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Billions being wasted by UK Marketers

Posted on 20 Dec 2012 by John Dawson

As previously discussed, John Wanamaker noted that “half the money I spend on advertising is wasted. The trouble is, I don’t know which half”. We wanted to know whether that “fact” still stood at the end of 2012 so we decided to commission a survey of 450+ UK marketers to find out.

The good news is that marketers believe things have got much better – according to marketers themselves, the proportion wasted has dropped to just 15.8 per cent. Applying this figure to the latest estimates of total advertising expenditure for the UK (£16.8bn as reported by the ASA - see implies that the money wasted on marketing would equate to more than £2.5 billion in 2012. Unfortunately, other data from the survey suggests that they are almost certainly underestimating the wastage, and the true figure is likely to be far higher.

The real problem is that marketers have a habit of relying on gut instinct and guesswork rather than data. As a result, it is likely that very few have an accurate idea of what the outcome of a planned campaign will be, or why past campaigns achieved the results they did.

When asked what most influences their marketing decisions, the survey’s respondents were more likely to simply follow what their firm has tended to do in the past (39.4 per cent) or what seems to be the commonly accepted practice in the industry (34.9 per cent) rather than seek advice (just 6.8 per cent sought advice from colleagues, 6.1 per cent from outside agencies).

Unfortunately, we know that gut instinct seldom works. Marketing is fiendishly complicated: purchase decisions are the result of many messages received through a multitude of channels across many places and over a period of time. This leads to an enormous amount of data being created - too much for our brains to process. To solve this problem, you’ll need to fire up an application like modelQED.

Another staggering statistic from the survey was that very few companies claim to be using the mountain of data available to them. Three quarters (75.6 per cent) had never employed a data professional to analyse their data. Even at firms with marketing budgets in excess of £1m, nearly two-fifths (37.2 per cent) did not report using any analytics tools whatsoever. Overall, the proportion of respondents who reported basing their decisions primarily on algorithmic forecasts was just 2.6 per cent.

This needn’t happen. In our experience, marketers who have used data intelligently have raised their profits by as much as a fifth. However, these are the exceptions. Unfortunately, many marketers are acting as raindancers going through the motions without any proof (or idea) of the effect of their actions. Rational marketers use data to create knowledge - a winning strategy.

Tags: Company News Raindancing Wanamaker

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