To be honest, I’ve been feeling guilty lately, a bit like a cheat, enjoying my TV Shows on my laptop but skipping those commercials that well-intentioned advertising creatives slaved away designing. I worry how agencies will get paid if I don’t sit through their advertisements. Yet I still hit Fast Forward as I hunt for the next laugh.

How can marketers make it today, in a world of hundreds of devices sourcing thousands of channels? How will  magazines and print publications survive, when each time I open their pages they give me news I read yesterday morning on Google Currents? Fragmentation, proliferation, and the free flow of information have complicated the once-simple job of marketers.

There is a new approach, packed with practical tactics, that smart companies like Netflix and Red Bull are applying to outmanoeuvre slower-moving industry incumbents.

The calculus has changed.

Your company’s revenue growth depends on three key metrics: (a) conversion rate (the cost to acquire a customer), (b) retention rate (your ability to retain a customer), and (c) revenue per shopper. All three are facing disruption. When advertising was about spending millions on Super Bowl ads, for example, companies were happy with a conversion rate of 0.01%. But by targeting messages cleverly, smart marketers can achieve conversion rates of 5%. Diapers.com, for example, doesn’t advertise on TV and can instead place offers on specific websites and searches to directly reach mothers of young children.

Let them laugh.

Just as the naysayers in the movie Moneyball laughed at General Manager Billy Beane for acquiring players with poor reputations, smart marketers buy advertising and use platforms others overlook. They know they work because analytics tell them they are a better investment. Netflix, for example, forwent flashy TV advertising to slip cheap coupons in DVD player boxes. It was deemed downscale marketing, but it helped put Blockbuster out of business.

Shorten the time from message to sale.

Direct-response marketing was once just for people with toll-free numbers who wanted to sell you knives or miracle diets. But now everyone should be in the business for two reasons. First, it’s easy: Your buyers are online and are comfortable buying online. Second, it’s smart: It allows you to refine your message inexpensively before you test it out on traditional channels. For example, before you print a bunch of point-of-sale coupons, test out several messages online and then pick the message that works best.

Shorten the time from sale to analysis.

If your marketer spends his time pouring over last month’s sales figures to determine what is working, you are falling behind. Today, smart marketers base marketing analysis off of more immediate data from scanners and panels. My friend founded an incredibly fast-growing consumer-products company, now publicly traded, that is outmanoeuvring competitors in part because it knows immediately, within hours, how its products are selling in pharmacies.

Perform MMA.

Now that you are getting quicker sales and are able to analyze the results more quickly, it’s time to turn on MMA (or Marketing Mix Analysis). This is a sort of conjoint analysis in which you correlate the rises and falls of your sales across time based on the various campaigns you have tested. It allows you to accurately identify how much each test contributed to conversion rate, retention rate, and revenue per shopper. This allows you to invest more in what is working, drop what is not, and introduce new experiments.

Put these all together, and you have a self-adapting, dynamic marketing machine that continually generates new customers.

What do you think? Do you have any other ideas? Feel free to share it below!

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