In marketing, predicting advertising effectiveness is an important decision that affects a company's profits. However, currently, many companiesSelecting advertising creatives and allocating media budgets based on marketer intuition and experienceThis isIt involves great risk.

This article draws on research that examines how trustworthy intuitive predictions about advertising effectiveness are, highlighting the dangers of relying on intuition in decision-making and the importance of evidence-based decision support systems.

The research we are introducing this time is "Marketers' Intuitions about the Sales Effectiveness of Advertisements ■The book's authors include Professor Byron Sharpe, a marketing authority from the University of South Australia.

※References:Nicole Hartnett, Rachel Kennedy, Byron Sharp and Luke Greenacre (2016), “Marketers' Intuitions about the Sales Effectiveness of Advertisements”, Journal of Marketing Behavior: Vol. 2: No. 2–3, pp 177-194. http://dx.doi.org/10.1561/107.00000034 

Research overview

In this study, 616 people from consumer goods manufacturers and 82 people from advertising agencies, a total of about 700 marketers and experts in the field, were asked to intuitively predict which ad would have a higher sales effect, by showing 16 TV ads provided by the consumer goods manufacturer in pairs, A and B. The predicted results were then compared with the actual results to confirm how accurate the predictions were (prediction accuracy).

Key points of the research

1. The limits of intuition in predicting advertising effectiveness

The results of the study surprisingly showed that the overall prediction accuracy wasOnly 51%, which is roughly equivalent to chance.This finding shows that even marketers and experts have limitations when selecting ads based solely on intuition. In particular, in product categories where impulse purchases are common, it was confirmed that accurate predictions tend to be difficult because it is hard to predict consumer purchasing intent.

2. Experience matters, but not as much as you might expect

The study also looked at how respondents' job type and experience (field level, manager, etc.) affected forecast accuracy. Those with more experience in marketing or advertising showed slightly higher forecast accuracy, but the difference was not as large as expected. In particular, those working in "marketing and consumer insights" and those with experience in specific product categories showed slightly better results, butExperience alone does not have a decisive influenceIt became clear.

3. Crowd wisdom doesn’t work

Aggregating individual predictions into a group decision only resulted in slightly improved accuracy for some ad creatives.Relying on collective intuition rather than data is not a reliable solutionI understand this.

Why is it dangerous to over-trust your intuition?

Trusting intuition too much when making advertising decisions carries many risks. In particular, it has been shown that in selecting advertising creatives and allocating media budgets, it is easy to fall into failure for the following reasons:

• Complex environment and influencing factors:In addition to advertising, there are many other factors that affect sales, such as price, sales promotion, and competitors' movements.
• Room for subjective interpretation:As mentioned above, the effectiveness of advertising depends on various factors, so even if the same event occurs, it is easy to add interpretations.
• Lack of clear feedback:They often don't give clear feedback on the effectiveness of their ads, making it hard to know exactly what makes them successful

Due to these factors, decisions based on intuition are often inappropriate.Risk of wasting advertising budgetEspecially in marketing where advertising accounts for a large proportion of the budget, relying too much on intuition can pose a significant financial risk to a company.

A new approach combining data and intuition

While the risks of relying solely on intuition are clear, that doesn't mean that intuition itself has no value in marketing.The right combination of data-driven approach and intuition creates stronger decision-making processes

The benefits of an evidence-based, data-driven approach

Given that intuition alone is poor performer, marketers need toAn evidence-based decision-making systemThe aforementioned study also recommends the use of evidence-based decision support systems to improve ad creative selection, and that a shift from intuition to data-driven strategy formulation is necessary. A data-based approach is also important for the following reasons:

• Ensuring objectivity:Data removes personal bias from decision-making, allowing for more objective judgments.
• Improved measurement capabilities: Because the effectiveness of advertising can be clearly evaluated through concrete indicators
• Continuous learning and improvement: Systematic data collection facilitates continuous improvement

The role of intuition

Combining intuition with analytical processes can further enhance your decision making. Here are some key areas where using intuition appropriately can be beneficial:

• Promoting creativity and innovation:Intuition is the source of new ideas and approaches that data cannot capture.
• Use when quick decision-making is required:In times of rapid market change or crisis, there may not be time to wait for detailed data analysis, and in these situations the intuition of experienced marketers is a valuable tool.
• Evaluating factors that are difficult to quantify:Intuition plays an important role in evaluating elements that are difficult to quantify, such as brand image and emotional appeal.

Conclusion

In advertising decision-making,Relying solely on intuition is risky; a data-driven approach is essentialThe results of the research presented here show that advertising effectiveness can be improved by incorporating a data-driven approach rather than relying solely on intuition. By implementing a data-driven decision support system and working with data analysis experts, marketers can optimize their advertising budgets and improve business results. In addition, by combining data and intuition, it is possible to create new advertising strategies that go beyond mere numerical analysis, and differentiate from other companies in a highly competitive market.

As a pioneer in the use of data science in the marketing field, XICA has supported data-driven marketing for over 10 companies, mainly domestic enterprise companies, for over 270 years. Our analysts and consultants with extensive expertise in a wide range of industries will help our clients make better decisions.

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