Donny and Kaisy had just flown in from the U.S. and were being chauffeured to their Bologna hotel when Donny suddenly told their driver to stop. Kaisy looked puzzled as well as jetlagged. "No point in arguing abstractions," Donny said, throwing open the car door. "I'm going to show you what I mean about the value of the 18-to-49 demographic."
He and Kaisy had spent most of their flight debating how to approach a new American marketing campaign for their employer, Fiero, an Italian stove maker. Kaisy, a tech-savvy 26-year-old, was advocating a whole new approach to understanding consumers. A vendor named Settop Analytics could harvest household TV-viewing data from the cable companies and cross-match it with survey findings and credit-card information from merchants to tell Fiero that, for example, 4% of the viewers of a Fiero ad on the show Modern Life are in the market for a stove, compared with just 2% of the viewers of America's Got Brains, even though both have about the same 18-to-49 rating.
So yada yada yada, the days of bluntly going after the 18-to-49s were over, she had been arguing.
But Donny, who'd spent 40 years in consumer advertising, had a gut feeling that no such technology, no matter how dazzling, could ever beat the value of aiming ads at 18-to-49-year-olds. He needed to convince her of his viewpoint before they met with the corporate parent's marketing head tomorrow to plan the next phase of the company's American campaign.
(Editor's note: This fictional Management Puzzle dramatizes a dilemma faced by leaders in real companies. Please contribute by offering insights, solutions, and stories from your own experience.)
Donny was now leading Kaisy out of the car and into a showroom that he had happened to notice from the road as they were passing by. It was full of appliances, including some from Fiero.
"All your new, high-tech metrics that show you which TV shows work well for selling which products — that's all fine and good," Donny said. "But at the end of the day, demographics trump everything. Come meet your customers — and yourself."
In the elegant interior, high-tech lighting contrasted with the exposed brick and beams. "Let's find an 18-to-49," Donny said, making his way through the showroom.
In the refrigerator area, he startled a young couple by making an attempt to communicate in broken Italian. Fortunately, both spoke English, and they brightened when Donny explained that he and Kaisy worked for Fiero. Donny asked them to talk about themselves. When they hesitated, he did it for them:
"You're young," Donny said. "You're building your lives and your careers. And maybe a family?" They grinned shyly and nodded. "You need lots of products to fill up your life. You probably have a new apartment?" They nodded. "You're looking for a refrigerator now, but maybe a stove later. The economy here sucks — excuse me, I meant to say it's terrible. But you have good jobs, you have a bit of money, and you like to spend, if you can find value. Right?"
They laughed. "Right," they said.
Donny turned to Kaisy. "You see?" he asked.
Kaisy jumped in: "How old are you, if I may ask?"
The man said he was 28.
"How old is your youngest sibling?"
"Do you think he'll be shopping for a refrigerator or a stove anytime soon?"
"He's riding a skateboard in the piazza," the man replied.
Kaisy said to Donny: "Eighteen to 49 is vast. It's a hodgepodge of demographic groups that have very little in common." She said to the man: "It might even include your parents."
"No no no, they are in their fifties," he said. "But as a matter of fact they just bought a new stove! They got a new apartment when my brother moved out." He added in a low voice: "Not a Fiero, I'm sorry to say."
"You're too good to be true," Kaisy said. To Donny, she added: "Listen to what he said: A lot of consumer spending happens from people outside the 18-to-49 demo. Fiero doesn't even advertise to that age group, because we're so focused on 18-to-49."
The driver, who had gotten out of the car and found them, was peering at them questioningly. "We have to go," Donny said.
"Donny, you don't seem to realize that Settop Analytics gives us a real chance to get beyond demographics," Kaisy said as they abruptly departed, leaving the couple looking baffled. "Our current advertising strategy of searching endlessly for channels that deliver the biggest numbers of 18-to-49 eyeballs is way too crude. With Settop, we can be more precise."
Hearing no response, she added: "Using Settop's technology, we can focus our advertising on real buying intention, not some random slice of the public based on age. We can know what the return is on every aspect of our ad campaign. We can target our dollars to TV shows that appeal to people who might really buy our product."
Donny spoke up: "What if that vendor is selling you snake oil? And even if there are some good data, the reality is that this new technology would be a nightmare. Imagine trying to make sense of all those statistics that might or might not be telling you something you need to know. Cable TV data, credit-card data, survey data — imagine all the trial and error, putting this or that ad on this or that show and waiting for the numbers to come back. I'd feel like I was back in high school biology, trying to grow fruit flies."
"You don't like it because it's science," she said. "But what Settop really gives us is freedom. We can free ourselves from the 18-to-49 mind-set. We can put our ads on shows that deliver likely buyers of stoves, whatever their ages. That's the case I'm going to make tomorrow to Sergio, our new marketing VP. This is the new world, Donny. I have a sense that Sergio is going to be very receptive to it. The old guard is gone at Fiero, and Sergio is new blood."
Donny stared out the car window. "You know, Kaisy, I've been hearing about the death of demographics for a long time. But think about that guy's brother, the skateboarder: Our ads on his favorite shows may not have an impact on him right now, but while he's thinking about which skateboard to buy he'll also be making a mental note about the Fiero brand, and if our ads are effective he'll keep that mental note in his head for a long time as he eventually gets married and starts a home. On a fundamental level, advertising is about building image and creating memory."
"Buying time on a show that delivers 18-to-49s is taking refuge in safety," Kaisy replied. "That's what Fiero has done for decades. It's like 'Nobody ever got fired for buying IBM.' At Fiero, nobody ever got fired for buying up a bunch of ratings points in shows that deliver high 18-to-49 numbers. But Sergio's in charge now, and I'm hoping he'll listen to reason."
Question: Should Fiero stick with its approach of appealing to 18-to-49-year-olds or use technology that reveals the impact of specific advertising channels?