How to Measure Marketing Effectively with Sorin Patilinet | Ep. 366

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0:24Welcome to the Marketing Millennials, the no BS marketing podcast. I'm Daniel Murray and join me for unfiltered conversations with the brains behind marketing's coolest companies the one request I tell our guests stories or it didn't happen get ready to turn the up we are back with another episode of the market millennials I have a really great guest today. He's an author. He loves numbers and he loves marketing science. And we're going to chat all about that today. I'm going to let him introduce himself, but I'm excited for this episode. So, Sorin, take it away. Likewise. Thank you very much, Daniel, for the invite.

1:14It's a pleasure to be here. My name is Sorin Patilinet. I'm calling in from Brussels in Belgium, in Europe. I'm originally from Romania in Eastern Europe. I'm an engineer trained in telecommunication engineering. But from day one of my career, I started in marketing and I've never looked back. And I've spent 20 years of my life working for various global organizations like British American Tobacco, Mars, and recently PepsiCo in roles that span marketing, brand marketing, and consumer insights because I've wanted to bring my passion for analytics, my engineering mindset into the world of brands.

2:00And that's where I am today. I'm excited to spend the next couple of minutes with you and explore the concepts around marketing effectiveness. Yeah, let's go. Let's first of all, just get into like why you decided to pick this topic to write about. I know you do it for a living, but what does it actually mean to have effective marketing? So marketing effectiveness is actually a trending topic in the world of brands in the sense of it has been always the number one priority of major advertisers to prove to their CEOs, CFOs the value of their investment. and with the advent of data and consumer data in particular, the choices that marketeers face every day are more and more accelerating and therefore the ability of ours as a function to keep up with technology is really limited.

3:11Therefore, we are questioned a lot. We are asked, what's happening with my investment? Are you generating ROI? Are you driving consumer engagement? What's happening with all this? And I would say that in recent years, the topic has become more central to the conversations that happen in big brands. Yeah, I think, I mean, especially now, I mean, big brands and small brands' budgets are very scrutinized. and then now they want to know, okay, dollars in, dollars out, where's our money going, what channels they're going, what channels are actually working. So could you describe what you did at Mars and what you're doing at PepsiCo so people know what your day-to-day looks like, and then we can dive into how you think about measuring marketing and how you think about your data-driven approaches to it.

4:05Yeah, and I would go back to what you said initially that nowadays, marketeers are scrutinized about their choices and their investment. And I think that's happening because data is more present. Everybody feels that data is somewhere here, that we should use it, that we have everything that we need to make the better decisions that we made 20 years ago. So it's just because of this omnipresence of data that is sometimes misleading, that marketing has become a much more quantifiable part of the organization, which I don't think it was in the past. I think in the times of Don Draper, clearly it wasn't.

4:50So what did I do at Mars? I've been with Mars, the company behind brands like Snickers, M &Ms, Pedigree, and Iams, for the last 13 years. And I've been slowly building what we call a marketing effectiveness center of expertise there. What does that mean? It means onboarding external partners, building internal solutions with the ultimate goal to make better decisions when it comes to advertising effectiveness, media channel choices and media strategy. So there are three elements of what I'm very proud of, what we've accomplished in that role. One was that we innovated in the way we measure the impact of advertising on sales using single source panels.

5:50Second of all, we've innovated when it comes to advertising testing, what is commonly known as pre-testing in the industry. and I was very, very clear that what I wanted to do is to run a purely behavioral measurement and therefore we looked at neurosciences, we looked at attention, emotions and we built our own testing solution that predicts sales impact, which is still used today. And lastly, we've took all the insights that we've generated at scale across all the geographies of the company and we've created what we call the Mars Advertising Principles, which is a set of guidelines that tell you how to make better decisions with your media dollars.

6:35So that's what I was at Mars. It's part of the history now. I can say recently, six months ago, I've moved to PepsiCo, which is a completely different beast, I would say. It's a much larger organization. It's much more effervescent. And the role that I have there is to innovate when it comes to measurement. Some of those capabilities are already existing there. My role is to scout what's available out there and ensure that more decisions are data-driven decisions. And that the tools that we are using when it comes to measuring ROI, measuring consumer response, measuring brand equity are top class.

7:22one thing i i know you've said before is um like marketing effectiveness effectiveness is not just about roi so what do you think um like a lot of marketers get wrong when they only focus on that like roi um metric so the reason why i wrote this book uh was that i was a little bit uh upset i I don't know, I would say pissed off about the fact that most of the conversation that happens at events, on LinkedIn, in whatever circles you have, like inter-industry conversations around marketing boils down to advertising and communication. It almost feels like everything that we do is advertising, which is not the case.

8:12With this book, I'm trying to elevate that conversation at the higher level because marketing effectiveness to me is a holistic solution to understand how your brand is performing and if you think holistically you need to look at how is how effective is your strategy how effective is your product performance how effective is your pricing your distribution your media of course and your advertising but also your the way you implement the insights into the organization. So I'm proposing a framework to look at measuring marketing, not advertising, that goes beyond the ROI of Facebook, for example, offering solutions that I've tested over the years and I've used that could provide a more data-informed decision for you.

9:11I honestly think that what you're saying, when you just measured the ROI metric, there's those levers that you were talking about recently, like distribution, pricing, segmentation, that get ignored in that conversation. So can you share the example where one of those levers have been overlooked by a brand? And what happens if they overlook one of those levers and just focus on that one metric that everybody talks about? I was like, what is my return on MetaSpend? What is my return on Google Spend? And that's it. But I think just to clarify why they're overlooked, there is a dynamic in large organization that the marketing department has become communications department.

10:05Because when you have a lot of resources, you tend to segregate different kind of decisions of the marketing, let's say four Ps or whatever you want to call it. So sales is in charge of distribution. Usually the finance department is in charge of pricing. maybe R &D and supply are responsible for product. And what's left in marketing is primarily strategy and communication, which makes the marketeer de facto an advertiser or like a communicator. I think the companies that I've been part of were examples in which those silos were broken by bringing together those departments. And I think there are numerous examples on pricing and product that are often overlooked.

11:01I mean, just a simple visit to any store nowadays will tell you how prices have changed across grocery products in the last years. but I think if a company does not look into consumer willingness to pay, does not look into price elasticity, which is the variation in demand that is expected from a difference in price, I think companies might be surprised. Now, I don't want to point out any organizations or any brands here, but most pricing decisions in last years were probably taken without looking necessarily at price elasticity and influenced by external factors, of course. But that's what I'm trying to raise the awareness that those things cannot be forgotten.

12:05I've run a lot of marketing models that converge to the conclusion that advertising or media or let's say communications is at best 10 % of the sales generated by a large scale brand. And that there are other factors that influence the other 90 % distribution, pricing, all those elements together with baseline. So by focusing just on 10 % of your potential, you're just shooting yourself in the foot. Yeah. And I think, I mean, what your, your argument too, which is right is like, I feel like those other levers are marketing levers and per se, like price is part of the offer. Like when you're a marketer, price is an offer where, where it's getting distribution distributed and shown is part of like where is a marketing thing and marketing's not involved in those decisions or marketing's not seen in those decisions like it's it's way harder for you only have you what you're saying is just the average so you're not influencing a lot of the bottom of bottom of the funnel movements which could move no no but you could you could influence those because you your portfolio is not static.

13:25I mean, you always launch new innovations. You always launch smaller brands to capture tailwinds in the category. And you could have a differentiated distribution model in which you focus on certain retailers. You could have a specific price point that would differentiate your current range versus the rest of the product. So those are all at our disposals. and they are the delta in what you get by really approaching them through an analytical lens is much bigger than what you get from optimizing your facebook campaign in the last week that's what's the that's the message that i'm trying to land in the book yeah and um so how should marketers like based on the concepts of your book of what you're trying to do like how can marketers be more like set this up internally like what is like the first one or two moves they need to do today like to start like making sure they have the right reporting have the right tracking start setting this up um where should they even start so i'll tell you wait where they should not start they should not start from the data that's available to them uh i've been uh i'm a fan of technology.

14:49I'm an engineer, so I love anything that has zeros and ones. And I'm observing from a distance the progress of technology over the last two decades or three decades. And it's fantastic. It's unbelievable. And marketers or even market researchers are just looking at that progress, thinking that we are not able to match that progress in what we do. The evolution of marketing, the evolution of marketing research cannot match the evolution of platform innovation or any kind of technology thing. So we're always playing catch up. So starting from the data is probably not the right way. I would look at it.

15:34And for the teams that I work with and I consult, I always tell them that the first thing you should clarify is what are the main decisions that you are going to take in marketing. And then quantify those decisions around the impact that one way or another that decision will make on your P &L. and then rank them. And then you realize that, okay, for this brand, maybe choosing the distribution model is much more important than the mental availability or the communication. For this brand, it's pricing. And it starts to create like a decision tree, but it always starts with the decisions. Because at the end of the day, everything we do is test and learn, try and see the results.

16:26It's always like we're seeking change in marketing and we want to see the results. So I think that's what I would advise. Yeah, I like the way I like when engineers and scientists come into marketing, because I think like a lot of marketing is you have a hypothesis and you're trying to prove and disprove the hypothesis. But you need to have that to be able to test learning. And even if the result comes out as like the result is not your favorable, at least you like tested and learned that that what based on that hypothesis. And I think like if you don't, I think a lot of marketers just go into things where they don't have that hypothesis and then they can't learn.

17:11And then they keep making the same mistake because they didn't come from what you said. Like, here's the big decision we need to make. What is the decision? The steps we need to make. What was the result? okay we learned this and that let's not make that mistake again now let's go back and have the next hypothesis and the next hypothesis and the next hypothesis where like if you don't have that first hypothesis you're not going to be able to do much and then you're not going to learn from all those mistakes you are making because you don't yeah i think i think it's a way of thinking it's a way of thinking that you are trained in engineering schools but you're not trained in business schools to think logically in systems in and as you say test and learn and hypothesis generating a hypothesis and generating a test and and control but i was i was actually very surprised when i looked at the list of top 10 companies in the world on based on market capitalization nine out of ten of those companies their ceos are engineers the only one that's not there is Amazon.

18:19And if Jeff Bezos would have still been around, he would have been 10 out of 10. I think this should, and I think this propagates to other like big brands. And this should say something. I mean, your main partner in making budget allocations is your CFO, but at the end of the day, your boss is the CEO. So if most of your bosses are engineers, you need to start at least thinking like an engineer. Now, I'm not advocating here that you need to go to engineering school to become a CMO or a marketeer, but embracing that way of thinking, the analytical way of thinking will help you make better decisions, but will also help you in your career in talking to your boss, because most of them probably are more literate in terms of finance and effectiveness than you are as a marketeer.

19:15And that's absolutely how life was. I think we're moving from a world in which marketeers were seen as gut-filled and experience-driven to a world in which cold, hard facts are driving their decisions. I also want to talk about you and Mars, you implemented... ACE and then AVI. Could you go into what those are? And just so people can get an idea of how you think about measurement and the strategies you implement. Sure. I'll pick ACE. I briefly mentioned it before. The biggest challenge that we had seven, eight years ago was that we were producing significant amount of execution of content of creatives.

20:14And we wanted to find a way to understand the potential of those creatives. Being a Super Bowl ad or like a traditional TV ad or YouTube non-skippable or skippable ad. We wanted to understand the potential of that ad to drive consumer behavior or to drive a purchase. I'm a very firm believer that asking people if they like an ad or if they remember an ad is not the right way to do marketing research. a because academics have proven more time and time again that people lie in surveys or people choose the easiest route in survey and and the second thing is that i i would ask you daniel when was the last time you took a survey we are all marketers here so i'll say it i hate batch blast messages.

21:14It's not 2010 anymore. We've got data. Let's actually use it. That's why I love customer.io. It helps you turn first party data into personal messages across email, SMS, and push. Build it, automate it, and make it not suck. Start a trial and join 7 ,800 plus brands already doing smarter marketing with customer.io. Visit customer.io to start your free trial today. yeah i i never take service i never i never i never i never know where these like brand surveys come from because everybody says they have a brand survey and i've i've never personally taken a brand so who is answering them that's what we should all be asking and we should check with our our partners who are offering us those services so i'm skeptical about the entire survey space and without even mentioning how AI and potential fraud are impacting that space.

22:10So we were looking at how can we focus on behaviors, focus on really how people engage while they're exposed to the ad. And we partnered with Nielsen, which was at that time the largest neurosciences for marketing organization. and we've run hundreds of ads in lab with real consumers to understand what's the impact of exposure to how the brain reacts to various stimuli. And we knew which ads worked, we knew which ads did not work because these were older executions. And we could identify that the drivers of creative excellence are attention, emotions, and cognitive load. And for that insight, we then looked at solutions that could scale because in-lab neurosciences is not something that you can easily run.

23:11I mean, you can't just put your Facebook ad and bring people in a lab to test it because it's hyper expensive and not fit for purpose. So we identified solutions that at that time were quite unique to look at measuring attention through facial tracking from respondents that were participating in a research on their devices, wherever they were on the go or at home. and by looking at the camera feed from their phone, an AI was able to understand whether their eyes were on the screen or not, whether they were smiling, whether they were frowning, so therefore diagnosing the attention and the emotions and the distraction, which is very, very important.

24:00And we created a model that predicted from attention, emotion and distraction, the impact of the creative, which has been used extensively. I think it was like 39 markets, hundreds and thousands of ads that were measured second by second and improved second by second. And it was fascinating because we were, when it comes to like even a Super Bowl ad, you spend a lot of time in the marketing department to write the brief and you put consumer insights and you put your heart and soul into that brief. but usually end up with a very large brief. And what comes back from your agency is a very, very complex creative construct with a lot of details, a lot of complexity, which is exactly what research told us you should not do.

24:50Humans prefer like easy messages, simple to understand, to decode. And frankly, my biggest insight that I had over the last five years of doing that research continuously for our brands was to find ways to simplify the message, to reduce the clutter. You don't need to show the end frame with seven SKUs. You just show your main SKU. You don't need to have multiple storylines. You can easily go with one single storyline. So all sorts of simple ideas on how you can improve step by step. And I think those ideas have legs and have been proven through marketing science. And therefore, they are part of the elements that I explain in the book.

25:40I think a lot of people ignore the psychology and the neuroscience part of marketing. There's so many things that we in humans are innately built to do. um and we always forget that i always tell marketers like if you start learning by human psychology first when you start marketing marketing becomes so much easier because there are things that haven't changed in two thousand three thousand years our needs are the same yeah yeah needs are the same where if you're writing for trends and things that are happening now that's it's way different you need to start with the principle of like here what are the basic need this product's trying to solve and then write back from that and then see uh and then you do you what you did is really intense and go and look at how brains are responding and stuff like that but if you start with that you know that humans are wired a certain way and that hasn't changed like and it still won't change with like ai coming into this world and still won't change for a long time um marketing becomes way way more easier to figure out i don't think it's it's easy otherwise every brand would be selling millions and millions of dollars very easily but but i think it will be easier than just going on straight like feeling in surveys and um yeah i I think marketing is easy, but we complicate it very often because we get bored.

27:18I mean, we get bored when our ads are seen for six months in a row. And then we think that consumers are tired of them. So we change the ads. I think not all of us, but some of us make stupid decisions just for the sake of novelty. And as you say, chasing the trend or chasing whatever the platforms are telling us to do. forgetting that there are a lot of insights in behavioral sciences, for example, on how biases influence our decisions and how you can use small nudges that can get your messages much better across. That's a fascinating topic, the behavioral sciences, which I haven't managed to crack.

28:09yeah it's funny because like copywriters for the longest time like dan kennedy for example he always said like he asked the question like to like people in school like what is the number one thing if you opened a restaurant was like the number one thing you would want and people were saying like i want a burger or i want like this and i want that and dan kennedy goes like i just want a hungry crowd um because you can sell to hungry crowd um so it's like like those type of things are like you need to sell to that that crowd who like that hunger isn't a human basic need and it happens every day yeah exactly so it's like if you're writing to that hungry crowd instead of writing to everybody you have something to to do something that's why i think it's super super interesting um this reminds me of uh the best campaign that i've worked on which is you're not you when you're hungry, which is the Snickers campaign.

29:05Yeah, it's fascinating. It was one of the campaigns that we had a lot of debate internally around how to evolve it. And I'm very proud that we stick to that message and we evolved it naturally, but kept the core concept. I mean, it turned a Snickers bar into a candy and a chocolate bar. turned it into like a thing where like even athletes were having it on the sidelines like people were like eating it when they finished running it was not just like uh like people when they had low blood sugar were eating it like it was not like it was just becoming everything was a you you connected hunger with a basic human need with a bar which is the yeah that's the and i mean it was brilliantly written and stuff like that but basic human need with a bar i think everybody I felt, um, and great creative and it helped bridge the gap in humans minds to be like, when I'm hungry, I should be getting a Snickers bar.

30:11Even I think of that sometimes, even when I, to this day. And I think this is the, I mean, we've been using a lot that, uh, that campaign or that insight in, uh, because it's a generic insight that's valid across geographies, across demographics. I mean, how can you create something like you're not here when you're hungry for your brand? I think that would be like a very good start of a brainstorming conversation inside your brand. Because how do you find out that unique proposition that your brand can answer? And that's generally valid for a larger chunk of the population. I think being in a room when they come up with that probably was a great thing.

30:58um and they and again like they probably i mean it was a very educated guest but it still was a a guest that they were like okay this is like we're testing like this line to see if it works and it worked but it still wasn't came it started like you said at the beginning like there was some sort of like experiment run like okay let's connect this and that um and that's why like if you start thinking like they did they probably had five 20 other lines lined up and that one became the winner and has been the winner for a long time so um i wanted to go in you mentioned a little bit about ai with the tracking of the eyes but how is ai changing the space now like how are you using ai to when you're thinking about the space it's massively it's massively changing because, I mean, one thing is certain, the amount of content that's produced is just exploding.

31:59For every single brand nowadays, I mean, you will not have the time to even monitor, let alone measure or test whether your content might be working or not. So the natural next step for any kind of ad testing solution is to use a synthetic data set that would predict the ability of that content to perform whatever your outcome metric is i prefer sales some other prefer brand live studies or equity but but to be able to have that model the synthetic model in which that you believe in you need to have done the work prior so that you train that model on some existing data you can't just start from scratch and take an off-the-shelf model then you just trust whatever company you are you're engaging with that their model is is great and i mean there are some great models are there but um i would say the rise of synthetic in in research is real uh and it's coming towards your your creative measurements very very soon yeah i think i think would you the the part you said about what people forget is like you need to have those good inputs to good outputs um and a lot of people forget about like doing the work the work before to have those good inputs to go to feed ai because it's just like any anything out there and content as well good bad bad content and like bad information and bad information out ai same thing is like bad data in bad data out um and you could be if you have bad you could and people are overly trusting of ai so if you uh put bad data in like oh this is what data that the ai is telling me this but if you didn't do the work ahead of time to put in good stuff yeah i think a lot of people are trusting ai because uh we got fooled a little bit uh i think we misunderstood the opportunity.

34:11I think everybody thought the opportunity is to create more content, while in fact, we want to create better content. And yes, of course, AI can create more content. That's what's been crafted too. But the real question is, how can you use AI to create better content, not more content? We don't want more content. We want content that convinces people to make decisions at the point of purchase, or at least to build the brand in their minds. I love that. I think that I've always said that this day and age, the ability to have above average content is just going to keep rising up. And that's what's going to keep happening.

34:51Above average ads. Ten years ago, you could win with the best targeting because you can use the systems of data to win. And now you have to use that and be above average because the sea of content is just so much. The bar keeps getting higher every single year to be that B plus to A content. And I think a lot of people are still forgetting that when you do a campaign, there needs to be a budget to be putting towards creating great content, And not only putting a budget to the distribution of average content, which is what a lot of brands do. Yeah, that's the typical conversation that happens a lot day to day around the working media and non-working media.

35:43I mean, we tend to see like a non-working, which is what we call the production budget skyrocketing nowadays. But that's something we try to keep into balance quite well. But it's a fascinating topic. So yeah, I would go on forever. I know you mentioned measuring on sales. So how do you have conversations with teams that are only focused on, let's say, brand? Let's just say, how do you talk to teams that are just thinking about, I just want to measure on brand and not sales? How could you use your effectiveness to influence a brand marketing team that haven't been thinking about the end results?

36:38Some teams do. How do you think about that, of making sure they use this marketing effectiveness model? So I was very lucky to be working in organizations that were driven by quant and where the sales impact or the ROI of the campaign was the number one criteria of decision. I've never been exposed to a brand team that only cared about brand equity, irrespective of how much they invest or what's the return of that investment for that campaign. Now, there are nuances, of course. I mean, we know that advertising builds both long-term brand equity and short-term sales. So there's always a balance between those.

37:27But that balance is mostly a choice of media, going more towards retail media when you want short-term sales or going more towards brand building media when you want the latter. Uh, but, um, what I've always stated as an axiom was that, uh, if an ad doesn't sell, uh, it means it's not a good working ad. So, um, because if it sells, then there's also an equity benefit. So we've proven that with data, uh, unfortunately, private data, but I, I, I think it's something that David Ogilvie also used to say, that it's how he was checking the performance of creative. So I don't think it's such a big problem, but finding the link between those two, finding the smooth balance between what's an increase in equity versus going to give me in future sales, that's a meaty conversation that I haven't cracked yet.