Why The 70 20 10 Rule Prevents Marketing Innovation

by | Jan 12, 2016 | 0 comments

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One of the current fashions in marketing is the 70/20/10 rule. For those who haven’t heard of it, it’s the idea that for any given campaign, you spend 70% of your budget on things that you know work, 20% on things that you think work, and 10% on things that you have no idea whether they’ll work or not. Given you’re specifically dedicating budget to things you’re not sure about, it’s seen as a model for driving innovation in marketing activity.

Now, it sounds pretty simple, but there are a whole load of interesting things about it when applied to agile marketing. First, it wasn’t originally to do with marketing. The 70/20/10 idea traces its roots back to a mid 80’s or 90’s career development model, which said successful managers learn “70% from tough jobs, 20% from people (mostly the boss), 10% from courses and reading”. In short, it’s a great model for stupid people who love hierarchy. There are lots of conceptual problems with it too, which you can read about here, but in short, it’s not scientific fact.

So this non-scientific non-fact was then taken and transferred into the field of innovation, by no less an authority than Eric Schmidt of Google, who said people at Google should ‘spend 70 percent of (their) time on the core business, 20 percent on related projects, and 10 percent on unrelated new businesses’. So it’s a way of making sure the core business still gets most of the attention whilst also making sure the company is still innovating and exploring new markets. Interestingly, that article also said that ’20 percent time applies to the technical staff. It does not apply to sales or management’. In any event, all it shares with the career development model is the same percentage proportions.

So it’s an idea not invented in marketing, that was then almost completely changed to deal with business innovation outside of marketing, now being applied to marketing. Sounds like a winner, no?

Well, yes and no.

First of all, if you’re taking an agile mindset about your marketing activity, then how can you know what works at all? An agile mindset doesn’t deny patterns and facts, but it is always slightly skeptical of them, bearing in mind agile is a response to complex, fast-paced and uncertain environments, especially digital ones. So right now, with digital channels still being so new, complex and rapidly changing, how can you truly *know* what works in those spaces? The only things you can *know* are environments you’ve got a lot of experience with, so a 70/20/10 approach tends to mean that you put most of your money into the traditional media you understand, and treat new, emerging digital channels as ‘innovations’ only worthy of a tiny part of your overall budget. Besides, if you had a true agile mindset, how could you say you truly know things will work? If you can’t truly know what works, then where can you put that 70% of your budget?

Besides, if you’re deciding at the outset of the campaign how you’re divvying up 100% of your budget, and you stick to that divvying up regardless of how the campaign goes, then you’re prioritising following a plan over responding to change, again an unagile approach.

It also falls down because it’s talking about budgets rather than time, effort or attention. If you’re dividing your campaign spend into 70%, 20% and 10% segments, how much time and effort are you going to put into the 10%? Probably not much. The activity being paid for in the 70% is the bigger budget, so will likely take more time to deliver, and you’re more sure it will deliver results so, consciously or unconsciously, you’re more likely to put time into it. So the 10% activity will become an after thought, meaning the tests it’s meant to be running won’t be that well designed, or at least will not be that rigorously measured or followed up on. At worst, if something goes wrong with delivering the 70% activity (and things generally do take longer and cost more than expected), budget, time and attention will likely get pulled from the 10% activity, meaning it may end up not being delivered at all. Basically, by deciding your budget split. you’re also deciding your attention split and activity prioritisation, potentially killing your innovation.

Taken to its logical conclusions, the 70/20/10 marketing innovation spending model too often keeps people locked into traditional media, prevents them from spending the majority of their budget in emergent, complex and fast-changing digital channels, and it ensures any innovation looks like the lowest priority in any marketing campaign. In so many ways, entirely without meaning to, it actually stifles innovation and marketing agility.

If you’re going to take an agile approach to your marketing, you need to innovate incrementally, constantly testing, learning, adapting and evolving. So instead of the 70/20/10 rule for marketing, I’d like to suggest to 10/90 rule.

At the start of a marketing campaign you decide to spend 10% of your budget on the things you’re going to test out first, and up to 90% of your budget on other stuff further down the line; on things you’ve probably not even thought of yet. But you might spend less than. or even none of, that 90% if the initial tests show you should abandon the entire campaign all together.

In short, ladies and gentleman, I give you the far superior 10/90 rule of marketing innovation:

“Spend 10% of your budget on things you’re going to test out first, and up to 90% of it on following successful tests and testing new things you’ve probably not even thought of yet, unless you decide to abandon the whole thing after the initial tests and do something completely different”

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About The Author

Gez Smith is an agile communications coach, trainer, author and speaker, and is also the author of ‘Agile Marketing: The Incomplete Guide‘.