Everything Is Obvious_ _Once You Know the Answer - Duncan J. Watts [87]
In general, the power of the Web to facilitate measure-and-react strategies ought to be exciting news for business, scientists, and government alike. But it’s important to keep in mind that the principle of measure and react is not restricted to Web-based technology, as indeed the very non-Web company Zara exemplifies. The real point is that our increasing ability to measure the state of the world ought to change the conventional mind-set toward planning. Rather than predicting how people will behave and attempting to design ways to make consumers respond in a particular way—whether to an advertisement, a product, or a policy—we can instead measure directly how they respond to a whole range of possibilities, and react accordingly. In other words, the shift from “predict and control” to “measure and react” is not just technological—although technology is needed—but psychological. Only once we concede that we cannot depend on our ability to predict the future are we open to a process that discovers it.16
DON’T JUST MEASURE: EXPERIMENT
In many circumstances, however, merely improving our ability to measure things does not, on its own, tell us what we need to know. For example, a colleague of mine recently related a conversation he’d had with the CFO of a major American corporation who confided that in the previous year his company had spent about $400 million on “brand advertising,” meaning that it was not advertising particular products or services—just the brand. How effective was that money? According to my colleague, the CFO had lamented that he didn’t know whether the correct number should have been $400 million or zero. Now let’s think about that for a second. The CFO wasn’t saying that the $400 million hadn’t been effective—he was saying that he had no idea how effective it had been. As far as he could tell, it was entirely possible that if they had spent no money on brand advertising at all, their performance would have been no different. Alternatively, not spending the money might have been a disaster. He just didn’t know.
Now, $400 million might seem like a lot of money not to know about, but in reality it’s a drop in the ocean. Every year, US corporations collectively spend about $500 billion on marketing, and there’s no reason to think that this CFO was any different from CFOs at other companies—more honest perhaps, but not any more or less certain. So really we should be asking the same question about the whole $500 billion. How much effect on consumer behavior does it really have? Does anybody have any idea? When pressed on this point, advertisers often quote the department-store magnate John Wanamaker, who is reputed to have said that “half the money I spend on advertising is wasted—I just don’t know which half.” It’s entirely apropos and always seems to get a laugh. But what many people don’t appreciate is that Wanamaker uttered it almost a century ago, around the time when Einstein published his theory of general relativity. How is it that in spite of the incredible scientific and technological boom since Wanamaker’s time—penicillin, the atomic bomb, DNA, lasers, space flight, supercomputers, the Internet—his puzzlement remains as relevant today as it was then?
It’s certainly not because advertisers haven’t gotten better at measuring things. With their own electronic sales databases, third-party ratings agencies like Nielsen and comScore, and the recent tidal wave of clickstream data online, advertisers can measure many more variables, and at far greater resolution, than Wanamaker could. Arguably, in fact, the advertising world has more data than it knows what to do with. No, the real problem is that what advertisers want to know is