The independent survey of 459 marketers found that according to the industry’s own estimates more than £2.5bn is wasted annually. However the study found the level of forecasting and evaluation undertaken by companies was typically so low that the true figure is likely to be significantly higher.
When asked what most influences their marketing decisions, respondents were more likely to simply follow what their firm has tended to do in the past or what seems to be the commonly accepted practice in the industry rather than seek advice (just 6.8 per cent sought advice from colleagues, 6.1 per cent from outside agencies).
Very few used data to predict what results they would achieve. Three quarters had never employed a data professional. Even of firms with marketing budgets in excess of £1m, nearly two-fifths did not report using any analytics tools whatsoever. Even after campaigns had ended, little analysis was reported – overall a fifth of firms do no evaluation on whether their choice of marketing channels had been effective.
As a result, it is likely that very few marketers have an accurate idea of what the outcome of a planned campaign will be, nor do they have a clear idea why past campaigns achieved the results they did.
Glenn Granger, CEO of marketingQED said: “Most marketers make decisions based on instinct, convention, or their experience of what tended to work well in the past. The problem is that this seldom works, and there is massive wastage as a result. Marketing is fiendishly complicated: most single purchases are the result of many messages received through many channels, in many places, over a period of time, and this is too much data for our brains to process. Marketers can guess what works and what doesn’t, but their guesses are often wrong. At worst, they are playing darts blindfold.”
Thanks to advances in mathematical modelling, several solutions exist for marketers to plan and fine-tune their campaigns before they commence, and to conduct sophisticated evaluation to quantify exactly what each element contributes to the outcome. However, despite more than a quarter (28.6 per cent) of marketers estimating that at least one in five pounds they spend is wasted, the industry has proven slow to adopt new technologies.
Even of firms with a marketing budget of more than £1m per annum, more than a quarter (25.6 per cent) have never employed statisticians, economists, data analysts or other data specialists to forecast or evaluate their campaigns. Less than two-fifths (39.5 per cent) reported using algorithm-based forecasting methods, despite these being available in desktop applications suitable for non-specialists. Overall, the proportion of respondents who reported basing their decisions primarily on algorithmic forecasts was just 2.6 per cent.
Glenn Granger said: “Marketers are missing tricks left, right and centre. They often use the wrong channels, allocate too much or too little money, on their campaigns, and have little accurate idea of what impact each choice has on the bottom line. This needn’t happen. In my experience, marketers who have used data intelligently have raised their profits by as much as twenty per cent.
“However, these are the exceptions. Unfortunately, most marketers remain raindancers when they could and should have evolved into meteorologists.”