A History of Marketing / Episode 54
Few people have challenged how I think about marketing more than Professor Byron Sharp. His book, How Brands Grow, might be the most influential marketing book of the contemporary era. It told a generation of marketers that much of what they’d been taught was wrong, and it had the data to back it up.
Sharp is the director of the Ehrenberg-Bass Institute, the world’s largest center for marketing science research. You may remember my conversation with Professor Rachel Kennedy that covered the institute’s history and the two researchers it’s named for: Andrew Ehrenberg, who discovered law-like patterns in buying behavior, and Frank Bass, who believed marketing could be studied like any other part of the real world.
This episode picks up that story, straight from the man who carried their work to a global audience. It’s a conversation that spares no sacred cows: Kotler’s STP, brand purpose, behavioral science, and personalized advertising all take hits.
We cover:
How a young academic in Australia took on giants like Philip Kotler, and why marketing had the data to become a science long before it acted like one
The difference between looking scientific and being scientific
A round of overrated / underrated: Sharp’s hot takes on positioning, brand purpose, behavioral science, and personalized advertising
Whether AI opens new questions for marketing’s most famous empiricist
Listen to the podcast: Spotify / Apple Podcasts
Special thanks to Xiaoying Feng, a Marketing Ph.D. Candidate at Syracuse, for reviewing and editing transcripts for accuracy and clarity. And to Nick Asbury, who you may remember from episode 53 of this podcast, for introducing me to Byron.
Andrew Mitrak: Byron Sharp, you’ve been at the top of my list of people to interview since before I started this podcast. So I’m looking forward to a conversation with you about marketing history and “the arrival of science.”
Byron Sharp: (Laughs) That’s not true because you interviewed Philip Kotler first.
Andrew Mitrak: Yes, well, I’ve interviewed a lot of people. I feel like I’ve had a chance to do my homework prior to interviewing you. Of course, I read and re-read How Brands Grow and then, for the first time, I went through How Brands Grow: Part 2. So that was excellent. So I feel like I’ve done my homework prior to speaking with you, between that and the other interviews I’ve done.
Byron Sharp: Excellent, excellent. At the end of your Philip Kotler podcast, he said, you know, “an inquiring mind” and “read a great deal of things,” and he was excited for the next revolution in marketing. He’d like to be part of it. I don’t know, when was that recorded? When did you record that with him?
Andrew Mitrak: I recorded that in October of 2024.
Byron Sharp: Okay, well, gosh, there has been a revolution. He’s obviously missed out on it.
“Have you looked?”: The Shift to Marketing Science
Andrew Mitrak: Let’s talk about that. So let’s talk back to sort of the Kotlerian era of marketing, and when you first encountered marketing, when did you realize that the prevailing marketing wisdom wasn’t sufficiently evidence-based?
Byron Sharp: You know, when I did my master’s by research, I read a lot of the American literature and things, and it was researchy. You know, it’s researchy. But it’s not terribly—it’s not the sort of science that we learn when we’re at high school. There was sort of, I don’t know, it’s weird. It’s a weird thing in the—I mean, Andrew Ehrenberg wrote this amazing article, published it in Nature, right? The world’s most famous scientific journal, called “Even the Social Sciences Have Laws.” And in there, he said that there was this sort of belief that you could not have scientific laws that concern human beings or crazy things like advertising and stuff. And it’s a great line from Andrew. I don’t know if it was ever published, but when people said there can be no laws in marketing, he would say, “Have you looked?” You know, if you don’t look, you’re not going to find. Because that’s always been—I mean, science is actually quite a new thing, and it’s only a few hundred years old. And it was just people looking systematically, taking systematic measurements of things. It’s not actually rocket science.
In the podcast with Philip Kotler, he talked about how—what was it?—in his time, finance was seen as science and marketing wasn’t. But even he is not talking about science; he’s talking about engineering. He’s talking about using numbers and spreadsheets and things like this, which is just not science. Science is repeating studies over and over and looking for repeatable patterns and then building—then when you find those, you can make predictions, and you can start to understand how the world’s working. And you can start to—you realize that some explanations work, fit with those laws, and some don’t. And you find weird things because the world is weird. There is only one science, right? People often say, “Can marketing be a science?” I’m like, “No, there’s only one science, it’s called science.” Science studies the real world. It can study marketing. It can study turtles. It can study whatever is in the real world.
But it follows a method that is designed to establish laws that are so reliable that we don’t, you know, I always joke, no engineer asks, “So what’s Brazilian gravity like?” We know. And that repeatability—so a lot of academia was always about new things, new words, or just coming up with new titles. “Social marketing” we’ll call it, as if people in charities didn’t realize that beforehand. I don’t, yeah, or buzzwords and things.
Applying Scientific Method to Marketing
Andrew Mitrak: So was there ever a moment where you were in some marketing lecture or reading a marketing book and just realizing, “There is no science here”? Like, what was the spark or the initial moment where you felt like, “Oh, this is not sufficiently science-based and therefore I could actually be part of the movement to make it more science-based”?
Byron Sharp: I don’t know. I think because I read philosophy of science, and I read writing by people like Frank Bass and Andrew Ehrenberg, and Andrew was actually doing it. And so I was very keen on replication, and I started a journal. I was advised, “Do a journal, it’ll be really widely cited.” It wasn’t. But I invited Andrew Ehrenberg onto the advisory board and then started working with him, and then sort of the rest is history, I suppose. But I came from the Phil Kotler school. I always liked how Phil Kotler was quite down to earth. He wasn’t like the Cannes crowd that I’ve just been with, you know. He was quite skeptical of the idea that advertising could manipulate people. There is a famous line about, you know, “People don’t have garages full of cars they don’t drive and fridges full of food they don’t eat” and things. They are quite experienced. And I liked that down-to-earth thing. So I sort of rebelled a little bit about the mystical part of marketing, the sort of magic advertising that subtly changed people’s psychology and things like that. I was quite skeptical about that. And at the same time, I thought, “Why aren’t people talking about memories? Why aren’t they talking about what we now call mental availability?” It seems that this is really underplayed. And that sort of got me doing research and discovering stuff.
The Pareto Law That Wasn’t 80/20
Andrew Mitrak: Do you have any hypotheses as to why it was that marketing was not more scientific, or stayed unscientific for so long? Or do you have any instincts, or have you looked at why—why wasn’t Phil Kotler more science-based, or why weren’t the folks of his era more science-based? Was there some bottleneck preventing them from being more scientific? Did they not have access to the research or the tools and processes to be more scientific, or do you feel like there was just something that went wrong very early on and they kind of went down the wrong path?
Byron Sharp: Academia is very competitive, quite vicious, particularly in the North American schools. Incredible pressure to be “new, new, new,” even if the new isn’t that new. It’s just what we call old wine in new bottles. Like today, people don’t talk engage. If you’re in an advertising festival like I was, they don’t talk about engagement much anymore, but they talk about attention instead, and it’s the same thing. So, yeah, there’s incredible pressure for that. So the leading North American journals are quite anti- if someone blatantly says, “This article is—so-and-so did a really interesting study, but we don’t have any idea, really, about how does that generalize, where does it generalize to? We need to do more studies. And so I’m going to do, first of all, a very close replication of it just to check that they haven’t made mistakes.” If you send that to a leading journal, they’ll go, “Well, no, we don’t publish close replications. No.” And particularly, “How dare you question that an article that we published in our journal might not actually be correct, that they might have made a mistake,” which is deeply unscientific. So, yeah, the lust for new—”new, new, new”—is, I think that is, yeah, it is deeply unscientific. Prestigious journals are deeply unscientific, too. I mean, we shouldn’t—you should be judged not by which journal you get into. If we judged Einstein by which journal he got into, he’s a total loser. We judge people on discoveries. Some guys won the Nobel Prize a while back for discovering graphene, which had always been—it’s graphene, it is only one molecule thick. It’s amazing. It’s spawning a multi-billion dollar industry. And they discovered it by putting graphite—you know, the stuff that is in lead pencils—between some sticky tape, and shearing the tape off over and over, and each time it sort of removed layers till they got down to one molecule thick. I think if someone sent that to a marketing journal, it would get rejected just by being, “That’s just too simple.” So, it is a cultural thing.
Our journals celebrate style over substance, rather than a discovery. So, when Jenny Romaniuk and I, and Andrew Ehrenberg, published on Pareto law—and we, before we published, right? So we looked at the Pareto law, you know, that the top 20% of customers should give you 80% of your sales. And we asked two questions. One was, is it law-like? Because we were already interested in laws, right? So does it—is it law-like? Does this cover a lot of different things, different categories, services, durables, is it law-like? And is it that the top 20% generate 80%? And we discovered, yeah, it is remarkably—it is actually remarkably law-like, once you account for time period of analysis and things like that, which had already been quite well documented. But it’s not 80%. It’s never near 80%; it’s much closer to 50%, which has quite profound marketing strategy implications. And we wrote that up and sent it to a friend of ours who was the editor of a journal called Marketing Science. There’s a journal called Marketing Science in America. And he went, “Oh, that’s fantastic, that’s so interesting. In fact, I’m off to a class, I’m going to use that in the class, like this afternoon.” And I went, “Oh, great, so do you think, you know, Marketing Science might be interested in publishing it?” He went, “Oh, no, no, it’s—you’d have to do some sort of optimization routine or...” In other words, some statistical gymnastics. He went, “That’s just a discovery.” And a physicist would never say that, I don’t think. I don’t hope. I hope. So, I think that’s—I think that’s the answer to your question. A culture developed that looked scientific but wasn’t.
The Long History of Marketing Proclaiming to be Science
Andrew Mitrak: So, as you’re looking at marketing becoming more scientific, but you mentioned that there is already a journal of Marketing Science, right? And there’s this long history of marketing and advertising presenting itself as scientific. You know, like Claude Hopkins publishes Scientific Advertising, which is more than 100 years old. And so—
Byron Sharp: Which was all just a set of case studies and musings of a consultant, yeah.
Andrew Mitrak: Exactly. So as you’re wanting to make marketing more scientific—
Byron Sharp: It was definitely Andrew Ehrenberg who was the first to, and that’s because he—no one told him not to. And he hadn’t been—he didn’t have a PhD from a North American school. He—so he just applied sort of high school science, and he never thought that was a big deal. He didn’t—I remember him saying to me, he thought his actual greatest contribution was his work on—most original contribution, sorry, was work on presenting data, which is actually not so well known. But, yeah, he didn’t think it was—he just did basic follow the scientific method. “Well, you know, you see something, you go, does this hold a second time? Does it hold? Does that hold for a different product? Does it hold in a different country? Does it hold like, you know, how regular is this? And then can we build an explanation on that that fits?”
“Don’t Trust Me. Don’t Trust Anyone.”
Andrew Mitrak: Yeah, that’s right. So kind of given that you’re actually being scientific and that you’re actually following the scientific method, how do you distinguish yourself and the work of Andrew Ehrenberg and your colleagues—your body of science—to sort of the pseudoscience that presented itself as science to begin with, right? How, as you’re communicating to the marketing world, was there a worry that people might roll their eyes like, “Yeah, people present marketing as science before. How are you any different this time?” Were you kind of conscious of that you’re going into a field where it’s often presented itself as scientific even when it’s not?
Byron Sharp: By plainly showing the data and not hiding behind—Andrew used to call “showing off our secondhand statistics,” you know, when you have these marketing journals that look as if they’re mathematics journals. He did do—I mean, he was—the Royal Statistical Society made him a fellow, which is a very rare honor. He was a real statistician, but he didn’t feel that, “I’m working in marketing now, and I don’t need to—I’m not at the forefront of mathematics. I don’t need to show off that stuff.” So, the amount of times I visit a company—I mean, I did several companies in Paris recently—and they would say to me, “Oh, I’ve got to show you. We’ve looked at our own data to see if your laws apply.” And it’s like, “And did you find anything?” And they’re like, “No, it applies everywhere. It’s amazing.” And so, that is science, right? Don’t trust me. Don’t trust me. Don’t trust anyone. And certainly don’t trust anything that’s trying to hide behind—a while ago, I actually had to use AI to, “Can you take this article and can you translate those coefficients there and turn them into an elasticity, you know, what we’d be used to: 1% change in price, what change in sales?” And it did it for me. But I thought, “That is so hidden in the paper. It’s ridiculous.” So, the real world loves discoveries about the real world. And if you can show them a discovery that’s reliable, to the point where they can go, “Well, why should I trust you?” “Well, go get your own Nielsen data, do a survey, whatever. Just gather the data the same way and see if it applies.” That is—you don’t have to convince anyone. They’re just like, “Wow. Wow.”
Andrew Mitrak: As you were kind of getting started or in the earlier years of sort of evangelizing, you know, your work and the work of Andrew Ehrenberg, were there any early customer wins or early sort of businesses, or how did you kind of get businesses to sort of take you seriously and look at the data? Was that easy because the science sort of sold itself, or was there initial kind of evangelism you had to do to even kind of market your own ideas?
Byron Sharp: Well, Andrew Ehrenberg had already always had some supporters. I mean, companies before he went into academia, big companies like Unilever and things like that, he had a little consultancy where they would give him the first panel data they had and then sort of say, “What does this mean?” And so he had supporters for that. And then when I sort of took that over and running that for Andrew, we sort of practiced what we preach and went, “Well, we need to be much more mass marketers and then much more easier to buy, and more friendly.” And we spent an enormous amount of, I think, very good work in working out what things mean and how to present that. Andrew quite rightly always said, “The D in R&D takes a lot longer than the R.” So, yeah, so there were some evangelists inside companies. But no, the book How Brands Grow was a huge breakthrough in the sense that it’s become the best-selling—that is, according to ChatGPT etc., that is the best-selling research-based book in marketing of all time, which, yeah, I don’t think we expected.
Andrew Mitrak: Yeah, that’s amazing. And there might be some listeners who haven’t read How Brands Grow yet. They certainly should.
Byron Sharp: Yeah, the marketing world is sort of divided into those who have and those who haven’t, I think.
Lightning Round: Overrated or Underrated
Andrew Mitrak: I thought to kind of introduce some of the concepts of it, we could play a game called overrated or underrated as kind of a lightning round. It’s a game that I stole from Tyler Cowen, an economist. I’ll share a concept and you can tell me if marketers—traditional marketers—sort of overrate or underrate it. And if you want to explain, that’s also fine, too. So—
Byron Sharp: What the science says, yeah, okay, okay.
Andrew Mitrak: Okay, positioning. Overrated or underrated?
Byron Sharp: Oh, overrated, yeah.
Andrew Mitrak: Why would positioning be overrated?
Byron Sharp: Well, I just heard because I was just listening to your podcast with Philip Kotler, and he said, “So you do segmentation analysis and you work out that there’s heterogeneity, there are segments.” And then he says, “You know, you can’t go for all segments, so you need targeting.” And that’s like, well, you might need some targeting, but you can actually go for all segments. And the science is very clear: when brands grow, they pull from all segments. Isn’t that weird? Right? I mean, it’s like—so, but he goes, “No, no, no, you do positioning, so you appeal to a particular segment.” Well, if that were true, when brands grow, they would not pull sales from all segments, and when you looked at where they shared customers, they would not share customers with all the other brands in the market, which is a scientific law that just keeps on holding. And so, this is where you go, “Oh, so targeting is misunderstood, and positioning, yeah, really quite overrated.” Yeah.
Andrew Mitrak: I asked the follow-up on that one. So I’ll go back to the lightning round version of overrated/underrated. That’s a helpful explanation on positioning, though.
Next one: Creativity.
Byron Sharp: That’s a complicated one because I would say it’s sort of underrated or underutilized, in that we have a lot of boring stuff in marketing. Right? Even in the sexy areas of advertising and things, it’s astonishing how much boring stuff there is. So you sort of think, “Well, we could do better than that.” That said—because I’ve just been, I’ve just come from the Cannes Lions, where, you know, it’s a celebration of creativity, and you’re not allowed to question the religion that creativity is everything and that more creative advertising must work better—that’s not true. That’s not true. Right? The job of advertising is to lay down memory structures, and sometimes creativity can really help that, and sometimes it can completely get in the way. So it’s not a simple message.
Andrew Mitrak: Here’s an easy one: brand purpose.
Byron Sharp: Oh, well, the evidence is pretty clear, right? It’s just, it’s pretty—it’s sort of a dud marketing strategy, yeah.
Andrew Mitrak: Behavioral science.
Byron Sharp: Oh, way overrated, yeah, for marketing, definitely.
Andrew Mitrak: Survey-based research.
Byron Sharp: In some ways, underrated because people don’t realize just how reliable surveys can be, in the sense that, you know, you measure something, and 17% of people say they do something, whatever. You do another survey, and it’s still 17%. You do another one, and it’s still 17%. It’s like, “Oh.” You know, it’s like, “Wow, my measurement is actually working.” And so I push back on people who say things like, “You can’t trust what people say,” and things like that. There’s some truth in that, but no, people actually find it quite hard to lie. It requires a lot more effort to lie. So, and we know a lot about the responses. So no, survey research can be very, very, very useful to us. As long as we don’t get the surveys filled in by bots. We do need real data from real people.
Andrew Mitrak: Yeah, not synthetic data.
Byron Sharp: Yeah, that’s when you just let the bots go completely wild. You don’t even let a human—you feel like only bots can fill in the survey.
Andrew Mitrak: Last one, hypertargeting and personalized advertising.
Byron Sharp: Okay, the evidence so far is that it’s not really needed that much because it doesn’t seem to have a big effect. Tons of hype, though, in—that is not what people think. People seem to think it will be super powerful, “If only I can unlock personalization.” And they worry—their problem at the moment is so much hype and people say that they can do it. People just blindly say, “Now in this age of hyper-marketing, how it’s so possible.” Yeah, really? Is it possible? Is it? It isn’t; it’s actually very difficult to do. But the evidence of when you do do it, when you do like control trials—so you have got personalization—is it doesn’t seem to have a big effect. So I am slightly puzzled, given that evidence, why people are trying so hard to get it to work if it’s not going to give a—if it’s going to be really hard to do and give quite a miserable return. It’s amazing there are people who believe stuff just because, I don’t know, persuasive salespeople keep saying it over and over. I like to remind people, we don’t even have smart traffic lights yet.
Andrew Mitrak: It’s wild that we don’t. You’re right.
Byron Sharp: It’s so obvious, you know, stick a camera on the traffic light so it knows not to stop traffic when there’s nothing coming the other way. It’s like, really, that would speed up cities so much. All the tech’s there now, but obviously, it is a lot harder than I’m making out. So when people say that they can do this magic with online data, it’s like, “Can you, really?” The tests have been pretty miserable on that.
Andrew Mitrak: Well, yeah, thanks for playing that game in that lightning round. I do think it’s, obviously, there’s a whole lot more to the book, but I think it was somewhat instructive of how the work in How Brands Grow is different than sort of the Kotlerian view of marketing.
Where does this all leave Kotler and STP?
Andrew Mitrak: My last Kotler-related question is, where do you think it leaves those models? Like, are they entirely without merit? Should marketers still learn them even as a reference point? Or what’s your overall take on where they belong—like sort of pre-How Brands Grow type marketing? Where does it belong in a marketing education, or how should marketers even think about those, if at all?
Byron Sharp: Well, the Kotlerian STP, you know, in his books became quite cookbookish, you know. “Do this, then do this, then do this.” And we now know that’s—no, there are actual real problems with that. I mean, it’s not how brands compete. It’s not how buyers buy. And it would mean investing a whole lot of time into things that were never going to pay off. So, no, I think we do need to say, “Understanding that consumers—there’s some heterogeneity in the client base.” Great. Okay.
Then we need to, but then we need to practice sophisticated mass marketing. There’s not—when Phil said on your podcast, “Oh, we can’t, we can’t reach all the segments,” it’s like, well, no, that’s your job. That’s your job! And you can. And it might need some tailoring, right? You might need to tailor and have different sort of shops for some people and different channels. But that’s what you’ve got to be striving for all the time. So the real danger of STP is that it sort of waves a white flag immediately and says, “No, our brand doesn’t sell to those sort of people, it only sells to these sorts of people.”
Andrew’s Case for Teaching the Evolution of Marketing Thought
Andrew Mitrak: Here is how this case for the reason why marketers should still learn it. I’d make an analogy to something like cognitive behavioral therapy, which is like a more evidence-based form of therapy. And like for CBT to exist, it needed to kind of build on and react against prior forms of therapy. And if you’re taking a psychology class or learning that, you’d kind of at least still learn about Freud, even though Freudian psychoanalysis is pseudoscience, right?
Byron Sharp: Yes, yeah.
Andrew Mitrak: I look at how my boss or marketers before me might have learned the Kotler in school. I need to understand that and speak their language, and I also need to learn the “How Brands Grow” school to explain to them why there’s a new way of thinking that’s even better, right? That would probably be my argument for the merits of learning both.
Byron Sharp: Yeah, look, I have a lot of sympathy for that. And of course, that’s what I went through.
So you sort of want other people to go through it, too. I think, yes, I think when I see young marketing scientists, their knowledge of the sort of the old STP and things helps them—I think it motivates them, right? They’re part of a scientific revolution.
That said, I see more lazy undergraduate students, and they hate it, with their, “What? You spent a whole hour telling us about that and at the end you told us it was wrong? Why are you wasting our time?”
Andrew Mitrak: Oh, fair enough.
Byron Sharp: Lack of intellectual curiosity, perhaps, but—
Andrew Mitrak: Yeah, okay, that’s a fair point. Some people just want to get to the—get to the right way to do it. “I don’t need all the work that came before it.”
One Page on Behavioral Economics
Byron Sharp: Yeah. When we were writing our university textbook, I know I had to have a chapter—I had to have some stuff on behavioral economics, behavioral psychology. But I ended up, I think it’s one page. It’s like a table of, well, there are all these heuristics that have been identified that show that consumers, you know, use heuristics. Yeah. But I didn’t torture the students with the whole chapter because it was like, well, actually, in the end, they’re not actually terribly relevant for marketing, and they’re quite weak effects, and they’re not persistent, right? If you—like, a lot of the experiments that they’re based on, the ones that weren’t faked—and there are a lot of faked, but only did the experiment like once or twice. But if you do it with the same respondents multiple times, the effect disappears. So, you know, you have to cover it, but I hopefully covered it with a proportional thing. It’s possibly more useful for salespeople, you know, knowing certain persuasion things, but its relevance to—yeah, you had Rory Sutherland on, right, on a podcast. And Rory is a huge fan of it, which I think is sort of odd because Rory works in advertising, and its implications for advertising—its implications for how you show prices or something, yes, but for advertising?
Andrew Mitrak: It is surprising how often Rory’s things seem so unrelated to advertising.
Byron Sharp: Well, maybe it’s his hobby. I think it’s his hobby.
Andrew Mitrak: It’s his hobby, yeah.
Byron Sharp: Because he has to work in advertising, and so, yeah, he’s interested in these other things in the world.
Logo Simplification and the Risk of Losing Distinctiveness
Andrew Mitrak: I wanted to ask about sort of trends in marketing practice and how they sort of intersect with some of the thesis in How Brands Grow. Your work emphasizes distinctive brand assets. Sometimes these graphics kind of go viral on social media where it shows the trends of brands getting more simplified over time.
Byron Sharp: Oh, yes. Yes, yes.
Andrew Mitrak: If you look at like the logo of Pepsi, or McDonald’s, or Starbucks, there are all these flourishes to their early designs. And overall, as the decades progress, all those flourishes get stripped away and you get sans-serif typography, and you lose a lot of some of the things that make them—well, I’m wondering, it is certainly simplifying. Are they losing their distinctiveness as they’re simplifying? Is that trend a mistake, or what’s sort of your reaction?
Byron Sharp: Well, the danger is—and that’s the problem that we use outside—we use design agencies, right? And obviously, they go through fashion cycles. And they obviously copy each other a lot, because you see this big trend towards, yeah, sans-serif fonts or something. And then it’ll go the other way. And you can almost look at old print ads, and you can tell by the typefaces and the colors and the things what vintage it is.
Andrew Mitrak: Yeah.
Byron Sharp: Which is a little—yeah, that is a little scary because the science says that brands are important to consumers, but not for falling in love or deep emotional attachment, but rather because—most of your buyers are so incredibly infrequent, and they screen—they want to just get on and make their purchases. They screen most things out, and they need to see you to be bought. So you need to look like you.
Byron Sharp: So anything that makes you look like the other guys is potentially dangerous, and anything that makes you look not like you. So any change is potentially dangerous. So, yes, you’re right. Those fashion trends, yeah, they come with risk.
Byron Sharp: It’s so weird, isn’t it, though, that people go, “We’ve modernized, here it is, it’s new,” and you’re like, “You mean it’s new just like everyone else.”
Andrew Mitrak: Exactly.
Byron Sharp: That’s like high school students, you know, the day they are allowed—we have in Australia, I think they call it Mufti Day, you know, when they don’t have to wear their uniform.
Andrew Mitrak: Okay.
Byron Sharp: And then people will joke they’ve swapped one uniform for another uniform, and that they’re all wearing the same casual clothes. But—
Andrew Mitrak: Yeah, that’s right. They all kind of get the same haircuts or they’re, “Yeah, I’m unique like everybody else.”
Byron Sharp: Yes, yeah, I think that’s part of being human, which is being tribal or something. But I think what you’ve highlighted—that may be very well for getting on with your friends, etc., and that’s how fashion works. But that shouldn’t be the way you run a brand.
What About Facebook? A Case for Segmentation and Targeting
Andrew Mitrak: Right. That’s right. I have a couple of questions I label this section “what abouts” because I’ve listened to interviews with you and people always ask, “What about brand X?” and “What about brand Y?” I’m sure this must be a little annoying for you, and I’m really sorry to do it to you. I’m going to limit it to two examples, though, okay?
Byron Sharp: Okay. Okay.
Andrew Mitrak: I started in startup marketing, B2B marketing, and one of the books that was helpful for me was Crossing the Chasm, this Geoffrey Moore book. It’s about like, hey, you start with a small target market, you jump to the next one, but you do a bowling pin approach. And so my “what about” to illustrate this is Facebook. They started with Harvard to build their initial network. They jumped to the Ivy Leagues. Then they jumped to Stanford, eventually they went to all colleges. Then they went to high schools, and then they went to everyone. And I’m wondering if—if, you know, Mark Zuckerberg had read How Brands Grow before starting Facebook, I’m not sure that he would have taken that approach. And I’m just wondering if that strategy sort of tracks with some of the thesis in the book, or how does that sort of line up with it?
Byron Sharp: Yeah. The book presents the availability theory, the market-based assets theory, that brands and companies become more valuable when they have more—these two assets: mental availability and physical availability, purchase availability. But it didn’t talk about how you need those overlapping. There’s no point getting distribution in a store if 99.9% of the people who go into that store just don’t see you on the shelf because they don’t know what you are, they don’t—you know, you have nothing, no memory structures. And likewise, there’s no point building memory structures for people who are there, but they never buy you because you’re just difficult to buy, right? You’re not in their stores. And so, this helps us answer that question of should a new brand start small and scale, or try to go big straight off. And it depends on can you get overlapping mental and physical availability. And if you don’t have the resources and you can’t, then you need to start somewhere where you can, and then build from there. But whenever you’ve got the resources and you can do it, you should try to, because otherwise, competitors will see what’s happening and someone will sort of, you know, gazump you.
Byron Sharp: In retrospect, you look back and go, the iPhone launched tied to one cellular network. That was a dumb decision of Apple, right? That was a dumb decision. But that’s with the beauty of hindsight. Why did they do that? Because they were brand new to the mobile phone industry, and there were huge players—the Nokias and Motorolas already. And they worried that those guys would just tie up the physical distribution with the networks, right, and in the network stores, and they wouldn’t be able to get in at all. And so, they went, “Well, at least if we sign—” was it T-Mobile or someone? They signed an agreement with one of them.
Andrew Mitrak: It was AT&T. They launched with AT&T, and then some years later they started with Verizon, which was the biggest. But, yes, it was AT&T to start.
Byron Sharp: And now, the idea that you would—”What? You can only buy an iPhone in some places, and it can only work on some network, but I don’t use that network. I mean, are they trying to push me away?” You know, like, that seems bizarre. But it was—the strategy is you’ve got to go with the resources you have. And Apple, remember, was nowhere near the size company it is today back then. And they were against very big competitors who might have locked them out.
Overlapping Mental & Physical Availability vs. Targeting
Andrew Mitrak: So, the earlier point and like the Facebook thing and the need for overlapping mental and physical availability, especially as you’re early, it sounds to me a lot like targeting. And I know that there’s probably nuance to it, and that’s overly simplistic.
Byron Sharp: Yeah, yeah, no. Targeting’s appropriate, but it’s to be used strategically of like, “Okay, I do not have the ability to do that. Well, then find somewhere where you can.” Or, the example I always use is, you know, in the United States, you have a significant portion of the population that speaks Spanish, and in some areas, you might go, “We should put some ads in Spanish as well.” But that’s targeting to expand and to cater for heterogeneity where it’s really important. But it’s not making the decision of saying, “We won’t play in the whole market, we’ll just ignore some customers or try to turn them away.” I mean, you can do that if you want to, but only if you want to be a really small brand.
What About Nvidia? A Case for Heavy Buyers
Andrew Mitrak: I said I had two “what abouts.” And my other “what about” is about Nvidia. I feel like the hero of How Brands Grow—or one of the heroes at least—is the light buyers. To grow through penetration, you need to get more light buyers. I feel like light buyers are somewhat underrated, or there’s a bias for marketers to, “Embrace your heavy buyers.” But you read this book and think, “Oh, wow, those light buyers are really important.”
But Nvidia is a very heavy buyer company. I think SEC reports say four—just four—customers make up 60% of their revenue. And they’re now the largest market cap company in the world, and so much of their revenue is very much from their heavy buyers and not from reach and acquisition of light buyers. Do you have just a general reaction to the largest company in the world being a heavy buyer company?
Byron Sharp: Well, they make very specialized chips, right? I mean, I’m not going to buy them; you’re not going to buy them. So they don’t have many potential customers. I’m sure they have got lots of lighter buyers, but light probably still means only orders a billion dollars’ worth a year. It’s just the market. It’s like if you build nuclear power stations, you know, you don’t have many customers. And the smallest amount you can buy is one. You can’t buy half a nuclear power station. So—
Andrew Mitrak: So, is it that even within that, they’ve built a highly specialized, very high-margin, very expensive tool? It’s also scarce right now; there’s always a chip shortage, there’s a backlog. So, the thesis—the reaction would just be like they’re just in a relatively small market of buyers, and so the concentration and the heavy buyers would make sense there?
Byron Sharp: I’m sure they have lighter buyers, but they make an ingredient that can only be sold to people who have massive scale. So, who’s going to knock on their door and say, “Hi, can I buy two chips?” That kind of customer just doesn’t exist, I don’t think. So.
How New Categories Grow: A Strategy to Skip Double Jeopardy
Andrew Mitrak: I think most of the book is also about sort of growth inside of a category, or most of the examples of how brands grow focus inside a category and not how new categories are made. And I think Nvidia also might somewhat be sort of reflective of a new category being made—
Byron Sharp: Oh, yeah, absolutely.
Andrew Mitrak: —or AI broadly. I think like OpenAI was tiny five years ago, and when the new category was created, it presented an opportunity to maybe skip double jeopardy. Have you ever studied category creation, or is that an area of research—
Byron Sharp: We’ve studied category growth, yes. But a brand-new innovation creates a brand-new category, and then that category grows according to the laws, right? I mean, it grows largely through increasing penetration as the size of the customer base grows and grows and grows. There’s quite a lot of controversy here in Europe at the moment that—was it one in five European homes has air conditioning? It’s crazy. They have more heat deaths than in any other place and have had for a long time. So, you know, the market is expanding and growing because people visit other countries and go, “Wow, this air conditioning, you can have it just in your home as well. We don’t have to go to Galeries Lafayette to get air conditioning.” So, it’s growing in the same way that any category does grow, and that’s acquiring new users, which is even more extreme than the light users’ story, isn’t it? These are non-users. They don’t use the category at all, and you’ve got to get them to buy.
Is the US Lagging on Evidence-Based Marketing?
Andrew Mitrak: In my last section of questioning, it’s kind of about expanding scientific marketing and adopting it. And I’m based in the US, and it does strike me that many of the leading proponents of marketing effectiveness and evidence-based marketing come out of Australia and the UK.
Byron Sharp: You’re not the first person to notice, yes.
Andrew Mitrak: Yeah, exactly. I’m wondering, why do you think the US has lagged behind in producing and adopting this? And even just like—not even on the researchers, but I’d say who shows up in my LinkedIn feed, actually, who listens to this podcast, frankly, is surprisingly overrepresented with Australia and the UK. So, I’m just wondering, what explains it, and what can the US do better? Or how can I, as an American, help spread the word to get more of it over here?
Byron Sharp: Yeah, there’s a degree of serendipity. There’s also sort of a belief—there is a bit of parochial—all countries have a degree of parochialism, don’t they? But no, actually, that’s not true. Well, sort of, I think Australia would be much more—we used to joke we’re much more famous in New York and London than in Australia, right? Because in Australia, they sort of can’t believe that Australia could be producing, you know, the leading institute in marketing science. So, in Australia, it was sort of a reverse of what is in the US, which tends to think, “Well, no, but surely we know everything already. This is the US.” So, yeah, there is a bit of that. I mean, but now, our North American advisory board, which we just had, had the CMOs of companies like General Motors and Coca-Cola. So, we are reasonably well-known. But I would agree with you, marketing science has taken off slower in the United States. And that’s in both knowledge of the research and also practitioners learning how to do it. But the US will catch up pretty quick. That’s the thing: science, I do believe that science always sort of outs, you know. Darwin and Wallace—that was sort of famous. But who was Mendel who did the pea genetics stuff? He was like a monk in a monastery. That’s pretty obscure. But it got out. Real discoveries—they eventually, people hear of them.
“The Dogs Bark, but the Caravan Moves On”
Andrew Mitrak: I’m a marketer—say I’m a middle-management marketer, and I’m not the CMO who can remake a company overnight. How can marketers internally advocate for the principles of How Brands Grow to change organizations kind of from the inside? Or how can marketers embrace it in their daily practices, if they’re not the CMO who has the magic wand to kind of change marketing for a whole org just as they wish? How can marketers who practice sort of embrace the principles of the book?
Byron Sharp: Well, by learning, by reading the book, giving the book. That’s what it was written for, right? It was to encourage that sort of dissemination. And just—it’s exciting, but don’t expect everything to change all at once, because that’s not how the world works. It takes time. But it is happening. There’s a lovely quote from Frank Bass—who was at UT Austin, he’s the Bass in Ehrenberg-Bass Institute. And he said, when people say there’s no need for the science in marketing, he had this lovely Middle Eastern expression, which is something like, “The dogs bark, but the caravan moves on.” The caravans are moving, and you might not like it, but the fact is it’s happening. It’s going to happen. It’s happened in every other discipline, right?
Andrew Mitrak: Yeah, that’s a fair point.
AI Can’t Fix Bad Marketing Literature
Andrew Mitrak: My last question is around AI. You’ve mentioned using AI a bit. How are you using it either at the Ehrenberg-Bass Institute or in your research? Does it open up new areas of research? Does it change how you’re performing research? Obviously, you mentioned synthetic data is a bad path to go down, but how are you broadly sort of thinking about how to employ AI?
Byron Sharp: Well, our researchers use it for coding and things and on massive sets of data. It’s a lovely, lovely tool. But we’re also—because the Ehrenberg-Bass Institute provides non-artificial intelligence, really, that’s what our sponsors get when they financially support the Institute—so we’re looking at how on earth we curate knowledge so that AI tools that are used by other people in marketing understand the science. That’s not just simple; you don’t just sort of whack a whole lot of literature into ChatGPT and suddenly it becomes this great marketing scientist, because it doesn’t. I think everyone’s learning this with AI: to make it really powerful, you need experts to do very careful curation of material, and then it becomes super powerful. I’m sure people are building AI to help heart surgeons and things, and they’re doing it carefully because AI’s not that good at handling if there’s a huge weight of—which there is in marketing, right?—there’s a huge amount of weight of things that have been said that are wrong. Well, it thinks they’re right because, you know, “Well, Phil Kotler said it. It must be true.” So we’re working on that. It’s moving very, very quickly, but it’s very complicated, yeah.
Andrew Mitrak: Yeah. Byron Sharp, I hope listeners, obviously, read How Brands Grow and its sequel. You’re easy to find online and on LinkedIn. Are there any other places you’d point listeners to to learn more about your research and your work, and the work of the Ehrenberg-Bass Institute?
Byron Sharp: Check out the Ehrenberg-Bass website. There’s a lot of resources there, even if you aren’t a sponsor. There’s a lot of resources, and of course, there’s great podcasts like this.
Andrew Mitrak: Yeah, and that’s marketingscience.info is the Ehrenberg-Bass—
Byron Sharp: Which I now follow. I now follow A History of Marketing.
Andrew Mitrak: Oh, yeah, thanks. Yeah, marketinghistory.org. Thanks for plugging this own podcast as well. So, this was so great. Byron Sharp, I really enjoyed this conversation. Thanks so much for your time.
Byron Sharp: Thank you.
