In this episode Martin Lucas, Mathematical Psychologist and Founder of the company Gap In the Matrix is about to blow the lid off many of the sacred cows in the agency world.
He has spent four years studying why humans don’t understand humans and how brands are missing a trick when it comes to engaging their customers and understanding why they make purchasing decisions.
Rory Sutherland, Vice Chairman of Ogilvy said this about Martin’s company:
“Gap In the Matrix is one of a tiny number of people in the world who understands that it is psychology which offers the greatest potential to revolutionise marketing in the next ten years and beyond.”
In this fascinating episode he shares the results of his four year study and drops bombshells like:
* Why $265bn of online ads don’t get interacted with and the average Facebook ad click through rate is a tiny 1.61%, Google display ad 1.91% and programmatic 0.035%
* Why measuring impressions isn’t useful
* Why brand strategy is stuck in its ways and should be called “performance branding”
* Why defining “personas” for a brand isn’t helpful
* Why the attribution model for measuring online ad performance is wrong
* How he is now helping global FMCG brands increase certainty in their marketing spend and save on average 18-21% of their advertising, increasing their profit margins by 3-21% and achieving 70-120% above industry average for open rates and click through rates.
I hope you find this episode as intriguing and eye opening as I did.
Transcript:
Jenny
So today I’m thrilled to have on the show Martin Lucas. Martin is the, he calls himself a mathematical psychologist, which we’re gonna dive into a little bit more. But he’s the founder of a company called Gap in the Matrix. And they specialise in cognitive data science. And Martin has spent the last four years looking at human decision making and actually what drives those decisions. And the reason I wanted to invite him on today is because he’s working with big global brands, and agencies, to really unpick the messaging that brands are putting out into the world to their consumers, why it’s not working and how they can do it better. He’s got some very interesting and very impressive statistics about the impact that his company has made on those brands. And before I kind of hand over to you, Martin to sort of fill in the gaps, I wanted to read a testimonial given by Rory Sutherland for the work that Gap in the Matrix do. So Rory basically said, ‘Gap in the Matrix is one of the tiny number of people in the world who understands that it’s psychology, which offers the greatest potential to revolutionise marketing in the next 10 years and beyond’. So that’s pretty impressive because Rory is very, very well known in our industry. So, Martin, over to you, would you mind spending a couple of minutes just talking about you, your background? And why you decided to do this research?
Martin
Yeah, well, thanks for having me on. First of all, Jenny, and I’m glad that you picked out the Rory quote because that meant a lot to me. That was a nice piece of validation. So just to give everybody a little bit of background in 2015 or so the business that I had the sort of investment property there had I did that entrepreneurial bet, just bet the house right. And I conducted a four year research and development project examining ‘Why don’t humans understand one another?’ That was that was my main problem statement write everything from ‘Why does Facebook not work when it explores all this data about your life that’s invading your life? I predicted Cambridge analytical before it happens, all the way through to every consumer, in various different guises is very frustrated with how they’re treated. Right? Simple questions. Genuine, when was the last time you got an email that really excited you or touched a personal need for you? Or you saw an advert on Facebook where you’re like ‘Oh, wow, I really need that, you know’. It’s a very broken system. Right? Yeah. And that’s what we wanted to pick apart – was not just to, you know, stand on a box and say there’s issues, right, everybody knows those issues. We want to understand why. And we wanted to do it from the consumer perspective. So we harvested from 24 academic disciplines, taking the most relevant components to do with consumer decision making. We turned it into algebra, because algebra is problem solving. And from there, we were able to figure out how you should communicate to different groups, and all kinds of different weird, but very practical things like skills of desire, for example, or why somebody absolutely adores and craves and collects pink umbrellas and why other people don’t care about it at all. So it’s about as much of giving people more of what they want, and less what they don’t in a very simple way. And one of the things that I think is very true and even further true today, and I think that’s why a lot of global brands are working with us, is a lot of people are caught stuck in that top down architecture, right, which never accounted for the digital age. So what I mean by that is, here’s a brand and a logo, we want to sell this product. So we shoved this product to everybody. So it tends to be much more logo orientated, not consumer oriented. And that’s one of the key things of what we looked at about why don’t humans understand one another. And it’s a very kind of capitalist, selfish kind of build, and it’s not working.
Jenny
So this is, I mean, it’s very, very powerful stuff. And you’re absolutely right. I mean, you know, engagement is key, and every brand wants to, but this model is obviously it needs some work. So, I mean, can you share with us, because I know that you were talking about statistics of click through rates or engagement rates. Tell me a bit about those findings. From your analysis?
Martin
Yeah, I mean, this is a key anchor that we use in a lot of situations with agencies, brand sales, and our own sales activity, our own marketing activity. So is it’s as true in 2015 as it was in 2021. The average click through rate on Facebook is 1.61%. On Google display ads, it’s 1.91%, on Programmatic, which are called stalker ads, it’s 0.035%. If you just combine three of those things together, which are just three minor parts of a much larger ecosystem of advertising and marketing, and that’s $265 billion worth of ads that don’t get interacted with and it’s 4.82 trillion ads being sent to consumers where it’s not just consumers don’t like them. It’s actually costing people loyalty and actually pushing people away from brands, because you could love a brand, that’s how it works within the brain, like you have a predilection for, I like, Jenny, give me a brand that you love. Like if you’re gonna shop and what’s brand that you love?
Jenny
Okay, so I’m into Trinny makeup.
Martin
Okay. And Trinny makeup, do you like every product that they do? Or is it just foundation? Is it face masks? Like, what comes to mind?
Jenny
Interesting. I like their eye products, their eye shadows and lipstick, actually, they’re best for cheek to lip.
Martin
Right, cool. So what happens is that we assume, this is me talking about the architecture in most brands, we assume that because you’re interested in this brand, we can show you this product. Right? And that’s what often happens is that because you’ve got an interest in it, we’ll just show you a advert, what your brain does in a microsecond. 98% of your decisions are unconscious, right? That’s your database of life and experience, right? What your brain does in a microsecond says, ‘Do we like that brand?’ Yes, or no? Yes, we do. Oh, but it’s not for the type of product that we like, and then we’re going to reject it. So even though you should be engaging with the Trinny products, you don’t because of what they show you. And that’s how the brain optimises what to do in any given moment. And that’s like the microsecond of decision making.
Jenny
Wow, it’s so true. Because actually, for a mascara, for example, I don’t know why this is all become about me, but I will go to Mac, which is a completely different brand. So tell me more about that 98% of what’s driving our decisions,
Martin
Right, so we humans are chemically driven creatures, right? So let’s do a really quick download of we’re going to do neuroscience, neurobiology and the psychology of meaning in the quickest way without it being all those things that made it sound like scientifically, BS, right. And I try to avoid any kind of BS with it. Because that was one of the things that I knew in 2015, you can’t come to market talking about emotions and psychology and stuff, you have to give them driven outcomes, right. So here’s the data of decision making. 95% of all of our decisions are based on emotions. Decisions only become conscious, in only 2% of the things that we experience. So we make 35,000 decisions a day. Most of them are unconscious, I’m not in the mood, I’ve already eaten, I don’t like that. Or I like training, but it’s the wrong type of stuff for me, right? Like, all of that happens is the unconscious. The conscious ones are the 2%, which is your emotional games, right. And the reason why humans are so driven by emotions, and we deal with 108 different types of emotions, we’re so driven by emotions, because emotions connected into the reward centre in our brain. So we’ve all got a friend who thinks way, way, way too positively, right? Like the positive all the time, and most of the time, it’s great, but sometimes you just like, just ease up, right? And then you’ve got a friend, that’s that stuck thinking negatively, the glass is half empty all the time, right? Both of those people are getting the same chemical treatment within the brain. Right. So it’s not about whether the unhappy person is having a good life, and the happy person is having a good life, right? They’re both getting, they’ve got an architecture in their brain to get chemicals based on feeling good and feeling bad. And that’s the system of how it operates. So that’s what we humans are looking for. The reason that we’re so driven by emotions is that motion gives us chemical releases. And it’s perfectly natural. It’s nature for us to be chemical kind of balanced machines, right?
Jenny
This is fascinating. I mean, I kind of want to know how you got all of this data like, you know, the statistics that you just shared a moment ago before you just said that data was, you know, 1.61%, 1.91%? How did you actually find out that, was that just because you said that you’re a mathematical psychologist, which I don’t know 100% what that means, but is it crunching those numbers? And how do you access that type of number?
Martin
Yes, so mathematical psychology is a specialism within psychology. And it’s actually a research capability. And luckily enough for me, it was built about decision making. So obviously, when I when I discovered it, for my purposes, I was like jackpot. This is exactly it, right. And basically, is not just a pure psychology field, it is actually research. So it gives you the capabilities to go and research in different dimensions and things right, combined with that, and I’ve got a very unusual skill for algebra. So I can connect lots of disparate dots and stuff and do it in quite a fast way. I wanted to train myself to make it more accurate. So how did I find those stats, a lot of hard work and perseverance. We spent six months hacking the Facebook advertising system. So we could figure out the back end of the number of adverts, versus their cost, versus Facebook’s profit versus what people spend the money on. And then that got us into what larger brands were doing. And then you know, it’s all just been a very progressive iterative thing, which is why give up four years of my life. Two years to do the builds and two years to do all the case study and testing and stuff, you know, and that included as well, because it’s not just about data or data architecture or thinking or anything like that. I spent time with sixty five different agencies around the world. And what I was trying to figure out was what don’t they know? What is the thinking model taught to marketeers and advertisers? Right? Because we’re all conditioned to think in a certain way, right, depending on our cultural environment, conditioning or education. So of course, advertising marketing is currently following a model. And I wanted to understand whether that model worked and what the gaps were within it, because I believe that there were gaps and that I think that’s where we sit today in quite a powerful position, just because of the number of global brands that we’re working with. It’s working well. It took us a while to figure out how to message that, but is working well, you know,
Jenny
I so want to dive into the 65 agencies and what you discovered, you know, in terms of importance, what was the first thing that you realise that really, you thought, wow, I had no idea that that was the case, because you’ve actually referred to it as a house of cards, and the broker model. So I want to dive into that, tell me more about the research specifically around how agencies are working.
Martin
And what I found is that you’ve got a system that’s very much generated by the whim. The whim of the CMO, the whim of the creative director and just the whim of people, right. And I don’t mean to call it the creative director, I’m not, I’m not criticising individual rules, I’m just saying in the agency model, you’ve got a lot of whim activity. And just today, I had to, I had to climb one of my business partners off a shelf of anger, because we did some analysis for a global business, right. And we’re looking at the research that they’ve done. And it’s a combination of survey data and sentiment research, right. And this is quite common for any brand, any agency, but what you end up with is a partial truth. And then you look at, so we’ve got 16 different decks from this client, because we’re at the research stage, right? And the first deck has an assumption within it. The next step takes that assumption and sees our customers want this ‘likely because’ and the ‘likely because’ is based on the assumption, and then the decks progress and progress and by the time you get to the sixth deck, this is now a truth. And their entire system is now being anchored around this truth, which was never actually true in the first place.
Jenny
Okay, so some people listening to this, because there’s a lot of creative agencies that tune in, they’ll say, but hold on a sec. You know, when we develop concepts and ideas, a lot of it is based on research, we do, you know, focus groups, we do, you know, observation techniques to see how people react. So a lot of kind of work goes in behind the scenes. So, tell me what you discovered about that part of the the way that the creative agency works.
Martin
So what we find is not creative agencies just, right, but looking at global brands and things as well, there was one example where they’d bought all the gear and got the testing done, via the creative agency, actually, where they, you know, you put on the headgear, and you measure the customer’s emotional reaction to the advert, right. And they got all positives, but they didn’t get sales when the car was launched. And what we’ve pointed out to them is that triggering them an emotion within somebody is not a decision, it’s not relevance. It’s just triggering an emotion in that moment. So the point about this is that when you look at market research, one of the world’s largest advertising agencies, their Chairman, told me that he had a doubt about market research. And he went out and recruited four people and got a budget to recruit those four people, really just to find out, was the market research valid? Or was it just coming from a library and an assumption, and he found that it was coming from a library and an assumption. And that’s not me saying that, that’s like what the chairman of one of the largest advertising groups and I find consistent evidence of things like that. So it’s not really criticising the creative agency model. It’s more criticising the fact that if research is not based on why the consumer buys, then you’re into a problem. And then in turn, that got us into modelling how different industries actually operate. So for example, we know in the automotive space, the vast majority of automotive companies are caught in a model of car, metal, engine, right? Think about every TV advert car, metal, engine, then once in a while price, car, metal, engine, price, right? That’s your consistent model. That’s not why people buy cars.
Jenny
When you say car, model, price, you know, when you see a car advert, for example, it’s very sort of emotionally led in the fact that someone’s speeding along and the wind’s blowing through your hair to kind of want for a better term, but just describe to me what you mean by this, this bit about model, metal?
Martin
Well, you’ve kind of nailed it really, right. Most car adverts and campaigns are driven round somebody driving the car, right? The speed of that car, and the price of that car. Right? So basically, it’s the look and feel and how somebody uses that car, right? And it works on that basis. When’s the last time you sat in a car journey and were like, ‘Oh my God, I feel so exhilarated because I’m sitting in my car?’. Right?
Jenny
Never, this is my car right?!
Martin
So what you’ve got is a model where people are trying to drive emotion. But emotion is not decision making. Emotion is a byproduct that either triggers engagement, or happens because of it. Whereas if you look at as an example, when we’ve done car launches, with the most recent car launch, we did, we had 453, actionable insights split up by various different biotypes. Right. And I’ll give you two really key pieces of insight that break this car, metal engine model. Number one, is that the car is second only, and to some first, behind the bedroom, for what you would term as the psychological layer. Right. So if you think about your bedroom, generally you share it with others, sometimes people don’t, whatever, right, and the car you might share with family and others. But generally, it’s a space that you get to yourself, you can blare your music, you can throw your rubbish on the ground, or you can be really OCD and put it into a bin and you just organise it the way you want. Right. So it’s very private, it’s a closed door space, very similar to the bedroom. So the reasons and things that we want from a car run a lot deeper. And we’ve won a lot of business by saying to people that for some people, the main reason they buy a car is the cup holder. Right? It’s not the only reason, but knowing, they’ve got a cup holder, because they’re busy doing conference calls to and from work all the time they need a place to put their coffee, if you don’t put that in the experience, they’re less likely to do it. Right. So that’s one version of it. Number two, we did a recent piece of work, we were looking at 27 European markets for a brand, and one of the markets, we identified that 67% of females, if they don’t get an affirmation that they can do parallel parking, they’re not going to consider that car. Right. And that’s got nothing to do with the car, the size of the car or anything like that. And the reason for that is that cars are designed by men. And women generally tend to be slightly shorter than, than men, right? So parallel parking is the thing that bothers a significant amount of women. And so if they can’t get affirmation of it, they’re not going to feel as secure and they’re not going to consider your car. If you don’t mention the cup holder or the parallel parking, people are just left to their own devices. And that’s the consumer issue. It’s you’re not addressing things that they actually want. Does that mean we do a TV advert with a cup holder in parallel parking? No, no. But, it does mean that we can do more things with other communication channels, which is what the automotive industry doesn’t do like a lot of industries that stuck with big TV advert. And then it’s just selling things on price, in the other channels.
Jenny
I’m glad you said that. Because I was just thinking, as you said, you know, what you’re talking about is features, which obviously have that ability to make the person want to buy it. Because as you said, like you’re triggering engagement with the ad. And advertising is a one message medium, so you don’t want to be crowding it with lots of different messages. So you’re absolutely right. But that doesn’t mean to say that you’ve got the right engagement trigger, to then translate into a buying decision. Right? And that’s essentially what you’re saying. This is absolutely fascinating. So I’m kind of thinking if I’m an agency, listening to this and thinking, okay, I see what you’re saying, did you in your research of 65 agencies find any agency that came close to, you know, acknowledging this or working in a way that was a lot more powerful?
Martin
Oh, my work with Rory Sutherland was obviously quite key, right? Because I was attracted to him. I saw him talking at an event, right. And I didn’t come from the industry. I came from the algebra world, right. And he stood up on stage and talked about why Uber won based on human control, and I’d written the same paper about this. So I went up to this chap that I didn’t know and that’s how I ended up meeting him. And then we just ran with our relationship from there. Up until that point, I didn’t know about Ogilvy change, actually. And I found Ogilvy change was before Ogilvy did its reorganisation, I thought that they were moving towards that kind of capability, because they had more of the behavioural science and the behavioural economics component of it. But in the general sense, I think that to be super clear, I’m not criticising, particularly the creative agency or the advertising agency model, where we are more coming from when I think about what we do with agencies, is we’re giving them more accurate truth based consumer knowledge, right, so that they can then create based on that truth. That’s that difference, that we’re giving actionable, truth based knowledge of the consumer.
Jenny
I heard you interviewed in another podcast, Martin, and you mentioned the way that agencies used to work. Can you tell us a bit about that?
Martin
Yeah, it’s my favourite thing actually, it’s amazing that you brought that up! So when, of course you’re trying to find out over the years I’ve been trying to find out ‘How does thinking work in a consumer context’, right? ‘What made advertising great, what’s made it’s more challenging? How much has the digital world affected it?’ Right? And one of the coolest things that I found was that the golden age of advertising from the 30s to the 50s, market research was done by an employee inside the agency, and they were a psychologist. So market research was based on that deep truth. And it was based on focusing on the boss of the operation, which I still believe is the case is the female. And I think that the more that the advertising and marketing world has specialised, it’s over specialised. So again, a different chairman from a different advertising group, but it’s still one of the big houses, said to me that you felt the biggest issue is when they separated media and advertising. Because once they did, that, they lost the connection to be able to control how to communicate to people at the right moment, and the part that sits round it as well. So I think that the golden age of advertising has got a really positive component to it. And why did they fire the psychologists? It was actually when, you know, in the 50s, the advertising body said, ‘You’ve got to stop saying that smoking is good for you because we now know that it isn’t’. In that classic way, business world overreacted and got rid of its market research, got rid of its psychologists. And then we began this path towards the more specialised capability of research that isn’t inside the agency. So sometimes this capitalism efficiency can end up costing us what made us good in the first place, in my opinion.
Jenny
So nowadays, because most, you know, a lot of advertising is online, and we can, everything’s trackable isn’t it? And tell me what your research kind of uncovered about, you know, how we are measuring the success because, you know, many agencies do have their measures in place to see what’s working, what’s not. And then, you know, maybe they do split testing or optimization as they go. So, tell me a bit about, like, how you’ve seen, you know, I think you called it the attribution model of measuring, and you didn’t, tell me a bit about what you think about the attribution model.
Martin
The problem with the attribution model, it’s similar to the finance model of ‘LIFO and FIFO’ or ‘Last in, First out’ that type of stuff, right? Anytime you come across multiple models, trying to solve the same thing, it means that nobody actually knows the truth. Right. So if you’re saying that 70% of our attribution model is based on first contact, and somebody else’s 70 percents based on last contact, and somebody says, well, we’re going to divide it equally between the eight pieces of contact, it means that you don’t know what works, you don’t know the impact, you don’t know how decision making actually works based on your consumers. And it’s a very fair reason why people don’t know it, is because what we’re trying to do is to create a model, which is one size fits all. And I believe that we’ve compounded it to make it even worse over the past 20 years, because the digital age is creating assumption, within assumption on top of research that is creating bias within bias. And you’ve got all that together. And it’s just quite a big cluster swear word.
Jenny
Thank you for not swearing you know you can by the way. That’s really interesting, because obviously, the click through rate is, you know, all views, number of views, click through rate, these are the kinds of measures that many people use nowadays. So would you say that that’s not an indicator? Like, what’s your thoughts on that? I mean, if someone clicks on an ad, and then clicks through to the page, is that an indication of a buying signal?
Martin
I believe, it is an indication of a buying signal. It’s just not an absolute. So what you’ve got at the moment, is Facebook salespeople are literally trained to be, and they’re out there telling all kinds of large brands, don’t worry about clicks, worry about impressions, because impressions mean that people will eventually come back to you. And that is like horseshit, since you gave me permission to swear, sorry. I mean, that’s just not true. But it’s a good sales strategy by Facebook because they’re Facebook, right? So the problem that you’ve got today is that nobody wants to raise their hand in a very siloed, blame free society and say, I look after this particular silo and I don’t think that this silo works, or do you know, I mean, it’s like the architecture of it all. If you think about human behaviour, there’s, in the world of psychology and the world of behavioural science in the world, the human science, there’s a commonality and I always look for commonalities because that’s how historians do things right if they find, you know, after a battle the king says this and a monk wrote here and a peasant that could write wrote about it, right, let’s say they find out the truth. And I think the same thing applies. So humans have got five dimensions that makes them human right across all these all these areas. And it’s language, it’s religion, it’s music, it’s art, and it’s tool making. And what’s going on in the world today is that we’ve started to rely too much on the tool makers. So because the software says this or because the data says this or we can do this big data project, you can’t think of somebody liking a page or visiting a page as an absolute. And that’s what Facebook builds its look alike audiences from, that’s why Programmatic falls on its butt because it’s got a point .035% click through rate. And what people are saying is, well, if we throw enough stuff, you know, for every 1000 that we send, three and a half people are going to click it. Right? What is that actually costing you the other way around? And I think that’s part of the problem, some of the stuff that we’re doing with brands away from advertising and marketing, and you could debate that this is advertising and marketing in itself, is asking questions like, what does it cost you Armani, when you sell jeans, stacked high as the rafters on a plain, plastic table in Costco? What does that cost you when Armani customers actually see that? We’re selling tracksuits in JD Sports, we wrote a paper about this, it’s known as thin slicing. And what it basically means is that you you thin slice away somebody’s perception of you, so that it changes. And the Costco one was a personal one for me, as my wife jokes I had like a little toddler tantrum about it was slamming these jeans up and down in a Costco. And I’ve gone from being a loyal Armani customer, and I don’t think I’m a snob, I certainly didn’t grow up as a snob, but I’ve never bought an Armani product since because it’s just a minister value, you know?
Jenny
Your perception of the brand?
Martin
Right.
Jenny
Do you separate, because there are some agencies that focus on brand strategy? And really sort of that higher level? What, what is the meaning of this brand? What’s it bringing out? And there’s other agencies that focus more on the execution of the messages and the maybe more, you know, promotional side of, of advertising? So do you see any difference? Or are you seeing the same problems occurring for both?
Martin
I think, brand strategy as a general rules got a little bit stuck in its ways, because the world has been overtaken by performance marketing. So everybody’s looking for number based stuff. And I think and I’ve done this with brand strategy people, as agencies, sorry. I’ve said that the time for them to look at branding is performance branding, right? If you understand what that brand means, what sits underneath that what its products means why people buy it, who’s interested in it, all the kind of stuff that sits around it, right? So what branding agencies should be doing, is the top down architecture that says, okay, Facebook advertisers, okay, Creative, okay, TV, okay, Mass Media, wherever you are, right? I want you to have the space to do your creative work, but I want you to follow these rules. Right? And that could be language, not storytelling structure, but certainly the essence of the story, right? And guess what happens if you do performance branding, the consumer gets continuity, in all of those channels. And that’s one of the things where, you know, we get well paid for what we do. And we work with global brands, so I’m not complaining about it, but there are times pretty much every other day where I’m just like, some of the things that we do just seem so logical. Why aren’t people thinking about this? But that’s the structure of business, right? We’re caught in silos a little bit too much.
Jenny
Give me an example.
Martin
I think, the persona stuff is probably one that comes to mind purely because we’ve been working on it today. Where you’re looking at these personas, and you’re like, this is not why people buy, right? If you’re going to buy an engagement ring, it’s got to be wrapped into either an emotional gain and a story, either an ego lead reason that you’re actually doing it and how you want to be seen, or how you want to be treated with the loved one, right? So it’s kind of we call it behavioural elastic. Right? So how much meaning does your purchasing go into? In this case, we’re talking about an engagement ring, right? So do you want to just impress the person that you’re asking? Do you actually want to impress yourself, which is really common, on the ego side? Or are you trying to impress your wider group of friends by that engagement? Right, and nothing is as pure as putting people in each of these boxes. That’s the thing. It’s all what we call the skills of self. Right? So desire, loyalty, categorization, preferences, all of that depends on the person the moment we did the campaign over the over Christmas, where we did CRM based on the weather. Right? So when the when the wind was above a certain level, we sent a message to people in Scotland about a winter jacket. And we sold out, this is a global brand, a billion dollar brand, sorry, in the UK, and they sold out their stock. Right? Because we made it about the real life, what we call the 2D architecture, what’s going on in somebody’s life, why are they doing it? If you understand all the scales, I think I’ve gone off a bit piste from what you asked me but…
Jenny
No, it’s fine.
Martin
It’s like this. This is just all the, the thing for me is like, if you’re trying to take a brand and come up with one advert that serves everybody, then you’re wasting your time. And if you’ve got the opportunity and let’s just do the basic domestic TV right, ITV has always had the opportunity for you to do localised advertising. And we just worked with one of the global top five entertainment brands, and they do a lot of children’s toys, right. And one of the things that we did was code it altogether so we could see, which were the characters that people were interested in based on different regions in the UK. Right. So it means that when they do their adverts, including TV, they lead with the products that the regions are most interested to, because that’s how you trigger attention and get the person looking at it. And that’s your job done. That’s how engagement works. It’s not about the story and the feelings of the brand. It’s like, show me something that’s relevant to me, do it really quickly, then you can trigger my emotion because now you’ve got my emotion to purchase, unlike when we’re talking about the car advert, just because you make me feel happy doesn’t mean that I’m ever going to like your car.
Jenny
So it feels like quite a comprehensive approach to making sure that we are engaging with the customer. I mean, do you think people should throw out personas altogether?
Martin
Yes, I would love them to. One of the most difficult things that I have is that I was trying to be direct, but in a very civil kind of educational way, right? Because you know, babies and bath waters and all that kind of stuff. But personas is really difficult. Like, if a business is architected most of its staff around personas, and here’s my biggest issue with personas, Dave, is 35, he’s got an income of 38K. He likes Coventry football club. He’s a big Doctor Who fan and he spends lots of time on Instagram, right? That’s a persona that we came across last week, right? And and that’s describing an individual. And when you do that anyone that then works on that it’s over prescribed and it doesn’t make any sense. And it doesn’t relate to what you’re trying to sell them. And one of the things that I said to again, one of the agencies and one of the really big ones, was that they’d spent two years combining seven personality tests into one, right. And it wasn’t that long after Cambridge Analytica and I said, well, you’ve got a risk with Cambridge Analytica, and they said, but here’s the actual problem is that I could understand everything, about Jenny’s life, right? Just like the personality test. That’s what Facebook do. I understand all these things. Jenny once liked her pink umbrella. She’d liked a Mercedes page, she liked Doctor Who once, you like Coventry FC, right? Behind the scenes Jenny could have liked the Coventry FC page, because they got beat six nil, and she wanted to have a laugh at Coventry Football Club. Right? And she wanted a friend to see that she’d liked it on Facebook, right? And she ticked the pink umbrella because she wanted to show it to a friend, right? Or she looked at a particular car because she absolutely hated it. There’s a variety of different reasons, you can’t use that those things as assumptions, right? And what we said was that you combine the seven personality tests into one, right? Do you know what your biggest missing thing is? You understand all this stuff about Jenny, but you still don’t know how she thinks and feels about the product you’re trying to sell her? So what’s the point? And that’s where we’ve cut through a lot of stuff you know?
Jenny
I want to take you back one step, because you mentioned that you gave a presentation or talk about Uber and human control. And I don’t know the story. So I’d love if you could share, because I’m sure it’s going to be insightful.
Martin
You well I mean, Uber’s had a lot of negative press and stuff like this. So let’s go this is going back like three or four years before they got all the sexist stuff and all the workers rights and stuff like that. And what I’d identified was that we’ve got, we’ve got 300 plus algorithms, right, which is all about the mathematics of decision making, the algebra of decision making, we’ve got a 296 part problem solving model, right? We call it neuro strategy, because it is about thinking and stuff but really, it’s a problem solving model where, as we’ve taken those 24 academic disciplines, the number one thing, the thing that it opens with, which is such a simple but deep question is what problem you’re trying to solve. Right? Such a simple question like everything is solving a problem. A pink umbrella is not necessarily just because it’s raining, the pink umbrella is because you want to look cool on your way to work. You want to stand out in the streets of London for example, right? I’ve don’t have a pink umbrella, but I’ve got an umbrella that makes me stand out because I’m a show off. Right. That’s it. That’s why I like umbrellas. I don’t think I’ve actually ever erected an umbrella, no matter how hard it’s raining. I don’t even know if that’s the right word. I don’t think we talk about erecting umbrellas. You see what I mean? If I buy it because I’m a dandy and I want to show off with the umbrella. But, I’ve lost my school of thought what are we talking about? Oh, sorry. So and what problem do you solve? This is the beauty of what Uber did. Pre Uber, Jenny and I are sitting in a pub, right? And we’re supposed to be going for dinner. Jenny gives me a slightly dirty look. And I’m like, ‘Oh god, I’m sorry. I’ll call them again’. I call them again. Taxi company- ‘Be there in five minutes’. It’s like ordering a pizza. Right? I’ll be there in five minutes. Come off the phone. Jenny’s scowling at me a little bit and I feel bad even though what can I do? I can’t control the taxi. Right? But I then start to get bothered because I don’t be like being late for things even though it’s just a restaurant, right? What Uber did, Martin and Jenny are sitting in exactly the same place. And I hold up my phone and I’m like, ‘Look, Jenny, it’s two minutes away. Do you want to do a shot?’ and Jenny laughs, goes ‘Okay, let’s do a shot right?’ Because now we’ve got human control. The problem that Uber solved was one of human control. We went from being frustrated and not feeling in control, even though it’s just a taxi. What I said was very fair, the frustration didn’t know when it was coming didn’t feel in control. If you’re paranoid, like how many times do you go to almost call the taxi, when you’re waiting for the 6am one to go in your two weeks summer holiday, you know, I mean, these are real things. And Uber solved the human control capability. What they marketed on was the cheapness of it, and the cost of it, but actually what the problem they solved was, taking an existing market, and they just did it with more human control.
Jenny
Amazing, I hadn’t even thought of it like that. And, and actually now, that sort of technology of tracking how far something is away from you, it’s actually becoming more mainstream, isn’t it in different kind of instances? So I’m just wondering, like for, tell me a bit about who you’re helping now, like you mentioned global brands. But you know, which sounds really impressive, but why were they attracted to you?
Martin
I think the main thing is that we’re giving them answers to questions that each of the individuals, particularly senior personnel, are frustrated about because their personnel or their suppliers, are giving them things that they know is not quite right but they don’t know why. And we can answer those difficult ‘why’ questions? Why does our customer buy? We’ve even got an algorithm called the science of cool, that uses object mathematics, which sounds fancy, and it’s the basis of psychoanalysis and therapy, it’s the Freud method. And we’ve adapted that and said, right, what’s the other dimensions about that pink umbrella, right? Martin’s not interested in the pink umbrella. But we now know that he will never open an umbrella, he wants a dandy type of umbrella, with a little wooden monkey head on top, which is the one that I do have, right? Right, we find out all those dimensions about what that object means to people. And that’s how we know how to communicate to different groups because the meaning is not just the physical product, it’s the psychology, it’s what it means to people, it could be an impulse product, we’ve got the mathematics of impulse, which fascinates me, like the average person in the UK spends £81 a week on impulse shopping. Right. And that means that the average person is going to spend that money on a Korean takeaway, on a McDonald’s, on a pink umbrella or on a pair of six pairs of Armani jeans based on Costco. So the point is that it’s not about how loyal they are to you, it’s about whether they’ve got awareness that their impulse shopping should go into you. Right, because it could go into McDonald’s, or it could go into jeans, or it could go into Trinny makeup. Right. It’s all that kind of stuff, really?
Jenny
And are you saying that this is something that only you can help with? I mean, who comes close to even helping because I can understand what you’re saying there was the themes and the holes in the model? You know, how can we make sure that we have a really comprehensive approach to our messaging, our targeting or even how we then further optimise either a campaign or our messaging? You know, I can see that there are, and how do clients make decisions about what they’re going to go with and what they don’t? If we’re kind of looking back at the market research and even questioning whether the right insight went into the development of any kind of messaging or so, who have you come across or what have you come across, that even comes close to doing this?
Martin
The, we haven’t found anything where anyone’s architected decision making or combined a bunch of different disciplines to understand that right. So we do know that I believe that we’re in a very strong, unique position. You’ve obviously got a lot of people that do specialisms on e-commerce, on optimization and things like that, they tend to be more digital focused, and we work with some of them, because it helps improve the function. But again, what we’re giving them is the here’s the communication, here’s the data, here’s the strategy to actually use, and then they can do the technical toolmaking component of it. So I do say that like completely, honestly, that I’ve been hunting, for years to make sure that, that I’m not just tricking myself, right. But now we’re starting to see that tipping point with the large brands, I think we’ve got the proof that, it’s only us that can do it. it’s just the question of getting the word out, I think.
Jenny
I mean, I know that from what we’ve discussed in the past, you’re pushing on an open door here because a lot of brands have been inviting you in and seeking you out. So I’m sure this is just the tip of the iceberg to how popular this services is but can you share some examples of some of the results you’ve had so far?
Martin
Yeah, so if I was to run you through, so at the moment, we’ve got two global automotives. One’s a car launch and one’s like an entire region, re-strategization, one of the US’s top retailers, one of the US has top bridal retailers, a lot of global companies like that. I’d love to have more fashion because that’s why I started all of this in the first place, because that’s what I’d love to do. But our mean average, across 56 case studies of big brands and things, is average save in the region of 26% on advertising and efficiencies, because if you know what people want, when they want it, you also know when not to bother them. So that’s a big savings thing. Profit growth, with three to 21%. So 3% per billion dollar company with 62 million, right? So 3% is significant. And then metrics, we average 70 to 120% above industry for like, open rates, click through rates, that kind of stuff.
Jenny
Wow, that’s pretty impressive. And just explain Martin, like how, at what point brands tend to invite you in?
Martin
One of two ways, what we’ve done is that we’re obviously like everybody looking for long term partners and stuff. And if we implement our matrix software, that puts us right in the middle of being able to help them with a little bit of everything right and a little bit of automation. But we do an immediate paid test. So that because a lot of people are frustrated with having to sign up for something that they don’t know whether it works or not. Right. And we’re fighting against that by saying, well, let’s just do an initial paid test and things like that, as well. And we find that that works super well for us as a point of engagement, you know?
Jenny
And do you equally work just as well with agencies, because obviously, agencies are the conduit to working on several brands or, you know, multiple brands? And I would have thought that you’re kind of like a bit of a secret weapon for an agency to, you know, partner with you in some way that they can then help their clients. So do you work in multiple ways like that?
Martin
Yeah, I mean, what we do, when we find the right agency partners, we put our USPs to be their USPs. Like sometimes they’ll say, we’re working with Gap in the Matrix. And sometimes we just let them white label it we don’t mind. When it works super well, when we’re really locked in like we did one with a global pharmaceutical, did an addressable market model and a lot of psychology stuff like solving problems that they hadn’t been able to solve for years. And it meant that the agency made a lot more money than what we did. We’re totally fine with that. So agencies do the markup on our cost, but it generally leads to a lot more business for them. And think about what I said about the brands, the brand strategy or performance branding, right, you don’t have to be a branding agency to take positive control of an entire client. And that’s what we do is just do the little segments with it. So our testing becomes their testing. And so it tends to work quite well. But, the agency world it’s a little bit of shaky ground so I find this is kind of based on trust. So somebody shows us a little bit of leg and we did that in return, and it works out well, then we build a proper partnership. And if we don’t, then we don’t, we’ve got a rule inside myself, my two business partners that we don’t work on back money. What we mean by that is that, I wouldn’t say we’re all long enough in the tooth, but probably enough wisdom from failure, which is how I define wisdom, right, the experience of mucking stuff up. If we’re not comfortable, or we don’t believe that the opportunity is authentic, then we’ll just back out of it.
Jenny
I totally understand that very, very, yeah, having people that are aligned with your values is so key to business, I think, especially nowadays. Tell me if there’s an agency listening thinking, well, I’ve got both B2B brands that I’m working with and B2C, I mean, as you said, 95% of decision making is emotional. Would you say that, you work with both, either and it works the same?
Martin
It works. I mean, we do have more on the B2C side. Right. And that’s deliberately part of our strategy. But my three previous businesses have all been B2B. We’ve deliberately designed our model, particularly the 296 part problem solving to be about B2B as well. So the moment we are doing some account based marketing, a lot of lead generation stuff, a lot of sales meets marketing type activity for B2B . So it’s a very, it’s a very open door. It just depends on what type of B2B it is.
Jenny
Okay, perfect. And as you said before, I think that, you know, people can invite you in as early as as product idea stage right, to make sure that their strategy is solid from the beginning?
Martin
Yeah, we’ve got them, on our board there’s Noelle Dye and Noelle, she’s pretty much the godmother of design thinking like she invented it, but it’s never been a field that’s been credited to a person but she’s done so many innovation projects, and she’s just got a beautiful mind, you know, somebody that just knows so much but can say things in such a succinct way. And she invented the Swiffer for P&G, which is a half billion a year product. Um, so we’ve got we’ve got that range and capability about pre design. And the reason why we created The Science of Cool, which is an offshoot of the algebra we’ve built, it’s called The Rational Mathematics, and the Science of Cool actually allows you to know, don’t create this product because you might be able to sell it but it’s actually going to be really low in profitable and it’s going to push other people away. So if you think about some of your favourite fashion brands, how often do they just have some really dross stuff. And the average for a retailer based on RRP, they should be selling for 83%, average, right. That’s how the profit’s driven, and a lot of brands are now dropping down to 67%. So you know how it feels like there’s a sale on all the time, that’s started to manifest itself in people’s bottom line. So actually, knowing what to produce and what not to produce is obviously a very, very powerful thing, because we’re moving into more of a profit driven world rather than just a revenue driven one, I think.
Jenny
On that point, you mentioned a couple of times, He psychology and She psychology? Yeah. Can you explain a little bit about that? Because I think it’s a fascinating sort of interpretation of how you’ve seen the changes over the last few years.
Martin
So just to give a bit of background, we’ve looked at every variable that affects how people think. Right? And a lot of this is unconscious, right? So do we know that if you take, so we’ve done the culture of every country in the world, right, so there’s one of the variables about how people think, so the reason why British people for non British people are difficult to deal with, is that we’ve got a really high individualism score and we actually map very similar to the United States. However, consciously, we think that we’re conservative, and we say that we’re conservative, but our actions don’t match what we say. And this is why people find it difficult to deal with British people, right? That’s one example of these conditions that we’re not aware of. Why would we know that right? And He versus She psychology is very much a big brand issue. So we’re not talking about gender, we’re talking about a thinking model. Right, and He psychology is defined as lacking emotion, tends to be quite practical, trends be quite numbers focused, right? She psychology, again a thinking model, not just the gender, She psychology is more emotional intelligence, the relationship between things connecting the dots. She psychology is storytelling, is the golden age of advertising. And yet the vast majority of brands are caught in He psychology model – car, metal engine, car metal engine, right? Practical, numbers oriented, lacks emotion, right, until you get to the TV that makes people feel happy, even though they don’t want to buy the car. So when we talk about equality in the world, She psychology is naturally more present in women, but it’s not an absolute. And I’m really careful about how I say that, because previous things that I’ve done, I’ve actually been, I’ve had some negative messages from women talking about this type of stuff. And I’m actually I mean it, it’s the opportunity for how brands should be behaving as a thinking model. For women that have naturally have emotional intelligence and men, you’re good storytellers. And that’s what the brands should be doing. We need to go back to the past with a little bit of influence, and using technology and digital in the correct ways. But it’s a She psychology driven world, it always will be, we just lost touch with that a little bit. And I think it’s, you know, a little bit too much capitalism. I’m all for money. But if you make that your most dominant object, you’re not going to win.
Jenny
No, thank you for explaining that. This really, I had never come across that until I heard you talk about it on another on another podcast. So, Martin, I mean, what needs to change now, for brands? I mean, what would you advise? I mean, there’s agencies listening to this thinking, Oh, my goodness, sounds like something that I would really, you know, I need to know more about or, but in the future, what what do you think needs to change, with the way that we are operating?
Martin
I think that, I think it’s about how we think about what we do. I think it’s for any agency personnel to just take them back to what their, what their dreams were, you know, when they first started out, when they had that initial success when it wasn’t just about awards or trying to be more than what they wanted to be. I think it’s about understanding your customers. And what does that actually mean? If you understand your customers, you understand the decision making. And you can learn who your customers are through language, through dialect, through accent, you can speak to them clearly more directly. Think about every touchpoint that you’ve got with them. Rather than just trying to shove product down our necks and price down our necks. The really ironic thing is that when we focus on price and product, it ends up costing us profit and product sales. Do you think that’s the kind of either needs? So I encourage any agency personnel apart from obviously hiring us, is just to go back to that, a little bit of dream state with a little bit more accuracy about who is your customer and how you’re going to serve them? Because bias is the biggest problem and in everything in life, I find that time and time again.
Jenny
I presumed that that was a big part of your research, wasn’t it, bias?
Martin
Yeah, I mean, it’s everywhere. Creative bias, assumptive bias bias within bias of research, bias within biases, sentiment analysis. You’ve got a lot of disciplines trying to prove that their thing is the absolute answer. And then it’s picked up by the person at the brand or the agency, because that’s their job, as the absolute answer. Right? And whenever you see some of the keywords like, this is likely to mean, that’s when you’re in trouble. Because it goes from this is likely to mean, to be in a fact, to be in a strategy.
Jenny
Powerful stuff. Okay, so I’m thinking about now agencies and brand owners listening to this thinking, this all makes sense, I can see that there’s an opportunity here for me to maybe look at what I’m doing to optimise. Who are the best people to contact you? And how can people contact you?
Martin
So our rule with agencies is we want to speak to people that are either heads over C level, depending on the size of the agency. And that’s just being direct because we deal with big ticket brands, and we know the decision making level that we need to speak at. So that’s just the reality of life, right, and from lessons that we’ve learned, but I’m always up for any kind of problem as a discussion. But that’s fun for me, what’s your problem, what you’re working on? Well, here we go. Here’s some insights that will help you but we can’t work with you, or this would be amazing, let’s work together.
Jenny
Fantastic. Well, Martin, honestly, I mean, is there anything else that you can share with the creative industry, or agencies in general, any piece of advice or pieces of advice or words of wisdom before we go?
Martin
I think at the end of the day, forget about the word mathematics in front of it. And even psychology in itself, right? Philosophy is like the forefather, foremother of everything, right? It’s always been about how do people think and how do we define the world around us? And that’s what we need to return to. And it’s difficult in the modern world. It’s difficult for all of us, because we’re being forced to do things quicker, faster, cheaper, right? What I’m saying is when you slow down, you get things to be better, faster and quicker, right? You’ve just got to slow down and give yourself a moment to think about who you’re serving and what you do and don’t know or what you’re assuming that you know.
Jenny
Nice parting words, Martin, honestly, this has been fantastic. Time has just whizzed by. I’m very conscious of your time, we’ve we’ve hit the hour. So, thank you so much for coming on the show. And no doubt I’m sure, you’ll get some inquiries from agencies who want you in their corner. So thank you so much.
Martin
Thanks for having me on Jenny.
