Rory Sutherland: evaluation

Transcript context

…Very simple. Be consistent, be distinctive and be famous. Now, often, we forget this, advertising often talks about brand in this incredibly nuanced way about differentiation and this and that and the other. You've got to be distinctive undoubtedly. You've got to be consistent for obvious reasons and you've got to stick at it visually without dicking around too much. But actually the reason advertising agencies never say, "We're going to make you famous is because it sounds too obvious." Okay, well yeah, obviously. Yeah, but let's not talk about fame. It is. It's about fame in that fame fundamentally changes the rules in completely non-linear ways. So first of all, when you are not famous, you have to find all your customers. Suddenly you reach this magical escape velocity of fame where people start coming to you and they start saying, "Have you thought of using this for this?" Of, "Actually, you didn't think of this as an application for your product, but I've actually got this, I actually use it for this." And then you reach, these are levels of fame and they compound over time. It's not linear, it's not attributable. You can't really say... I joke about this, there are people who can attribute their fame to one single event, Monica Lewinsky perhaps being good example or serial killers. All right, okay. "If I hadn't killed all those people, no one would've heard of me." There are people for whom fame is attributable, but for most people it's a whole what you might call amalgam of different activities going back years. And actually in many cases we ask consumers, "How did you hear about this?" They don't actually know. They'll always put TV or something online, but actually they don't know how they heard about it. They just heard about it. And we know that people's brains react completely differently in terms of their level of comfort with things they've heard of before versus things that are completely new. It's almost similar to the heuristic of, is everybody else eating this? Have I eaten it before and have I heard of people eating this? It's part of that same package of right in the motherboard at human psychology. So fame is completely, it basically changes the rules for everything. When your chief executive rings somebody up, they probably call back. If you're a famous company, if he's heard of you or she's heard of you, she'll call back. If they haven't heard of you, they probably won't call back. What's that worth? What's it possible? It's impossible to quantify the value of fame. People come and work for you for less money. People actually apply to you without you having to find them. People stay longer, customers come to you and give you the benefit of the doubt. You're allowed to cock up once if you're famous. s money. People actually apply to you without you having to find them. People stay longer, customers come to you and give you the benefit of the doubt. You're allowed to cock up once if you're famous. People will give you, if you've got a great brand, the best definition of a brand is from the guy who's called Eric Johnson, I think, who wrote the book, Blind Sight and he's also written a book called Brands That Mean Business. It's a great book. It deserves to be much more famous actually. And there's a sentence in that book which says, "Having a great brand means you get to play the game of capitalism on easy mode." And I genuinely can't think of a better definition than that. Now, the point about playing on easy mode is can you quantify the value of that? Well, no. Because you don't know what your score would've been if you were playing on hard mode or psycho mode. I'm not a gamer, but you know what I mean. Okay. Can you also say which of your various activities contributed to the building of that great brand? Well, no, you can't because it's actually not even an amalgam of things. It's actually a concatenation. There are a host of elements here which are catalytic. They're not linear. And that's the other thing, which is that because it's not linear, attempts to evaluate advertising on short-term transactional metrics will always grotesquely undervalue the contribution of that activity to your ultimate business success. It's a bit like when I first got a pension for the first few years, brand building is a bit like a pension. For the first few years I had a pension. Oh God, I'm paying this guy a few hundred quid a month and look, half it's gone in commission and there was a lot of work and I'd rather have the money to have an Indian meal. I don't know why I'm doing this. Oh look, it's hardly gone up at all. What a bore, what a waste of time. I thought that for about three years. I'm 58 now and I've got a pension and I go, "Where did all this money come from? I don't remember paying this." It really is like that. It's a compounding effect. And everybody effectively, because we have finance and ROI and all those things, everybody's using addition, multiplication, subtraction, and division to try and quantify the value of an activity, which actually is about power laws. It's not about that linear bullshit. It's really about power laws and non-linearities and all this kind of stuff. And so we are being judged by the wrong maths. We're being evaluated by the wrong maths and also we're being evaluated over the wrong timeframe. And consequently, my argument would be that at a very rough estimate, an awful lot of marketing activity is in reality four times as valuable. Four is, okay, I'm plucking that number out of the air, but four seems about [inaudible 01:16:25] is probably four times as valuable as people think it is when they measure its short-term contribution. Could be more of course I love that because over time it will build and it compounds. It's like a drip. I love the three points you made about how to build a great brand consistency, distinctiveness. What was the third? It was be famous?…

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