Do Popularity and Penetration Trump Loyalty?
NEW YORK (AdAge.com) -- Andrew Ehrenberg, who died last August at the age of 84, was an unlikely radical.
Hailing from a German academic family that escaped Hitler in 1939, he became a London statistics professor, spending the better part of three decades at two institutions. Though -- as he remarks in a strange autobiographical paper available online -- he swaddled a young Olivia Newton-John, his life was far from glamorous and his passing got little attention in the press. The task of eulogizing was left to wonkish research organizations that naturally highlighted his relationship to inscrutable concepts like "negative binomial distribution."
How Mr. Ehrenberg's legacy should have been described is this: He gave us the empirical basis to doubt deeply any number of marketing truisms, from the importance of brand loyalty to the relevance of market segmentation to the idea that advertising can persuade people to buy something to the notion that mass marketing is dead to the assumption that social media should be valued differently from other media.
His work, doled out over decades in arid academic prose nearly impossible for a layman to understand and in marginally more comprehensible interpretations, makes compelling cases against many marketing laws adhered to today. Coming under intellectual fire are disciplines like customer-relationship management and thinkers from Philip Kotler to Kevin Roberts and the latter's notion that great brands have emotional connections with their buyers and, hence, are "Lovemarks."
In his Ehrenberg-influenced 2010 book, "How Brands Grow," Byron Sharp takes aim at Mr. Roberts' book. "A more down-to-earth view is that if buyers don't care deeply about a brand then they could easily be lured away by another brand," he wrote. "Yet even this supposedly common-sense statement is actually an untested empirical assumption. It's just as possible to argue that a lack of caring is the cornerstone of loyalty."
Central to all this is the notion of double jeopardy, which holds that a smaller brand in market-share terms suffers from the additional slap of having less customer loyalty. Return business is a function, essentially, of how popular a brand is. As such a marketing organization's mission should be to increase market penetration at all costs.
"Popularity trumps everything," said Paul Parton, the co-founder of Brooklyn Brothers, a New York- and London-based boutique agency, and a fan of Mr. Ehrenberg.
"It's the only thing a brand should be concerned with," he said. "If you're popular, it begets everything else. Greater penetration comes with more loyalty, which is [the] surprise of his model. It's contrary to pop theories of marketing."
Growth isn't about squeezing more money out of the most loyal consumers but trying to grab new ones. That renders CRM less important and puts a focus on an old-school definition of advertising that is consistent, frequent and mass, wears the advertised brand on its sleeve, and bashes the consumer with old saws like taglines, logos and celebrities.
Mr. Parton was introduced to Ehrenberg theory in 1997 when he was working in the Singapore office of DDB. A data planner there suffered from severe dyslexia and turned to mathematical explanations for marketing doctrine. Finding little aside from Mr. Ehrenberg, he eventually introduced the thinker to Mr. Parton.
I asked Mr. Parton whether his agency's work was informed by his reading.
"We try to do things that are accessible, popular, not hard to get to insidery. We try to be populist." He also noted that while people he meets who are interested in Ehrenberg are generally interesting, he doesn't do a lot of client evangelizing on the professor's behalf.
Not surprisingly, it's not easy to pinpoint just how influential Mr. Ehrenberg has been.
Some followers are quick to argue that, because of the antipathy to the way marketers and agencies operate on a daily basis, he's been ignored. Yet, in his 2002 book, "Welcome to the Creative World," Mark Earls writes that Mr. Ehrenberg's work is "widely read and his writing heavily awarded by his peers." And there is in Australia a research institute that bears both his name and a list of sponsors that includes some of the marketing world's deepest pockets, from Procter & Gamble and Unilever to Coca-Cola. Not too shabby.
I asked the institute's director, Mr. Sharp, to help me understand Mr. Ehrenberg's legacy. In an email exchange, Mr. Sharp, who discovered Mr. Ehrenberg as a graduate student, acknowledged that the marketing implications of his research have only recently been explored, though some of his findings are, in "under the bonnet" fashion, built into forecasting models used by the likes of Nielsen, P&G and Unilever that have "had little exposure."
Some high-profile marketers have been vocal supporters. Coke CMO Joe Tripodi blurbed Mr. Sharp's 2010 book, "How Brands Grow," as did Mars Global CMO Bruce McColl. Mars has also sponsored a laboratory at the institute that, Mr. Sharp said, works to interrogate marketing assumptions.
You can see why Ehrenbergian thinking would apply to consumer-packaged goods marketers. Candy, soap, shampoo, flavored carbonated water are all frequent, low-involvement purchases. It's difficult to expect consumers to be loyal to one brand or another and, consequently, unrealistic to expect your marketing directors to forge that sort of relationship. But Mr. Sharp extends that thinking to other categories.
The qualitative evidence adduced by Mr. Ehrenberg and, later, Mr. Sharp is convincing, but equally as powerful is this: their work should have some appeal to anyone with a shred of skepticism about touch-feely conceptions of marketing. You're in for a treat if you blanch at all the talk about joining the conversation and the general notion that people want anything from brands other than products that work.
Take Apple, whose legions of fanboys who will shell out for and evangelize anything bearing the logo, is often thought of as an iconic case of customer loyalty. Apple's success isn't about cultivating a small but loyal user base. It's about getting its smartly designed devices in the hands of as many people as possible and advertising the hell out of them. Macs were once a cult; iPods and iPhones now constitute a global religion.
This is as much an attack on brand loyalty and the expensive programs designed to foster it as it is a defense of mass advertising, not a typical point of view in a world where most of the public discourse about marketing is focused on putting brands in dialogues with the consumer, often by taking advantage of communities like Twitter and Facebook.
To Mr. Sharp, this is wrongheaded. Mr. Sharp allows a role for social media as a listening tool, to be used to see what people are saying about your brand. But even that can be misleading because so much word-of-mouth chatter about brands goes on offline.
"Social media's value is most probably largely the same as other media," he said. "How much reach can it offer? On this criteria it's not terribly attractive because it is so fragmented."
Mr. Sharp ended with this, useful to any marketers scratching their heads over why their corporate Twitter feed only has 200 followers.
"People want to talk to their friends, it seems, not to manufacturers."