“Emergent Marketing” is a fundamentally new approach different from the traditional “resultant” marketing that is based on cause-and-effect at the individual level. In networks, one of the most studied phenomena is that of “infection” spread when a contagion is dropped into a network of humans; the result can be traced back to its cause – this is the hallmark of “resultant” marketing. Contra-distinct from this approach, Emergent Marketing is a low-level multi-node intervention in a human social network that creates the emergence of a ground-swell of a desirable activity (“emergent” activity) without identifiable one-to-one causality.
Let us start at the beginning. From high school Physics,
we know that atoms come together to form molecules and they have palpable
physical properties; for example, H2O in the form of water can flow as a liquid
and you can get wet. When a state transition occurs to water (such as due to
cooling), ice emerges whose “solid” property was unsuspected when H2O was a
liquid – this is called an “emergent property”. Solid-state Physics has
countless examples of such phenomena and one of the necessary conditions for it
is densely connected simple entities. The brain is an example of such a densely
interconnected neuronal network; such networks exhibit variability over time.
Variability over time or dynamics is often an essential property of such
networks, exemplified by the recent discovery (popularized in the press during
September 2012) of the role played by “junk” DNA in the expression of “coding”
DNA responsible for various diseases. There is a more informative discussion of
these basic concepts in my recent blogs, “What does ‘Emergent Properties in
Network Dynamics’ have to do with Shopping?”, http://pgmadblog.blogspot.com/2012/10/what-does-emergent-properties-in.html
and “So-Mo-Clo Framework for CUS”, http://pgmadblog.blogspot.com/2012/07/so-mo-clo-framework-for-cus-dr.html
The last paragraph introduces three concepts: networks,
dynamics and emergence. In my previous Emergent
Properties blog, I noted that “Facebook connected us in a vast network –
this is only a first step. The deep reason for the fascination with social networking
can be understood from the shopper example. Shoppers
are enmeshed in an ever-changing network of social interactions and
preferences; desirable behavior can be made to emerge by perturbing the
interactions within the network.” For
the first time, the concept of “Emergent Marketing” was introduced in this
context.
Emergent Marketing:
As mentioned in the first paragraph, Emergent Marketing
arises when one goes beyond one-to-one “resultant” marketing designed to
provoke a certain purchase activity in a shopper.
A simple model to understand marketing approaches is the
Purchase Funnel. The right hand side of the funnel in the figure shows the
various intentions of the shopper as she traverses through the funnel.
Marketing techniques aspire to move her from “Awareness” phase as quickly as
possible to the “Action” or purchase phase. The left hand side shows the coarse
buckets of marketing activities traditionally undertaken to achieve this funnel
transition – Branding and Direct Response. By the Direct Response methods, the
marketer is trying to induce a specific one-to-one response (as indicated by
the word, “Direct”) that will culminate in a purchase. On the other hand,
“Branding” is more nebulous; branding can take years to take hold and start to
bias your purchase decisions.
When you think some more about “Branding”, it appears to
have many of the features of “Emergent Marketing” that I had mentioned in the
first paragraph! Branding is a multi-node intervention that creates a
ground-swell of interest in a product or service but with a long delay.
In this blog, I want to focus on the Interest-Desire-Action
phase of the Purchase Funnel. Ads in this phase have the desirable properties
of immediacy and measureable efficacy; both are very important to the Brands
that pay for advertisements. Especially, the ability to correlate ‘ad spend’ to
point-of-sale receipts is a super-important metric; Brands need it (“Half of
the ad expenditure produces results; the trouble is no one knows which half!”).
Even during one of the worst down years of the Great Recession, worldwide
advertising spending was huge (estimated at approximately $654 Billion, $54
Billion of which was for online ads); it will be good to know which of the Billions
worked!
Among the many Emergent Marketing techniques possible, we
want to start by building on what we already know about branding ads and create
what I term “Just-in-time Branding” (JIT Branding). JIT Branding will exist in
the Direct Response phase of advertising and will have immediacy and measurable
efficacy.
Just-in-time
Branding:
Retailer’s interest is to precipitate a specific buying
behavior within a specific customer. But we do not approach it on an individual
basis because we know better now - we have to consider him as a node in a
network that includes his social network which creates latent influences and also
his “Shopper Attribute Map” made up of his likes and dislikes.
Even though infection spread is not a good analog for
Emergent Marketing, let us try to utilize it since much of the earlier work in networks
has been the modeling of the spread of infections in a population. Each node
has a different “influence function” – a node “infects” a varying number of
other nodes (out of total of ‘N’ Nodes). If there are ‘K’ contagions, the Linear
Influence (or Infection) Model (LIM) is -
v = Mi; where M - Influence Matrix (KxN); v – Volume of Infection (Kx1); i –
Node Infection (Nx1)
Matrix Algebra has so many powerful tools, fast
algorithms and practical insights that a lot of useful information can be
extracted by the expert from this simple equation. In general, singular values
and vectors (and the related eigenvalues and vectors) of matrix, M, can tell you which nodes are the
major “influencers” or hubs, how big their influence is and even what forms the
bases of their influence in some cases! You can start populating the Linear
Influence Model (LIM) with historic data collected from your real network and
apply the results and insights to your business to improve or control the viral
spread of your marketing message (or “contagion”).
JIT Branding using LIM is still a primitive model of true
Emergent Marketing. LIM models minimally incorporate the dynamics and the
ability to perturb the network in a fine-grained manner. The design and number
of “contagions” for emergence of desirable “ground-swells” of activity are also
open issues at this time.
What is next in
Emergent Marketing?
In a “crawl-walk-run” approach to developing full-fledged
Emergent Marketing techniques, JIT Branding is a “slow crawl” at best. Unlike
traditional branding, our main insight is that we have to explicitly utilize
the facts that (1) shoppers are embedded in social and preference networks, (2)
these networks are dynamical and (3) control knobs and levers at a fine-grain node
and link level have to be perturbed to engender desirable emergent activities.
One promising avenue is likely to be synchronization in
dynamical networks; it is a powerful method to generate global and local
“ground-swells” (sometimes with undesirable outcomes such as epileptic seizures
in the brain or outages in the Internet!). More advanced Emergent Marketing
techniques will exploit this avenue and other perturbation methods in dynamical
social networks to create desirable short-term product affinity for a selected
cohort of shoppers.
Closing the
Analytics Loop:
Analytics extract meaningful patterns and information
from raw data. But what do we do with those insights? The promise of Analytics will
be fulfilled only when we close the loop
via actions that lead to profitability in the broad sense. Emergent Marketing
is an example of closing the loop of “analytics” drawn from retail data and shopper
network activity back to the customer generating additional new analytics. We may
have tapped a rich vein in analytics-driven retailing here; whether it will
taper off or hit the mother lode remains to be seen.
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