Forget Everything You Know About Your Customers

Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Chris Peterson, managing partner at R2C Group.

We marketers love to imagine our customers. We want to see them, understand them and get inside their heads. We make PowerPoint slides with stock photos of them. They’re millennial, they prefer kale to bibb lettuce and they value peer opinion. They agree with the statement: “Technology is an important part of my lifestyle.”

Who knew that for decades these efforts have been suppressing business results?

As humans, we crave anecdotal narratives about our customers. They solve an important problem of our marketing imaginations. How do you market to someone you don’t know? Our customer stories assure us that we know what we are doing. As NPR radio personality Ira Glass said, “The power of anecdote is so great that it has a momentum in and of itself. No matter how boring the facts are, you feel inherently as if you are on a train that has a destination.”

The “facts,” of course, can be right or wrong. Jonah Berger, author of “Contagious: Why Things Catch On,” describes narrative and storytelling as a potential Trojan horse, where any set of apparent facts can be set into motion with a small amount of storytelling. Start with facts – or just make some up – and wrap them up with an interesting story, and voila, you rally people forward into a bold new future based on half-truths.

This is exactly what happens all too often in advertising. Sketchy so-called facts about customers are turned into full-blown narratives that form a key role in advertising strategy. In many cases, customer facts are completely made up, derived from a handful of customer interviews, conjured up in the mind of the CEO or result from a 20-foot view of hundreds of database attributes.

These “facts” are given a narrative in the media brief and some $180 billion in advertising is set into motion – or at least a large part of it. Sometimes these “facts” form a third rail that emanates from the CEO’s office, winds down the marketing department’s hallways and stretches across the country to connect several agencies. Armies of people align, many simply because they want to get their job done.

Today these facts and the needs of our marketing imaginations are colliding with the cold reality of correlations that exist within customer data sets. Speculation is being stubbornly pushed aside by the customers themselves – as if from behind closed doors. What gets us the most insight into business performance, it turns out, is keeping customers anonymous.

This has been going on quietly for years in digital media. Just look to the rapid growth of Google and Facebook in capturing what’s become an astounding 85% share of all US advertising dollars. Their success is largely rooted in ignoring who we imagine our customer is. When you’re paying for behavior, who cares if they prefer kale over bibb lettuce? You follow the revenue.

In June 2008, Chris Anderson, then executive editor at Wired Magazine, brought this to light in “The End of Theory: The Data Deluge Makes the Scientific Method Obsolete.” He posited that in a world awash with data, the scientific method wasn’t necessary. Instead of formulating hypotheses and testing for success or failure, data can now yield correlations that emerge on their own independent of what you think might be true.

Anderson pointed to Google as an example. “Who knows why people do what they do? The point is they do it, and we can track and measure it with unprecedented fidelity. With enough data, the numbers speak for themselves,” he wrote. When several scientists pushed back on Anderson’s idea that the scientific method was dead, the same scientists also admitted that Anderson was probably correct when it came to advertising.

Fast-forward to 2017, and Anderson’s ideas applied to advertising have proven somewhat prescient. Advertising is rapidly moving toward media targeting and optimization that ignores who we think our market is. Customers are becoming so abstract it’s requiring us to forget everything we thought we knew about them. If we do, there is far greater potential for stronger business results.

Today, customer databases are matched to media consumption data to reach more people like them. The customer is anonymous with regard to habits, age, preferences, diet, income, education, home ownership, fashion preference and more. They could live on a boat in the Marquesas or be sword swallowers in a circus; marketers don’t know and they don’t need to care.

Of course, creative directors still need something to go on. You can’t simply hand them a database and wish them luck. They will usually work with some kind of composite profile, and if they are good at what they do, their creative solution will transcend the requirement of clearly explaining who the customer is. Often this takes the form of creating an aspirational customer, which doesn’t need to rely on who the customer actually is.

When teams sit down to figure out if advertising worked, the customer is kept equally anonymous. Brands now employ multistage regression models to better identify which components of a media plan work better than others. When statisticians analyze campaigns, they consider what media was bought for how much and then correlate it to sales and revenue. Results simply point to what brands should do more or less of. The analysis doesn’t care who your customer is – only that there are places where you can get more of them.

As customer targeting and results measurement evolves rapidly toward complete customer abstraction, the result is a powerful combination of tools for scaling a business. Customers are better identified at the start and statistical analysis confirms or denies that purchase behavior tracks with their measured media consumption habits – no stock photography required. Our imaginations no longer get in the way of people buying products because we no longer put them in boxes.

For some this will represent sucking the life out of advertising. Is it advertising if you can’t imagine your customer? For others, it brings immense relief knowing that we are no longer just making things up.

If this is where things are headed, it seems that Anderson was correct about the death of the scientific method with regard to advertising. So, do we now stop hypothesizing about who our customers are, what they do and what they eat? Do we now represent customers as mysterious gray shadows in our PowerPoint presentations?

Reached for comment nine years after writing about the death of the scientific method, Anderson stated, “My views on that article are like much else of what I’ve written: guilty of some hyperbole and overstatement, probably incorrect in some of the example details, but directionally correct and getting more so by the day. In other words, right enough to think about and debate.”

Follow R2C Group (@r2cgroup) and AdExchanger (@adexchanger) on Twitter.

This post was syndicated from Ad Exchanger.

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