Effectiveness vs Efficiency for greater media impact.

On the 6th May 2010, over $1 Trillion was wiped off the US Stock Market in 36 minutes. This was made possible by High Frequency Trading Algorithms, designed to take advantage of tiny variations in stock prices, working at speeds that human traders couldn't hope to compete with. Why has this got anything to do with this article? Because this is pure, unadulterated efficiency at work but unless the objective was to wipe huge amounts of value off of the stock market, it wasn't very effective.

Effectiveness is doing the right thing, Efficiency is doing things right.

This is an important demonstration because in the media and marketing worlds, these two terms are used interchangeably, often without any real understanding of what they mean and the fact that they are significantly different. The best explanation I have come across is that "Effectiveness is doing the right thing and efficiency is doing things right". This illustrates the key difference. Being effective is inherently valuable. It means you are doing the correct thing(s) in order to achieve your objective. This doesn't hold true for efficiency and there is nothing inherently valuable in being efficient. The flash crash is the perfect example of being really efficient at doing completely the wrong thing.

In media, efficiency has become the holy grail, at the expense of effectiveness (as highlighted by a series of Binet and Field work), driven by the rise of digital channels and the obsession with targeting, then hyper-targeting and now hyper-personalisation. Moving to a short term view of success and measuring success solely through the cost of acquisition has seen many brands inadvertently lose traction and miss growth targets, whilst simultaneously reporting how much more cheaply their rapidly diminishing customer base is being acquired.

Effectiveness is making a comeback though. The work of Binet and Field has been hugely influential and both brands and agencies are embracing the importance of more holistic measurement approaches such as Multi Touch Attribution and Econometrics. These approaches can help develop an understanding of the full contribution of all activity, not just that which can be directly linked to an immediate sale and importantly identify “value” of those acquired and not just the “cost” of acquisition.

As with most things, the answer isn’t either or, it’s a balance. We should be trying to be more efficient and more effective. The important thing is to know which you are trying to do and why and then ensure you have a “basket” of metrics you are measuring for success, so that you don’t blindly follow one at the unexpected expense of another.