4.2 Buying impact
When Billy Beane looked at his options in 2002, he hung his head in despair. As manager of the Oakland Athletics Major League Baseball team he had an annual budget for players one third of that of top teams. Whenever he managed to discover a talented player, the following season they would be poached from him by a bigger team with bigger budgets. His team was an incubator for more wealthy teams. In such an environment it is impossible to win.
You may have heard this story before – it was covered in both Michael Lewis’s book Moneyball and the film of the same name starring Brad Pitt and Jonah Hill. For many years the collective wisdom of baseball was that statistics such as stolen bases, runs batted in, and batting average were the best measures for evaluating players. Every year scouts would visit high schools and identify prospective players with talent. They would then sign those players to the team; some would go on to demonstrate their full potential, others would not. But Beane maintained that because more data exists for established players, high draft picks spent on high school prospects, regardless of talent or physical potential, are riskier than more experienced players. The statistical analysis that Beane applied showed that the subjective measures that talent scouts applied were less reliable than measures like on-base percentage and slugging percentage. “People who run ball clubs, they think in terms of buying players,” said Jonah Hill’s fictional character Peter Brand in the film. “Your goal shouldn't be to buy players, your goal should be to buy wins. And in order to buy wins, you need to buy runs.”
In 2002, after many tense discussions with his scouting staff who favoured the traditional method, Beane assembled a different type of baseball team. Despite losing a number of start players at the start of the season, and on the surface lacking star power among his line up, the Oakland Athletics surprised the world. Not only did they make it to that season’s play offs, the did so with then record breaking 20 consecutive wins in the season. This record had held for over 90 years, and has only been broken once since.
But winning streaks must come to an end and so too did the Oakland Athletics’ at the hands of the Minnesota Twins. They were beaten by a superior team on the day who had more money and more resources to bring to bear. The Oakland A’s, however, changed the game of baseball by proving that a the conventional wisdom was wrong. Data-driven decision making – science – triumphed over gut feeling and false metrics – alchemy. The Minnesota Twins, though, proved that a scientific approach is not a guarantee of success and there is still a place for magic and start power to reshape expectations.
Much the same as Billy Beane, many marketing organisations are full of opinions and experience but find data and statistical analysis in short supply. What actually drives marketing value? And how much does that value cost? The role of a marketing leader is to invest resources to create value (i.e. buy impact). Answering this question is part of the value of attribution models. As well as demonstrating the impact of marketing they can be used to uncover how marketing actually creates value. And because marketing is working within a finite budget envelope they can provide direction on where budgets should be invested.
Say your only organisational objective is new contract revenue. Your marketing goal shouldn’t be to buy interactions or time on site or click-through rate, it should be to buy qualified pipeline – pipeline that goes onto convert. In order to get qualified pipeline you need to get qualified leads. So with your limited marketing budget, what is the maximum value you can generate? Is it best to invest 80% of your budget in content creation and 20% in execution, or 10% in content creation and 90% on execution? Is $100k invested to win one $10m deal better than creating $50m pipeline? If your win rate is better than 5:1 then no, if it isn’t, then, yes. The marketing organisation that is able to get a handle on what is actually having an impact. Budgets can only be spent once. Cut out the low value and see what happens. Reinvest in the high-value. Follow the data, not the way things have always been done.
But like Billy Beane, marketing teams cannot forget the impact that a spark of genius can have. Much of Beane’s analysis looked at statistical averages. Boiling players down to a small number of numbers against which an evaluation cane be made. And as we’ve just looked at, averages can hide many sins. Playing to win on average means that on average you will win. But when another team is playing outside of that spectrum – because they’re having a good day or they’ve hired a star player – then average isn’t going to win. Which is where the magic of marketing continues to live. Data should tell you how to optimise for maximum value. Magic will keep you innovating to find where the data should take you.