This is the third of three
blog posts on the valuable marketing lessons to be learned from the recently-concluded
Presidential election. One and two can be found here and here.
the many lessons the successful Obama campaign taught brand marketers, one has
been largely overlooked. It is this: the
current Big Data ramp-up in marketing database infrastructure needs to be
focused on winning at the margins.
about the campaign’s voter database continue
to dominate post-election coverage of Obama’s victory. These stories are filled with fascinating details
about the fusion of disparate databases, the profiles constructed of individual
voters, the likelihood scores assigned to each individual, the targeted phone
calls made and the frequency of making them, and the experiments conducted to
optimize the framing of Obama’s message to voters. But few of these stories describe, or even
recognize, the most valuable purpose of these efforts, which was to sway and
motivate voters at the margins.
were two such marginal effects the Obama campaign needed to accomplish. The first was to get the Obama constituency
to the polls. Romney’s campaign made a
huge bet that Obama would fail to get the vote out among his strongest
constituencies, and thus the final distribution of actual voters would wind up
in Romney’s favor. As it turns out, this
was a very bad gamble. The Obama
campaign was able to use its data infrastructure to turn out likely Obama voters
at the margins who, otherwise, would probably have not gone to the polls.
second effect was to persuade many of those on the fence to vote for the
President. Again, this was a marginal
effect, one of winning over the next voter, and then the one after that and the
one after that, etc., with each successive voter a little harder to convince
than the one before.
election turned on these marginal results. If the Obama campaign had been unable to influence the distribution of
voters or the votes of undecided voters, Romney would have prevailed. Only by winning at the margins did Obama wind
up with the bigger share of votes cast.
Obama campaign was fully cognizant of this. A combination of sophisticated targeting models and detailed media
profiles enabled the Obama campaign to place ads in media more likely to be
viewed by key voters. This resulted in
far greater efficiency, or more ad exposure per dollar spent to reach a
particular voter, which enabled Obama to offset Romney’s fundraising advantage. Obama’s fewer dollars bought more impact than
Romney’s dollars. As noted
by Larry Grisolano, who helped develop the system driving media buying, the
campaign was willing to forego big audiences in order to reach the “right
ones.” This is a focus on efficiency,
and efficiency like this is yet another marginal effect. Ken Goldstein, the president of Kantar Media/CMAG, a media monitoring
and analytics consultancy that worked with both campaigns, was blunt about this
when interviewed following the election: “All of this stuff [done by the Obama
campaign] only matters in the margins.”
politics, though, voters at the margins matter only in close elections. In a landslide, the winning candidate can
afford to lose voters at the margins without threatening his or her
victory. In brand marketing, though,
margins always matter. The key metric
for brand marketers is profit per buyer not total number of buyers, and consumers
at the margins are usually the most profitable.
are many ways of calculating the profit contributed by individual consumers,
but the most common way allocates overhead and other operating costs in such a manner
that consumers at the margins yield a higher contribution. This is not just bookkeeping; it reflects the
actual way in which a company’s revenue scales. The first consumers to buy pay the bills; after the bills are paid,
subsequent buying is all profit.
at the margins is what brand marketers must get from huge databases for these
investments to be worth it. Certainly, there
are other uses to which these databases can be put, but these databases pay for
themselves by identifying incremental consumers at the margins who would
otherwise go unnoticed, untargeted and unconvinced. As the Obama campaign made clear, the
enormous investment of money, time and talent it takes to establish and operate
Big Data databases pays off at the margins.
marketers have lots of interest these days in building massive customer files
to support sophisticated
microtargeting. But the biggest payoff
from these investments comes from consumers at the margins. This, then, is the way in which to think
about building, managing and, especially, evaluating these databases. If Big Data infrastructure is not working at
the margins, in all likelihood, it is not worth the investment. But when it does work at the margins, its value
is clear. It is the difference between
winning and losing in a highly sophisticated marketplace that is far more
competitive than ever before.
Contributed to Branding Strategy Insider by: J. Walker Smith, Executive Chairman, The Futures Company
Sponsored By: The Brand Positioning Workshop
FREE Publications And Resources For Marketers