particularly the way we do it, you get a whole range of other things that affect sales as well,” she says.
She recently worked with a restaurant chain, and was able to report on the cost versus benefit of the ratio of chairs to staff.
“If you have more staff per table, the tables turn over quicker, which means you’re busy earning more revenue. But if you have less staff, you pay less in salaries, so there’s a trade-off there, and part of what we do is help them quantify the trade-off and help them to make good decisions around it,” she explains.
It’s a kind of resourcing challenge planners and marketers will be familiar with, in trying to figure out price elasticity say, and the sensitivity of people to things such as price increases or promotions.
Kite’s work can provide clearer insights around issues such as last click attribution and whether it always favours Google. It matters, because misattribution can lead you down a warren of bad decision-making.
Indeed, data and dashboards can sometimes feel like a game of whack-a-mole optimisation. If you’re doing well in women, say, you won’t do well in men. So you start panicking and say we’ve got to do better in men, and end up doing worse in women.
Attribution value can change depending on the stage your business is at, says Kite.
There is a perception that econometrics is prohibitively expensive, particularly in a small market such as Ireland’s. Not so, says Kite
“If you are a very young business that sells online, attribution figures are actually quite useful, because if you switch something on and your sales go up, the attribution figures are helpful because there isn’t anything else going on at the same time,” she explains.
As an organisation gets older, and bigger, with people out there already aware of you, and past customers to recommend you, a consumer might click on a search ad on their way to you – but were coming anyway.
In this situation, attribution that comes with the platforms will count that click as having driven a website visit and a sale. People are starting to see this mistake, but even once it’s known, it’s hard for an organisation to change.
“It’s quite hard to move to something else because people have got used to seeing those figures,” she continues. “Yet when you actually go to econometrics, it is going to give you a clear view on what might be, say, the fault of the weather, or the fault of the economy, not things you can actually attribute to marketing.”
There’s an inherent problem in that. “The result is that the numbers for what marketing does are going to be smaller, and that’s quite hard if you’re in the marketing department and are trying to take these figures to the CFO,” she explains.
It is in the interests of platforms to maintain the status quo too, but what econometrics does is ensure you don’t end wandering off down a track of “counting things that were going to come anyway”, she adds.
There is a perception that econometrics is prohibitively expensive, particularly in a small market such as Ireland’s. Not so, says Kite.
If you are a mature user of econometrics, and have done it loads of times, you will probably get about 10 per cent more bang for your buck out of your budget, she says. First-timers can expect an uplift of between 20 and 40 per cent. This stacks up as well worth it versus the cost of a starter econometric project in the region of €50,000 for any business spending €500,000 or more on advertising.
But you won’t see any benefit at all if you don’t act on the research, a common problem. Indeed, it is one that exercised Kite so much when she started out that she commissioned her own research to find out exactly why so many reports end up gathering dust on a shelf.
The reason she found was lack of buy-in from colleagues outside the marketing department or in senior positions. “It goes back to what I said earlier about it being a people job as much as a numbers job. In the end, no matter how good the data is, it’s only people that can make the difference, and people that can make the decision to change things,” she says.
The research revealed to her all sorts of things people would never have said face to face, such as that implementing a report might have left their role diminished or shorn of budget.
“What the chief marketing officers and marketing directors told us was that when something is put on the shelf, it’s because the job hasn’t been done to convince people to use it,” she says.
To be effective, good research needs more than just data, it needs a champion.
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