Maximizing Marketing Success: Embracing a 'Moneyball' Approach to Your Media Mix

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In the book Moneyball, the former general manager of the Oakland As, Billy Beane, decided to select players based on their performance rather than traditional standards. He looked for players who could catch, run, or hit well, even if they didn't have the typical star appearance.

The Oakland As managed to win the league with a limited budget, and their success story was even turned into a movie. Brad Pitt portrayed Billy Beane in the film.

Most people who manage a marketing budget may not expect this outcome, but there are valuable lessons to be learned. Choosing media channels that are effective but not widely popular can give a marketing team a competitive edge.

Just like in the movie, Billy Beane made successful choices by selecting older players who had been overlooked. A recent study called Profit Ability 2, conducted by EssenceMediacom, Gain Theory, Wavemaker, and Ebiquity, indicates that the same principle applies to media selection.

It identifies radio and podcasts, linear TV, and, for the audiences that still read it, print, as the ‘moneyball’ channels of the post-covid era.

Fashionable vs. moneyball

This study measures the advantages of various media platforms and the extent to which marketers invest in each one. By analyzing the correlation between expenditures and returns, we can determine which media channels are currently popular and which ones are not being utilized to their full potential.

The diagram provided shows a framework for classifying media channels based on their share of profit and total spend. Channels are plotted on the x-axis for share of profit and on the y-axis for share of total spend.

Channels located above the 45 degree line are considered fashionable, indicating that more money is being spent on them compared to their profitability. On the other hand, channels below the 45 degree line are categorized as moneyball channels, meaning they are effective choices but are not receiving their fair share of spend.

The chart below plots media channels onto the framework.

There is a bias towards newer, more attractive, and usually online media channels. The 'trendy' group, who may be overspending, consists of generic PPC, paid social, and display advertising.

Cinema, online video, and broadcaster video on demand fall on the 45-degree line. These mediums are neither trendy nor outdated, as they are being purchased based on their performance capabilities.

The best opportunities can be found south of the line. This is because there is a bias in media buying against certain channels, resulting in less demand and the chance to get a good deal.

Traditional channels like radio, podcasts, print, and linear TV are located in this area. Surprisingly, these channels actually provide the highest total profit per £1 spent compared to all other channels in the study.

Overextending the Pendulum

Many marketers may find it surprising to hear that increasing linear TV ads and print advertising may not be the best approach. With the decline in live TV viewership and the dwindling popularity of physical newspapers, it may seem counterintuitive to invest more in these traditional mediums.

Changes in how people consume content happen gradually over time, which is why it may not seem obvious at first. However, as media professionals, we are quick to respond to these shifts. This indicates that we may have progressed too rapidly.

In a recent study, it was found that over half (63%) of businesses stopped using print in the last 5 years. Only those who saw a very high return on investment continued to invest in print, while others with moderate to high ROIs decided to drop print from their marketing plans.

A similar trend was seen with radio, podcasts, and linear TV. Post-covid, marketers who still invest in these channels are benefiting from lower demand in the market, allowing them to get good value for their money.

Over-investment in online channels

At the fashionable end of the chart, the story is of over-investment in online channels.

These channels definitely belong on the plan. Paid search, paid social, and display are usually more cost-effective for direct responses compared to traditional methods. They can also effectively promote brand awareness in certain cases.

However, our current spending on these channels is excessive.

Maybe it's because online channels provide quicker payback, like the research showed for paid search, and we're eager to see our return on investment. But maybe there's a less logical explanation.

What if it's because online channels have measurement platforms that are now a regular part of our lives and guide us towards success? Or is it because they offer constant communication through their reputation? What if it's simply because they're more appealing?

The Unsung Hero of Moneyball

Pete Palmer may not be as well-known as Billy Beane, but his contribution to the 'Moneyball' story was crucial. As a sports statistician and encyclopaedia editor, he played a key role in designing the model that assisted Billy in identifying undervalued players.

Baseball managers often choose strategies they think are safe and won't lead to criticism, even if it means overlooking players who could help them win. This allowed the Oakland A's to take advantage of the missed opportunities.

The same concept can be applied to marketing. Conducting research such as Profit Ability 2 or MMM/econometrics tailored to your specific business can provide valuable data to identify the most effective media channels, similar to how 'Moneyball' strategies were used in baseball.

You need a Billy Beane on your team. Someone who is willing to take risks and go against the norm to achieve success. A hero who is not afraid to face challenges for the benefit of the business. Maybe even someone who could be portrayed by Brad Pitt in the movie of your triumph.

Grace Kite is the creator of Magic Numbers, a company that offers user-friendly analytics and hands-on training for marketers.

Editor's P/S:

The article highlights the valuable lessons that marketers can learn from the "Moneyball" approach to selecting media channels. By choosing effective but less popular channels, marketers can gain a competitive edge. The study cited in the article identifies radio, podcasts, print, and linear TV as the "moneyball" channels of the post-COVID era. These channels offer high profit margins compared to their share of total spend.

The article also cautions against overextending the pendulum by investing too heavily in online channels. While these channels can be effective for direct response and brand awareness, marketers may be overspending on them due to their convenience and measurement platforms. By conducting research to identify the most effective channels for their specific business, marketers can make informed decisions that maximize their return on investment.