Here’s your missing half, Mr Wanamaker

John Wanamaker was a genius. He pioneered the concept of the department store, he was the first to systematically employ truth in advertising and he invented the price tag – believing that if everyone was equal before God, then everyone should be equal before price.

Nowadays, however, he is most widely known for the quote “half the money I spend on advertising is wasted; the trouble is I don’t know which half”. And who could blame him for it? After all, this was over a hundred years ago. Since then, mankind has learned to master heart transplants, invented the computer, eradicated smallpox and walked the surface of the moon. And, believe it or not, figured out a great deal about how advertising actually works.

What’s more, the thing is that Mr Wanamaker firmly believed in advertising and it was absolutely critical to his empire-building.  So I would interpret his quote not as meaning that advertising is a waste of money but rather as “advertising is so crucial that the advertising budget is the very last thing I’ll cut – no matter what”.

So I’ll say it again: Mr Wanamaker was a genius and should be admired for his achievements. Fast-forward to today and I’m not as impressed. Depressed, would be a more appropriate sentiment. Why? Because you hear the Wanamaker quote being thrown around even to this day, not only by cackling digital cockerels – which comes as no surprise – but also by people actually in advertising and marketing.

Well, I have two words for you: Blame yourselves. If in this day and age you don’t know better than to think that a big chunk of your advertising investments go to waste it’s nobody’s fault but your own.

Firstly, you don’t know whether your ad investments pay off because you don’t know how to measure them correctly. Advertising effectiveness always has to be evaluated both in the short term and long term, since the main thing advertising does is that it affects the brand being advertised, which in turn influences purchase behavior. The model for how almost all advertising works is thus Advertising -> Brand -> Sales and not, as most people still seem to think (probably because they even haven’t thought it through), Advertising -> Sales. In spite of this, the most common, and a lot of the times the only, way marketers measure “effectiveness” is by means of ad recall, ad liking and ad-induced purchase intent. I’m sorry, but that’s just plain stupid – and of course it will lead you to thinking that most of your ad money is wasted.

Secondly, and more importantly, you probably are wasting your money. But, again, that’s not advertising’s fault, it’s yours. You’re wasting money because you are stuck in an outdated model of how advertising works. You still sing praise to AIDA (born in 1896 as a model for personal selling and never meant for advertising) and still think advertising is about information processing, i.e. about transferring messages from sender to receiver, when, in fact, it works mainly through creating, altering and strengthening brand associations and brand relationships.

The reason behind this misconception is that marketers seem to be the only professionals on earth who still think that people are fundamentally rational beings (and also that they’re actually interested in actively decoding and responding to advertising). Ok, so it’s not enough for you that every psychologist, neuroscientist and behavioral scientist agree that’s not the case – so be it. But for heaven’s sake, when even the disciplines of economics and finance, which used to be all about rationality, are adopting the fact that people’s behavior is primarily irrational and emotional, don’t you think it’s time for you to rethink your position?

Probably not.

Because at the heart of the matter is an even more depressing fact: Most marketers aren’t all that interested in how advertising works and in how it should be used to sway people’s decisions in their favor. They have never read a book on the matter, never downloaded a research paper, never attended a conference or engaged in a discussion on the topic of how advertising works. And it doesn’t stop there. If they were merely passively ignorant, things would be ok. Not good, but ok. However, not only do most marketers not understand the fundamentals of communication and aren’t very interested in it; to make matters worse they insist on sticking to their obsolete models, mostly based on the despicable notion of “common sense” (of which Einstein said “common sense is the collection of prejudices acquired by age eighteen”), thus making it difficult and sometimes damn near impossible for people whose job it is to actually know and master these things to, well, do their job.

And then, at the end of the day, after all the nonsense, they still have the nerve to blame advertising, e.g. by firing away platitudes to the effect that half the money they spend on advertising is wasted.

So, Mr Wanamaker didn’t need it and may be excused for living a hundred years ago, but for anyone wanting to work in marketing in this century, here’s a piece of advice:

Take a look in the mirror. Read a book. And grow up.