Play ball! Moneyball for Marketing

by Michelle McGinnis on Thursday, March 31, 2011 in Revenue Performance Management

Today is Opening Day for Major League Baseball and with it come all the promises of baseball season: spring, the crack of bats, and unending, complex number crunching.

Last season I took part in my first live fantasy baseball draft: Ten guys in a room, in baseball caps depicting the logos of just as many “actual” teams, bidding imaginary money on the anticipated performance of real players. Those with athletic talent hit homeruns, the rest of us speculate.

It’s strange to think that this obsessive, algorithmic decision-making is a young phenomenon in baseball. Even stranger is how similar it is to the data-driven revolution that’s happening in marketing.

In 2003, financial journalist Michael Lewis released his groundbreaking (and engrossing) book “Moneyball,” which detailed how the small-market Oakland Athletics compiled a competitive team despite their limited funds. If you haven’t read it, you should. But to summarize, the Athletics went against the handed-down wisdom that scouts needed to rely on their gut as their sole guide, that what drove offensive success was purely power and speed measured in generalized stats such as batting average and stolen bases.

By contrast, the Athletics followed deeper – “geeky” argued many – stats, such as on-base percentage (OBP) and slugging percentage (SLG), and their connection to organizational performance, wins over losses. A Barry Bonds power hitter might deposit a ball in the San Francisco Bay three out of every 10 at-bats, but if the rest of the lineup can’t get on base, the team is confined to that one run. In Moneyball, walks – even times hit by a pitch – have serious value as variables in OBP. And OBP’s value is its correlation to baseball’s “bottom line”: converting runs into wins.

There are detractors of Moneyball, of course.  Some claim such a focus on metrics distracts us from the beauty of baseball. For them, the purity centered on the diamond is about physical and psychological strength and talent. That is an overly simplistic understanding of Moneyball economics, however. The poetry of a powerful swing or the slide into home remains the same. The investment in players with strong OBP, SLG or OPS (a combination of the two) is an investment in the organizational goal to drive success on the field.

The A’s management did not invent these metrics.  They always existed.  The team simply assigned a monetary value to them, and this focus allowed them to outperform teams that spent a multiple of Oakland’s payroll budget.

Marketing is undergoing a similar overhaul. Subjective feeling is giving way to painstaking measurement as businesses increasingly mark the success of any marketing campaign to its impact on revenue. Indeed, revenue attribution is the OBP of marketing.

I’ll provide an example from Eloqua’s own history. We used to sponsor a huge marketing event with big upfront costs. But looking at the data it became clear that not a single deal resulted from the event. The event looked like a great “ballplayer” (it crawling with marketers, and plenty of business cards were collected), but the data told a different story. So based on insight rather than instinct, Eloqua dropped its sponsorship.

It’s not an isolated incident. Just as Moneyball changed baseball for poor and rich teams alike, Revenue Performance Management is changing the game for marketers. Success is determined by sourcing leads and tracking what content moves leads from one stage of the funnel to the next. I’m sure some amount of superstition and weird science will always live on both in baseball and marketing, but in sports and in business the numbers don’t lie.

After all, a grand slam is always more glorious than a solo homer. But you need to get your players on all on the bases to accomplish that kind of hit.

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