April 20, 2010

Making Small Numbers Work

If you are a person with a history in traditional marketing, you have been trained a certain way.

Your worldview requires you to identify a large audience, then find a large audience within the large audience that "shares your values", then you deliver your message to the large audience. The mass marketer uses television, for instance. Segmenting the message requires the mass marketer to speak to a mass audience on a "smaller channel", like a cable channel or a radio station.

The digital world is moving in the opposite direction. Take Ning, the social network community where 40,000,000 individuals disperse among a million networks. That's an average of forty individuals per network.

A traditional marketer sees these numbers and says, "that can't work".

The traditional marketer must make a single message work to a mass audience, the economics of traditional marketing require a mass audience.

The digital marketer must accomplish the same objective in an opposite manner. The digital marketer must make small numbers work. The digital marketer finds ways to glue together audiences of 29 individuals, 88 individuals, 1,294 individuals, and 284,003 audiences.

Our future requires both disciplines. A cataloger will be able to rent 1,380,439 customers at six cents a pop for the foreseeable future. Companies will be able to create mobile apps that solve problems for smaller audiences. And search will represent a way for a mass audience to act in small ways, all with individual preferences that cannot be lumped together.

Our job, of course, is to be good at making big numbers work (big numbers work well when there are big costs involved), and to be good at making small numbers work (small numbers work well when there are small costs involved). For many of us, we're having a hard time wrapping our heads around the concept of making small numbers work. We will have to get better at doing this.

2 comments:

  1. Great contrast in this post. I'll add to it & say small numbers can also work well for very targeted pitches or dedicated, captivated audiences. For example: What if I could opt-in to advertising from a favorite brand in order to get access to the content I want online? I get my content, I get ads that I might actually enjoy/use/share & the advertiser gets much higher response rates.

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  2. derek.newman6:53 PM

    "we're having a hard time wrapping our heads around the concept of making small numbers work"

    Yes. I am.

    Another thought-provoking post thanks Kevin.

    The older paradigm:
    3% response rate = +ve ROI.
    Copy tested/ optimised for maximum collective response rate.
    Bigger audience = better ROAS

    The newer paradigm:
    Copy tested for channel? segment? keyword?
    Is response rate dead/ meaningless in a world without mass mailing?
    How do we afford/ justify the costs of resourcing one-to-one marketing?
    Is the ideal target audience size just one person?
    Do we jump on the bandwagon and think that 74 followers on Twitter is a potentially profitable market segment?

    Cheers

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