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Pitfalls of Marketing Experiments
Marketing experiments are a great tool--but they are not a perfect predictor of how the market will respond. Watch Raj Venkatesan explain more.
What did you think? Should Ohio Art run the TV campaign? Well, let me say what Ohio Art did. They decided, based on all these numbers and the confidence in the creator, they supported Betty Spaghetty with a $2 million national advertising campaign during the 2008 holiday season. What do you think happened? What do you think were the results? What do you think happened during the 2008 holiday season? What do you think happened? Think about it. Figure out, go back in time, and think what happened during 2008 in the holiday season. Now, let me tell you what happened. Hannah Montana happened. That was the time Hannah Montana was launched by Disney during the 2008 holiday season.
Sales of Betty Spaghetty were not good at all, all right, and this was the time Ohio Art had no way of expecting Hannah Montana to launch during the holiday season and was completely upstaged, they could not get distribution. The ads ran, they had some good pick-up, the creator was good but what didn’t happen was distribution and then the experiments were run in a situation where the biggest factor during that holiday season was not existing. This shows the real challenges of TV ads. Because even if you run the experiment, even if you saw some causal effects, when you actually ran the national campaign- there was a time gap between when you ran the experiment and when you launched the national campaign.
The reality on the ground changed but you couldn’t pull back your investment because TV ads, the way they work, it works as a fixed sunk cost. They had to pay $2 million to buy the upfronts, to buy the ads during the holiday season. Now they couldn’t get back and that was a loss. This was the reality in which the world existed when it was only TV ads. Marketing was treated as a fixed cost, whatever happened you took a bet, put the sunk cost in and hoped the reality on the ground would be similar to when you did the experiment and if things changed, that’s how it was and that’s the reality of how marketing was before the digital revolution began.
Now in a few minutes, we’re going to see how the same company was doing the same kind of experimentation in the digital space and then we can contrast TV and digital.
Learn the final details of the Betty Spaghetty story and what happened when Ohio Art ran the ads nationwide. It’s a morality tale on the pitfalls of marketing experiments.
In the comments, share any marketing experiment examples you are familiar with.
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