The (marketing) fight of the century?

Sharp vs Ritson at the Festival of Marketing. It’s the closest the marketing world is going to get to Mayweather vs McGregor. But how much of the beef between these two marketing heavyweights is just there to sell tickets? Do they really disagree about much at all?

At the level of headlines, the disagreement seems stark: Ritson is an advocate of targeting; Sharp is against it.

Ritson has called a return to mass marketing a return to the ‘dark ages’. He has said that those who bash segmentation and targeting are ‘talking nonsense’. Sharp has called targeting marketing’s most overrated concept. [Vizard 2017]

Unfortunately, ‘Targeting vs mass marketing’ is an imprecise way of framing the debate, and this is part of the problem.

The important bit of context to add to what Sharp and Ritson are saying is what they think targeting or mass marketing are good or bad for.

When Ritson (and others) talk about targeting they are mostly talking about it in the context of specific campaign objectives: selling more stuff by selling it to responsive audience x: getting more bang for their advertising buck. Targeting, Ritson is (mostly) saying, is good for getting a better ROI.

When Sharp talks about targeting he is almost always talking about it in the context of long-term brand building activity: in other words, activity aimed at growing brands by increasing their penetration (and market share, etc.). Targeting, Sharp is saying, is bad for growing brands.

But if Sharp and Ritson are talking about targeting’s merits in two completely different contexts, it’s entirely possible they don’t disagree at all.

Targeting for ROI

Let’s start with Ritson’s notion of targeting for improved ROI. In How Brands Grow 2 Sharp allows that targeting heavy category buyers can deliver a higher ROI, before making the point that “focusing on ROI can prevent a brand from benefiting from scale and earning larger, more secure profits.” (p. 37). He notes that targeting heavy category buyers might be a good place to start one’s marketing efforts, but that it is not a sustainable strategy:

“‘Fish where the fish are’ can be a sound maxim. You might as well start where many fish are pooling together — particularly when the ocean is huge. But to grow you need to reach all sorts of category buyers — light as well as heavy.” [Romaniuk & Sharp (2016) p.35]

Ironically, Ritson makes a similar point in one of his attacks on Sharp:

”Smaller companies, for example, without the resources or scale of a Mars would do well to start by taking a smaller, segmented bite of the marketing apple and gradually building their presence.” [Ritson (2016b)]

So it seems that Sharp is not denying that you can can get a better short-term response per dollar spent on a given advertising campaign by targeting, for example, heavy category buyers. That’s why they might be a good place to start. Targeting will help you along the way more quickly — but in the long run, it won’t grow your brand.

Targeting for growth

Now we turn to Sharp’s notion of targeting for brand growth: does Ritson have any arguments that targeted marketing is a good way to grow a brand? There’s the point about targeting heavy buyers first, but as we have seen, Sharp also agrees with this. It doesn’t damage Sharp’s argument because it’s about a tactical starting point for a growth strategy, rather than the strategy itself.

Another argument Ritson puts forward is based on the example of “an American fashion brand that had aged with its client base and had suddenly discovered it’s [sic] once twenty-something customer was now forty-something. Nothing wrong with that customer or her sales, but without an explicit re-focus on a new generation of younger clients the brand in question was looking at a long, slow death.” [Ibid.] In How Brands Grow 2, Sharp and Romaniuk distinguish between a product range strategy and a segmentation strategy: “Any successful marketer develops a product range to take into account the heterogeneity among category buyers.”[p. 39] It’s a challenge to sell old people’s clothes to young people, and vice versa: it sounds like the fashion label’s mistake was to imagine that its customer was an ageing cohort and let down the rest of the market with its range strategy. This example is an argument for paying attention to range strategy, not an argument for targeting for growth. [3]

Whatever Ritson’s published responses to Sharp, is there a case to be made for targeted marketing to support brand growth?

Let’s remind ourselves of why Sharp thinks targeting is so bad for brand growth. He says:

”If you want to be a big brand, you … need to attract light category buyers as well.’ [Romaniuk & Sharp (2016) p. 36–37]
”for maintenance or growth, a brand’s marketing has to somehow, at least over time, reach all the buyers in a brand’s category” [Sharp (2010) p.53]

In other words, targeting only your most responsive customers doesn’t work in the long run: according to Sharp, targeted advertising cannot grow the brand more quickly than advertising to the whole market.

If a brand’s objective is to grow as big as it can grow, then, if the market exhibits NBD-Dirichlet-like properties, as in most cases it will, more and more of its sales must come from these lighter category buyers. If advertising doesn’t reach them, then the brand can only grow through word of mouth or its visibility ‘on the street’, and in a crowded market in which other brands are advertising, relying on that alone seems unwise.

But is there really no circumstance in which targeted advertising can grow a brand more quickly per unit spend than advertising to the whole market?

The principal target of Sharp’s criticism are the marketers who believe they can grow their brand by focusing on their most loyal customers. Brands can only grow, Sharp says, if they engage their less loyal customers — such as the lighter category buyers — and hence increase their penetration. But if this is so, then is it not possible that targeting precisely those light buyers might be a more efficient and hence cost-effective approach to growing the brand than broadcasting to the whole market? Advertising to people who are going to buy your brand anyway won’t help increase your penetration numbers.

Whether or not such a light-buyer-targeted approach is in fact more cost-effective will depend on the actual cost of targeted vs broadcast advertising, and the relative impact of targeted vs broadcast messages — but as long as there is a possibility that advertising targeted at light buyers can be more efficient than broadcast in increasing penetration we can challenge Sharp on empirical grounds.

The question then becomes more interesting, and less theoretical: for which categories, and for which brands, and under which assumptions about the relative cost and impact of targeted vs broadcast advertising, does it make sense to include targeted advertising into the mix in order to grow the brand? If targeted advertising is sometimes useful for growing a brand, how do we figure out when it is useful? [2]

Conclusion

I have argued that the ‘debate’ about targeting between Sharp and Ritson is based on a failure to separate two contexts in which one might want to talk about targeting. The first context concerns the value of targeting in generating a return in the short term; the other concerns the value of targeting in generating growth over the long term. Once the contexts have been separated, it’s clear that Sharp agrees with Ritson that targeting can work in the short term; and whilst Ritson doesn’t offer any conclusive arguments to support the claim that targeting can work in the long term, there are some reasons to believe that it can.

Footnotes

[1] It’s fairly clear that he does deny it. For example, “Marketing science clearly states we need to reach all categories of buyers — the value of targeting smaller segments is actually far less effective”

[2] These are hard questions, impractical to answer through experiment or market testing. A more fruitful approach would be to build models of individual categories, parameterised using real market data, that capture both the Ehrenbergian dynamics of the market and the effects of broadcast and targeted advertising in shifting those markets. But that is a topic for another post.

[3] In the same article, Ritson claims that B2B marketing provides a counter-example because here, 80% of the sales come from 20% of the customers. But of course B2B markets are very different because the demands of individual companies are vastly more variable than those of consumers.

References

Sharp, B (2010) How Brands Grow. OUP.

Romaniuk, J and Sharp, B (2016) How Brands Grow Part 2. OUP.

Sharp, B (2017) AANA: The Science Behind How Brands Grow. https://www.marketingscience.info/aana-the-science-behind-how-brands-grow/

Ritson, M (2016a) Those who bash segmentation and targeting are talking nonsense. *Marketing Week*. (https://www.marketingweek.com/2016/11/10/mark-ritson-bash-segmentation-and-targeting/)

Ritson, M (2016b) Ditching targeting for mass marketing is going back to the dark ages. *Marketing Week*. (https://www.marketingweek.com/2016/04/12/mark-ritson-ditching-targeting-for-mass-marketing-is-going-back-to-the-dark-ages/)

Vizard, S (2017). Byron Sharp and Mark Ritson to go head-to-head at the Festival of Marketing. *Marketing Week*.

https://www.marketingweek.com/2017/09/04/ritson-sharp/]