Chip Wilson, founder of Lululemon, took out a nice big ad in Wall Street Journey to talk about how, essentially, the pursuit of numbers has made a brand that was once driven by innovation and could have been run by a refrigerator to one that has lost the cool factor. He says the power has shifted from Creative to Merchants, and that “merchants” use algorithms to meet financial forecasts – which usually means a focus on what worked last year.
This means the brand becomes predictable and innovation dies.
Is the algorithm to blame?
Algorithms can fail when they are built on faulty or incomplete data.
The lady at the salon used a calculator to add 1500 to 300. I was amused – and distracted – by that and did not realize till later her boss spotted that while she got Rs 1800 right, she was on the wrong page of their physical ledger!
Google Maps occasionally wants me to go down the wrong way of a one way or go miles for a U-turn or is inaccurate.
ChatGPT tells big whoppers every so often.
When we switch off our minds and trust the algo, yes, there is likely to be a crash.
In the Age of AI, why are brands still operating with incomplete data?
The data is still not keeping up with expectations
We can see a person’s home and through countless cues label their “taste”. We label them as “posh”, “stingy”, “fashionable”, “Y2K”, “vintage” etc. These are all qualitative judgements based on thousands of data points, which we process. Much of which is not available to any system at present.
Our brains are great at unstructured data – your friends and partners probably know exactly how you like your coffee. Or that you stopped adding sugar a few years ago for health reasons.
Businesses will be in trouble if they ONLY focus on the structured data available to them. What is labeled as “creative insight” is the ability to use ALL the data – structured and unstructured and then use all the tools at your disposal to determine what your customers are looking for.
So Why is Marketing in An Algorithmic Cage?
In the mid-90s when I worked in Ogilvy Advertising, knowledge of customers was pieced together with a combination of demographic data and in-person visits. Since media was more homogenous and there were a lesser number of SKUs, maybe this wasn’t all that inefficient.
We are now in the golden age of processing with a capacity to crunch data that we could only dream about in the 90s. Yet, many marketers have a LESS comprehensive view of their audience than they did in the pre-internet era.
There is a proliferation of SKUs and media. Theoretically there is also an explosion of purchasing channels, but reality is that for most brands a large part of their spend is on mega platforms like Amazon, Meta, Alphabet or Flipkart, Blinkit, BigBasket.
However, unlike the old-fashioned “market-visit” where you sipped chai with retailers, distributors, and customers, these new platforms are a black box – the only information that is definitely yours is that the product was sold.
Customers have a lot more information than they used to – can compare prices and products far more easily than back in the 90s. But marketers? No such luck. Data asymmetry is a marketing reality.
How to break free?
We have to use sources other than these black box retailers. Transaction data was one option discussed at the CMO Roundtable I recently co-hosted with Apurav Sethi, SVP Marketing of Razorpay. Our own direct sales channels is another.
Another – and this is not new -is to work on building your brand to attract your audience. As Chip Wilson points out it is easy to fall into the trap of chasing numbers of all sorts, but since there is no precise data on which to base a push algorithm, we have to invest in pull. The 4Ps of marketing are alive and kicking!
I love this take on what marketing ought to be by Virginia Sharma.
Focus on the math, but don’t neglect the passion for the customer.
Culture of Connection & Caring
At the CMO Roundtable that we co-hosted with Razorpay, one thing that shone through was their culture of caring. Whether it was the custom gifts for each participant, the lavish food spread or the genuine conversations to understand marketers’ challenges, it was a welcome change.
The fact that so many of us noticed and called it out, tells us how pervasive hustle culture has become! Every interaction is important, but every interaction is not a sale. We marketers have to not just crack the algorithm but break free from its tyranny.
In today’s long tail, we have to put in effort to do this. I’m trying to break free from the “songs you will like” by learning about trance and attending a Carnatic music Baithak this weekend. Write in and tell me how you are breaking out of the algorithmic jail 🙂
Have a great weekend!
