The Marketing Bureau

By Gregg Satell

“The time has come when advertising has in some hands reached the status of a science. It is based on fixed principles and is reasonably exact. The causes and effects have been analyzed until they are well understood.”

That’s how Claude Hopkins unfortunately began his 1923 classic, Scientific Advertising, which has had an enormous effect on not just advertising, but the marketing profession as a whole.

What Mr. Hopkins describes is neither marketing nor science.  Good marketing, like good science, is about the questions you ask not the answers you give nor the knowledge you think you have.

Unproven Science
In actuality, science is full of doubt and uncertainty.  Let’s take the two most influential scientific advances of the past few centuries: Einstein’s relativity and Darwin’s theory of natural selection.

Are these theories proven? Certainly not.  Do they have principles that are “fixed and exact?”  Not really.

These ideas are important not because they are true without a doubt, but because they produce useful predictions.  They allow us to make things that improve our society, like antibiotics, nuclear power and GPS devices.

As Nassim Taleb points out, all swans are white until you see a black one.  In a similar vein, there is nothing in a turkey’s experience that would indicate an imminent Thanksgiving dinner.  Science is inductive, and therefore neither fixed nor exact.

We humans don’t live for millions of years, nor can we travel at light speed, so we have no way of observing the forces these theories describe first hand.  Therefore, we make do with what little information we have.  It is in the dark, uncertain areas where progress is made.
Illogical Science

“God doesn’t play dice with the universe,” Einstein said.  “Einstein, stop telling God what to do!” Niels Bohr retorted.  Bohr not only won the argument, he won the day.

At issue was Heisenberg’s uncertainty principle, which said that you can’t ever know the position of a subatomic particle, only its probability (or, to be more exact, its wave function).

Erwin Schrödinger, Einstein’s ally came up with a counter example using a cat in a chamber that contained cyanide in a closed flask.  If a particle is detected, the poison is released.  Obviously, he argued, the cat can’t be both dead and alive at the same time.  That would defy logic.

Yet, that’s what science predicts. We don’t understand it, but accept that it’s true because that’s what best fits the evidence that we are aware of.   
As Richard Feynman said of his QED theory “If you don’t like it, go somewhere else!”  (See video below). The theory doesn’t make much sense, but yielded the most accurate predictions in the history of science.

The Marketing Equivalent of Financial Engineering?
The myth of scientific advertising is eerily similar to the myth of financial engineering.  In the early 70’s, men came up with complex models with names like CAPM and Black-Scholes.  The originators revolutionized finance and won Nobel Prizes.

The formulas were logical and mathematically sophisticated, but their predictions were wildly off the mark.  The models predict that a stock market move of more than 3% should happen roughly every 2 years (we recently had 3 such moves in a week).  A real crash should occur only once every 300,000 years or so.  We’ve had two in the last decade.

The problem is that statistical models assume independent events, but most real world phenomena are linked in some way.  These linkages create feedback loops which cause the uncertainty we are familiar with in our everyday lives.

Benoit Mandelbrot pointed these problems out early on and traders on the floor knew from experience that volatility was underestimated in their models.  However, the fiction of financial engineering was a useful and profitable one (until recently, of course).

Many marketers are guided by the same need for false certainty.

How About Mathematical Marketing?
Of course, marketing has become much more mathematical in recent decades.  We have seen the rise of optimizers for TV buying, econometrics for planning and digital media is chock full of algorithms fueled by massive computing power.

Surely all that math must deliver the kind of certainty that Hopkins promised?

Unfortunately, no.  High level math tends to be highly subjective.  Model fitting and algorithms involve making assumptions which reflect the biases and preferences of the people who create them.  As I wrote before, there’s a big difference between math and numbers.

Even when the numbers are fairly simple and clear cut, they are only useful in the context of objectives such as awareness, sales, loyalty, market share, etc.  Which objective is primary?  Well, you just have to make a judgment.  There are no rules that can bestow certainty, somebody has to take responsibility.

Pseudoscience and False Gurus
The misunderstanding about scientific marketing is not merely semantic or academic.   Real damage is done.

False gurus are everywhere telling us ridiculous things like that it is now “all about the conversation,” or that traditional media is dead and lots of other nonsense.  They have no doubt because they ask no questions.  They only have answers.

Of course, they can find some data that supports their argument.  It’s not that hard.  The world is full of contradictory facts.  We live in a muddled universe.  What’s really important is how much we don’t know and how we intend to go about learning more.

100 years from now, all of our slick marketing ideas will seem as quaint as Hopkin’s world in 1923 looks to us today.
The Reality of Scientific Marketing
In truth, I haven’t been quite fair to the late, great Mr. Hopkins. Much of the rest of the book is actually quite scientific –  an iterative process of trial, error, measurement and hard won progress.  Despite the unfortunate opening, it is a highly worthwhile read.

Marketing and science, much like Zeno’s famous paradox is a process of constantly advancing half the distance towards a goal we will never reach.  Occasionally we even have to go back a few steps.  There is, and probably always will be, much more that we don’t know about marketing than what we do.

I, for one, am glad.  How else would we ever have any fun?

- Greg
www.digitaltonto.com