Rory Sutherland is the Vice Chairman of Ogilvy, arguably the most recognisable brand in marketing and advertising. A globally renowned TED speaker, Rory has led the charge for the integration of behavioural sciences in advertising, establishing a team within Ogilvy that search for ‘unseen opportunities’ in consumer behaviour.
We met with Rory to discover:
- How these principles translate into the B2B space
- The degree to which buyer rationality really exists in business
- The single defining characteristic of a great modern marketer
- The shortcomings of (most) digital marketing
- The role of mass brand advertising in B2B industries
One of the case studies we’re most proud of at the Behavioural Change Department of Ogilvy involves a large B2B software company and their script for managing customer cancellation calls. Rather than starting with “Can you tell us why you want to cancel?”, which is perfectly logical in terms of data collection but a disaster in terms of customer retention as you’re asking people to rehearse a list of reasons why they want to pull out, we changed it to ”Can you remind us why you subscribed in the first place?”. This small change facilitated an increase in retention worth several millions a year.
“Butterfly effects are possible. Small changes really can have major consequences.”
It’s also evidence that in B2B just as much as in consumer markets, butterfly effects are possible. Small changes really can have major consequences.
In many ways the understanding of behavioural bias is more pressing in B2B, as in a consumer environment the biases in aggregate largely cancel each other out; one person is biased one way, another person is biased the other way. However, in a B2B environment there are extraordinary biases between what is in the interest of the decision maker personally – his career, job satisfaction, etc – and what is in the interest of the organisation as a whole. The reason we under-explore these biases is because of the Objectivity Trap; the pretence that because we’re dealing with a business suddenly everything becomes dehumanised and rational. That once someone puts on a suit and sits behind a desk they effectively become homo economicus. This could not be further from the truth.
“There are extraordinary biases between what is in the interest of the decision maker personally and what is in the interest of the organisation.”
In a B2B environment, there are always extraordinary biases between what is in the interest of the decision maker personally and what is in the interest of the organisation.
Because of the Objectivity Trap, advertising in B2B is assumed to be of secondary importance and the marketing person never quite achieves the same attention as they might in a Unilever or P&G. On the plus side, the opportunity to differentiate oneself is huge.
One area where there’s enormous scope for experimentation in B2B is pricing. We often see it in the consumer space, such as the Starbucks store value card which is a piece of behavioural genius; if you’ve got £30 on your card then treating your family to coffee doesn’t feel anywhere near as expensive as if you had to take it out of your bank account. That’s the benefit of separating the moment of payment from the moment of consumption and it applies just as well in B2B. I have a friend who runs a legal firm that specialises in transport law. Most legal firms offering this service do so without cost until someone crashes into one of the vehicles, at which point they charge vast amounts of money. Instead my friend charges 30 pence per vehicle per day, and when he gives talks at conferences he leaves 30 pence under every seat and finishes by saying “If you reach under your chair, you’ll realise I’ve paid for the first day for you.” It’s a simple but brilliant way of reframing the cost to something that’s essentially a rounding error.
Changing perception of price from cost to value is a constant battle for marketing agencies, as it is for any professional service. Procurement like to list the sum total of all the money they spend with you, frame it as a very large cost, and ask that you reduce it by 5%. However, if you framed the cost of the agency as a number of pence per product sold then it would be patently obvious that a good agency should be able to add several pence to the perceived value of a product. When Ogilvy pitched to a very large B2B technology company, I was impressed to discover that they reframed the cost against the overall scale of the project, explaining that for 12 months of agency fees the company could get one of their rockets from the launch pad to 147 feet in the air!
The areas of marketing that are treated with the most ludicrous stinginess are often the areas that add the most value per pound spent. Package design, for example, is where many products become a brand, so if there’s one area you shouldn’t skimp it’s that. And yet, because the amount spent is fairly small, I notice some of our sister agencies in package design are treated with a level of skinflinterry which is in excess of that found in advertising.
I’m going to give a plug for an upcoming lecture which is held annually by The Marketing Society Scotland, and it’s to commemorate David Ogilvy’s Scottish heritage. You can find a ticket waiting for you here.
This year I’m introducing the lecture but it’s being given by Mark Ritson, and I know he’s going to talk about the end of either/or. You see this terrible thing has happened in marketing that’s an example of the classic false dichotomy. The argument is that you either do digital marketing or you do brand advertising, which then it manifests itself as “Well mass advertising is inefficient, you need to run highly micro-targeted/segmented campaigns, etc”.
“Your willingness to cope with ambiguity is the single defining characteristic of a great marketer.”
The classic quality of intelligence in marketers is rather like F. Scott Fitzgerald’s comment that it is “being able to hold two opposing thoughts in your mind at the same time without losing the ability to function”. Your willingness to cope with ambiguity is the single defining characteristic of a great marketer. So yes, you need to optimise the bottom of the funnel; if you don’t do that then there’s no point doing anything higher up. But just because that’s important, doesn’t diminish the importance of everything else.
This extraordinary false dichotomy where x has to replace y, and you must either be a fan of one or the other, is what holds back so many marketers, but it’s very difficult to escape because the educational system prepares us for a world where the opposite of a good idea is a bad idea. In physics, maths, engineering, etc, broadly speaking there’s a right answer, and anything that isn’t that answer is a wrong answer. One of the things I talk about in my book, Alchemy, is that the opposite of a good idea can still be a good idea.
People will often say the future is digital but the extraordinary thing about media is that it’s an ecosystem, and just as video didn’t kill cinema and cinema didn’t kill theatre, digital is unlikely to kill more traditional channels. In fact, if you want my kid’s attention, direct mail is brilliant because they don’t get very much. And if you send them a handwritten letter it’ll probably be the most meaningful communication they get all week!
“The opposite of a good idea can still be a good idea.”
I often think it’s a mark of a genuine creative when they sell unfashionable solutions. Occasionally I’ll say to a client “Actually the answer here is long copy off the page press”, which is a kind of Edwardian form of advertising, but our urge to use printed text to hoover up information isn’t going anywhere. David Ogilvy admitted in the 1960s that few people read the long copy, but the point was that the people who read it were the people who had been undecided and then went on to buy.
When you do something in traditional media, be it a newspaper ad or a handwritten letter, there is often an element of costly signalling – by which the message carries greater importance precisely because it was inefficient and therefore expensive. If you look at it purely in terms of simple information transmission then an email or a tweet would do just as well, but its efficiency would eliminate any meaning. Furthermore, when you put a large ad in a newspaper, you’re stating that you believe it applies to a large number of people and that the message is therefore important. People may feel like they’re missing out if they don’t read it. The same is unlikely to be true online.
Creative people have been to some extent frozen out of digital marketing. I don’t see much online that seems to have a copywriter’s hand behind it. Most of it is bland statements of fact or discounting. I certainly don’t see much that has an attempt to beguile, seduce, persuade.
“I don’t see much online that seems to have a copywriter’s hand behind it.”
How many digital ads would pass muster as press ads? People view it as either/or and believe that they don’t need creative as their targeting is so fantastic. But remember, targeting only finds customers, creative actually generates them.
Colleagues in the ad industry worry that if they get behavioural scientists involved they’ll mess with their process. “No no no” I say, “…this stuff is additive!” That is the opposite of how things work in the traditional advertising world, in which marketers have been taught to strip everything away until they’re left with a thing called “The big idea”. But my answer is that creativity is too valuable a thing to confine to one point of intervention.
The book, The Anatomy of Humbug, by Paul Feldwick, talks about how people are obsessed with having one model of how advertising works. In a world where things are designed, generally a single thing has a single function. But in a world where things have evolved – and if anything has evolved then it’s the human brain – things can be successful for more than one reason. Advertising can work in more than one way. Your product can have more than one target audience. It probably needs a single concentrated idea of user imagery and consistency of tone of voice, but let’s not forget that for every athlete who wears Nike there’s a pensioner who does, too!
The first thing is that you have to stop yourself being viewed as a commodity, and fast. Economists like commodities because you have complete fungibility and substitutability, and procurement likes commodities as it makes it all about price. But in terms of capitalism, commodities are horrible because they remove any incentive to innovate. Quality provision becomes a race to the bottom, distorted around three or four metrics, typically designated by the buyer.
“In terms of capitalism, commodities are horrible because they remove any incentive to innovate.”
In the Soviet Union there were a number of fatalities caused by falling chandeliers and that’s because chandelier factories- such things existed in the Soviet Union – were incentivised by the weight of the output, so they produced unbelievably heavy chandeliers that caused ceilings to collapse. When you produce anything in a complex system that’s over optimised along two or three metrics, it creates distortions where a hidden cost appears elsewhere.
The great thing about a brand is that it’s a repository for credit and loss, which creates a feedback loop where good businesses are rewarded and bad businesses are punished. So the first job of any marketer is to perform the inestimable service for capitalism of decommoditising whatever you offer, whether that’s through pricing or delivery or some other form of added value.
Absolutely. The common thinking in B2B is that because targeting is so specific, there is negligible value in brand advertising, but while you may know who your audience is today, you certainly don’t know who they’ll be in five years time. Neither do you know who your employees will be. Likewise, if your company is bought by Google, that’s presumably because they’ve heard of you. And if your Chief Executive gets his or her phone calls returned whenever they cold call anyone, that’s because the person who receives the call has heard of your company. Nobody can attribute the value of returned phone calls, but over a period of months and years it probably amounts to the millions.
When you are slightly indiscriminately famous you have a much wider exposure to possible upside, opportunity and luck. You can’t predict that in advance and you often can’t often attribute it in retrospect, but nonetheless, simply having a large surface area exposure to possible happenstance is a powerful thing.
“When you are slightly indiscriminately famous you have a much wider exposure to possible upside, opportunity and luck.”
Unfortunately, we’ve been trained to believe that if we can’t attribute direct value, it should be disregarded. This mentality has been exacerbated by our obsession with big data, but the dangerous thing about extrapolating from data is that it all comes from the same place – the past. After all, let’s not forget that the behavioural data in 1993 would have indicated a fantastic future for the fax machine!
This is why the modern marketer needs to be comfortable with ambiguity. Just as we’re happy to use certain medicines without knowing how they work at a molecular level, the same applies to advertising. If we know that advertising works, we have to be able and permitted to do it without necessarily knowing why.
“The dangerous thing about extrapolating from data is that it all comes from the same place – the past.”
It’s rather like religion. If religion brings benefit to those who practice it, getting anally retentive about whether or not it’s true is slightly missing the point. The point is it works.
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